However a chief executive who is a consummate deal-maker, a financial wizard and technological visonary is always hard to find–until recently, it seems. My sources at WikiLeaks slipped me a copy of a very interesting CV that is making the rounds amongst top executive headhunters in London and New York. Looks like some lucky media conglomerate may be fortunate enough to snag this Master of the Universe.

Note to James Murdoch: pack your bags, dude.

(click here if you can’t see the document below in your browser)

For those of you who are complete idiots, this is a parody, however the information is taken directly from Edgar Bronfman Jr.’s entry in Wikipedia.

© 2012, Wayne Rosso. All rights reserved.

How to rewrite history with one little press release

The news that NARAS is honoring Steve Jobs with a Trustee Award has been picked up by media outlets worldwide. In making the announcement, the Academy said, “As former CEO and co-founder of Apple, Steve Jobs helped create products and technology that transformed the way we consume music, TV, movies, and books. A creative visionary, Jobs’ innovations such as the iPod and its counterpart, the online iTunes store, revolutionized the industry and how music was distributed and purchased. In 2002 Apple Computer Inc. was a recipient of a Technical GRAMMY Award for contributions of outstanding technical significance to the recording field. The company continues to lead the way with new technology and in-demand products such as the iPhone and iPad.”

All true, but disingenuous at best. I find it to be just another cynical public relations stunt by an industry seeped in hypocrisy.

Let’s look at the facts. Does anyone remember how Steve Jobs had to drag the labels into iTunes kicking and screaming? Prior to iTunes, Sony Music septuagenarian CEO Doug Morris, then CEO of Universal Music, called iPods “repositories for stolen music”. He later went to war with Jobs, enlisting Sony and Warner’s help, whining that the industry had been “rolled like a bunch of puppies” with the iTunes terms. They complained about the $.99 price point. They complained that Jobs had too much control. Artists and managers started to line up behind Morris’ ill-fated jihad. Irving Azoff (Eagles, Journey, Christina Aguilera, and others) told Businessweek ”Doug is doing the right thing taking on Steve Jobs. The artists are behind him.”

As the digital age has matured, labels have bent over backward to protect their iTunes revenues while simultaneously chafing under the strong arm of Apple. They called Jobs “pigheaded” and Machiavellian. Once the industry woke up to Apple’s business model, they cried like babies over not getting a cut of iPod sales. Genius Doug Morris got everyone together to teach Jobs a lesson and start their own digital initiative, Total Music (not exactly a household brand name today). They hated Steve Jobs.

Sure Steve Jobs was a genius. I read the book. I’m a big Apple fan and have been for many years. But Jobs didn’t invent anything. Digital music services existed before iTunes. So did MP3 players. Jobs’ talent was in making these, and other, products so much better. He didn’t invent the mobile phone but the iPhone is now the gold standard. Same with computers, tablets and soon TV’s.

Several years ago Apple was awarded a technical Grammy, and it was certainly deserved. Apple computers and software have become integral components in the recording process. The Trustees Award is given to those who have significant contributions to the field of recording in areas other than performance. So did Steve Jobs produce, engineer,compose or arrange music like his co-honorees Dave Bartholomew and Rudy Van Gelder?

If the Academy wanted to honor the actual pioneers of digital music they’d be giving an award to Michael Robertson or Diamond, the manufacturers of the first portable mp3 player. The industry chose to sue them at the time. Michael Robertson was the guy who popularized the MP3 format and was even the first to launch music in the cloud. But Michael isn’t dead yet and the industry enjoys suing him too much to give him credit for anything.

The NARAS press release was picked up everywhere and got lots of play. The lead in every story was about Steve Jobs getting a “special Grammy”. A special honor for the guy that every label hated. An award for the guy who held the industry in a stranglehold for years. A man they  all cursed and whined about. So do you think that this is just a big publicity gimmick?

Now that Steve Jobs is gone, they seem to have changed their tune.

© 2011, Wayne Rosso. All rights reserved.

It's bonus time!!!!

When Lucian Grainge pulled the rug out from under Sony Music and Warner Music last month with the surprise acquisition of EMI, it left both companies sucking for any leftover oxygen. Warner was counting on picking up EMI at distress prices in order to benefit from economies of scale and provide growth opportunities for the future. Sony and its septuagenarian CEO Doug Morris were blindsided and destined to be the perennial Number Two. Warner Music, continuing to rack up huge losses, is a very distant third with 18.6% of the US market and is a virtual non-entity.

Now sources say that Warner is in serious discussions with Sony Music for a distribution deal, leaving the former major label as little more than a big production company. Even though Warner has a huge hit with Michael Bublé’s Christmas album, that’s really it. Sources say that the upcoming Warner release schedule is as barren as the Mojave Desert and with nothing in the pipeline and only one big holiday seller, the company will eventually be forced to make a lot of cuts. In fact, according to another source, “They’ll [WMG] have to just keep cutting and cutting until finally they just won’t be able to do the job any longer”.  Right now it looks as though the company may have a very hard time being competitive.

Sony, of course, will do anything they can to pump themselves up. You just know that the Sony brass is going crazy over the fact that Lucian Grainge has suddenly come out of nowhere to become the undisputed King of the World in what is now a two-horse race. Sony execs may think that cutting a distribution deal with Warner may give them bragging rights to the extra market share when in reality it’s nothing more than scrapping around for crumbs. Every little bit helps, I suppose.

We can discuss the pros and cons of a Sony/WMG distribution deal and Warner’s future after having doubled their losses last quarter, but to what end?  The more important question is “How will all of this effect Lyor’s bonus?”

© 2011, Wayne Rosso. All rights reserved.

Remember what happened to Moe Greene?

Today Hits Magazine reported that former Sony North America chairman Don Ienner has been added to Lucian Grainge’s executive stable at Universal Music in the form of a consultancy. The item goes on to speculate that Donnie along with Jason Flom and Tom Whalley, “both of whom are currently operating within Monte Lipman’s Universal Republic”, could possibly play a role in the “retooled” EMI.

Grainge has been locked in meetings for the last couple of weeks obviously figuring out just what he wants to do with EMI. Everyone knows that UMG will have to divest itself of some assets–in France, for instance, the combined UMG/EMI would control something like 60% of the market and EU regulators are likely to frown upon that. My sources tell me that the also-ran WMG  and Lyor Cohen–the Moe Greene of the music business–are doing everything they can to blow up the UMG/EMI deal. I really don’t think that Grainge has anything to worry about since he’s infinitely smarter than any Warner knucklehead and is just as tough as Lyor. In fact, he just may be the prodigal third Kray twin.

Who knows what Grainge is planning for EMI, but I find the Ienner association interesting. I know that I’ve been pretty rough on Donnie in the past, but I have to confess that he was successful at Sony. I don’t necessarily mean to diss Roger Faxon, but the betting is that he will go with EMI Music Publishing. He served his purpose as CEO of the music group by bringing stability to the company and tidying it up for sale (like I always said, he reminds me of Mitt Romney). But when I think about it, Don Ienner is just the kind of record guy that could revitalize EMI. He’s had some recent success with Hot Chelle Rae and I would imagine that he’s learned a lot from his unceremonious departure from Sony and is a different type of executive. He definitely has an energy and enthusiasm for the business and a genuine love of music that  EMI could certainly benefit from. Ienner, like Lucian, is very competitive, and together I’m sure that they would delight in kicking some septuagenarian ass.

The worm keeps turning.

© 2011, Wayne Rosso. All rights reserved.

Thanks to my sources inside Warner Music, I have

Dear Colleagues:

As Warner Music Group begins its next chapter, well-positioned for some truly exciting and unprecedented opportunities, I am writing you today to inform you of my decision to leave the company. As you may recall, last August I wrote you about my “promotion” to Chairman and the appointment of Steve Cooper to my old job as CEO. After leading the acquisition from Time Warner, transforming the company, and selling it to Access, I thought that I could add greater value by addressing the challenges WMG faces on a macro scale. In other words, buying EMI Records.

I’m sure you know by now that my old company, Universal Music, succeeded in purchasing EMI and consequently I have nothing left to do. My goal has always been to secure Warner Music’s position as the third largest record company in the world. I have achieved that goal. Even without EMI we’re still Number Three!  I have made less than a paltry $100 million from stock transactions, bonuses, salary and golden parachutes from the company during my tenure with the company but let’s face it, times are hard and the dollar is very weak. I would have gone back to the family business, but I completely blew that on those DuPont idiots, not to mention the Vivendi schmucks. I don’t care if I ever set foot in France ever again. What the hell do they know about insider trading anyway? So I have decided to go back to where my talents truly lie. Thanks to a generous deal from Warner Chappell Music Publishing, I am once again pursuing my career in songwriting and will be working on songs for a new Pussycat Dolls reunion album. These are truly exciting times and I’m really looking forward to working with Nicole and the girls. Since Rick Rubin will be free from other “obligations” soon, I’ll probably knock off a few tunes for some of his acts. Metallica could do a great cover of my Celine Dion hit, “To Love You More”.

Over the years we have accomplished much together. Even though I led the fight against Napster and the unwelcome intrusion of technology into the music industry, together we were able to convince everyone that we were the leaders in the digital music revolution. Richard Nixon was right about one thing–if you repeat the same BS over and over enough people will eventually believe it.

Together we were able to shed useless artists like Madonna, Nickelback, Joni Mitchell, Alanis Morissette and Paul Simon. Losers. Our legacy now consists of some of the greatest new artists of our era: Cee Lo Green, Bruno Mars and Paris Hilton.

Now, a few thank yous are in order.  First of all, I want to thank Len and Access for being amenable to my kicking myself out altogether and understanding that I came to WMG as both an investor and operator-a dual role in which I have served throughout my career, a position that’s much better for fleecing stockholders.

But the biggest thank you I’ve saved for last.  And that’s to all our amazing employees around the world.  Thank you.  In transforming WMG, together we’ve performed something of a miracle. How else could I have lost $429 million and still put $100 million in my pocket?  I know that New York Magazine called me “possibly the stupidest person in the media business”, but how stupid is $100 million? A company’s true value is the quality of its employees, and you are the finest group of employees with whom I have ever worked. None of what we have accomplished could have happened without the extraordinary talent that is the WMG team, except for a couple of people who shall remain nameless. I especially would like to thank all the assistants and secretaries that left in order to keep our head count down, allowing Lyor and I to reap huge bonuses. I’d also like to thank my sister Bhavani, our Israeli licensee, on her gracious offer to become the Haifa sales manager as well.

I’m excited for what the next chapter holds.  And I look forward to writing that chapter without Lyor.

Edgar

**For those of you who happen to be total morons, the above is a spoof of Junior’s internal memo to the WMG staff on August 19, 2011.

© 2011, Wayne Rosso. All rights reserved.

 

The iPod: A license to print money

(Or How Doug Morris Gave Away The Record Industry)

Walter Isaacson’s terrific biography of Steve Jobs is full of interesting little gems. Of interest to most of my readers is, of course, the section dealing with iTunes and Jobs’ negotiations with the record industry.

As Isaacson describes it, Jobs launched a massive charm assault to win over the heads of the major labels. He started with Roger Ames, then of Warner Music, and quickly moved on to Doug Morris, then CEO of Universal Music. The two execs quickly fell under Jobs’ spell, impressed with the iTunes end to end solution.

After dazzling these two knuckleheads, Jobs ran into a road bump in the person of Andy Lack, then the new CEO of Sony Music. Andy learned from the great Jack Welch who taught him “not to fall in love”. Andy is a smart, affable, good humored guy, but Jobs thought he “could be a dick”. And why is that? Because Andy saw through Jobs’ modus operandi and realized, unlike Morris and Ames, that by licensing their music to Apple, they would drive the sale of millions of iPods which in turn would drive the sales of millions of Macs. And that’s exactly what happened. Like Gillette with razor blades and Hewlett Packard with printer ink, the music industry’s content would sell a whole bunch of hardware. While the other guys had stars in their eyes, Andy connected the dots and pushed Jobs for a royalty on the sale of each iPod.

I remember during that time I was talking to a very high level executive at one of those labels (still in the same position today, in fact) who told me there was “no way I am going to let Andy Lack be the savior of the record industry”. Jobs, Morris and Ames made sure of that. Morris and Ames refused to go along with Lack’s strategy to get a royalty from ipod sales and thus isolated him in the industry. As a result, Morris and Ames gave Steve Jobs and Apple the keys to the shop and there’s been no turning back. Apple, in effect, controls the music industry today.

A couple of years later Morris woke up from his coma, demanded and got a one dollar royalty from Microsoft for the sale of every Zune music player. Good call, Doug. You were right on top of that one. He probably made Universal Music an extra $276 on that deal.

The music industry hates outsiders, and they considered Andy Lack an outsider just like Eric Nicoli, Jim Fifield, Elio Leoni- Sceti and Guy Hands. But unlike those guys, Andy was a genuine media mogul. He may not have come from the music industry but he is very savvy and understood how major media companies run and the value of their content. I remember when Andy was catching a lot of grief about giving Bruce Springsteen a big check for re-signing with Sony, especially from the BMG half of Sony BMG. He said “If they’re pissed off about how much I’m giving Springsteen to stay here, how pissed do you think they’ll be if he signs with Universal instead?” Good point. Springsteen renewed with Sony and it’s not been talked about since.

Andy Lack is a decent man. He was always fair and honest in his dealings with me and I always appreciated that. He never went back on his word. Steve Jobs didn’t like the fact that Lack was doing what was right for Sony and the music industry. If Doug Morris had been smart enough to take Andy Lack seriously the record industry would not be in the anemic state that it’s in today. The Steve Jobs book proves that Andy Lack was right all along.

So what happens? Andy Lack now heads new media for Bloomberg and Sony ends up hiring bedazzled septuagenarian Doug Morris in Andy’s old job. These guys will never learn. No wonder Lucien Grainge is thrilled he’s at Sony.

© 2011, Wayne Rosso. All rights reserved.

Sean Parker--investor, entrepreneur and professional party planner

Industry sources tell me that Sean Parker is working furiously behind the scenes with Ron Burkle’s Yucaipa Companies to put together a winning bid for EMI. According to insiders, Parker really wants this to happen. The main competition seems to be Junior Bronfman, who’s new duties at Warner Music seem to consist solely of trying to outbid everyone else for EMI.

Since Junior has been shown the door, the new CEO Stephen Cooper has been wisely keeping his head down and staying under the radar. Maybe he realizes that the music industry doesn’t take kindly to outsiders and by staying down in his foxhole Lyor is more than willing to keep popping his head up and drawing fire. I mean really…there’s just nothing like a record executive’s ego. By keeping a low profile, Cooper can just do what he has to do and let Lyor take the media heat.

It would be very surprising for Junior to pull off the EMI deal even if he did place the winning bid. I still believe that a Warner/EMI merger would never get through EU regulators. Certainly EMI CEO Roger Faxon would prefer having a buyer who is not in the music industry, but would he really want Sean Parker as his boss?

There’s no doubt that if he won the deal, Parker would not be a passive investor. Far from it. As he displayed last week, he’s taken a very active role with Spotify. There’s no doubt that Spotify will be the biggest winner of all the competing services on the new Facebook platform, having acquired nearly a million new users in less than the week since the Facebook integration. He lives large and likes to put his fingerprints on everything he’s involved with, but as one Parker associate told me, “Sean’s just got too much money”. Others say that it would take a real stretch of the imagination for Faxon to live with answering to Sean Parker, who is at least 30 years his junior. Sounds like Sean and Roger could be on a quick collision course.

Unless, of course, Burkle, the older wiser wing man for Bill Clinton, can keep Sean under control. We do know that Parker would at the very least revive an old music industry tradition. He likes to throw a lot of big expensive parties. Woohoo!

© 2011, Wayne Rosso. All rights reserved.

Goobye Junior, hello Lyor?

When Warner Music announced that Junior Bronfman was getting kicked upstairs and being replaced as CEO by sexagenarian Stephen Cooper, a turnaround specialist and long-time Blavatnik associate, could mark the beginning of the end for Junior as well as the entry of yet another non-music industry guy in a top position.

The reports have Junior now concentrating solely on the purchase of EMI, which conventional wisdom says doesn’t happen. If that is the case, Junior is deemed to be toast.

In a memo addressed to the company, Junior made the claim that the switch was all his idea and painted a picture that had him working hard to convince Blavatnik that it would be for the good of the company. “I conveyed my strong conviction that my energies on behalf of the company would best be directed toward transformative transactions and long-term strategy…I want to thank Len and Access for being amenable to my kicking myself upstairs,” he wrote. Right, Junior.

What hasn’t become public are rumors that surround these machinations. Gossip from deep within the bowels of Warner Music has Junior and Lyor Cohen not getting along recently. As the story goes, Lyor convinced Len that Junior should be working on the EMI deal and that Cooper should be the man in charge. If Junior were to be unsuccessful in acquiring EMI, he would be out the door and Lyor would have free reign. Coincidentally Blavatnik financed Lyor’s fashion designer girlfriend Tory Burch in her business.

Since the company is no longer publicly traded, Junior and Lyor can’t continue to suck cash from the coffers like they’ve become accustomed, so in Lyor’s eyes this simply means that he won’t have to split his bonus with Junior. Junior has always thought of himself as a “music guy”, though he’s always been widely considered to be more of a dilettante. With an operational man, Cooper, in charge Lyor becomes the only real “music guy” at the company thus enhancing his position and ultimately his bonus.

So what about the EMI deal?  Everyone who bid for Warner Music a few months ago and lost to Access Industries is back with a vengeance, this time looking for a more level playing field than with the last auction. One really has to wonder if Blavatnik is all that concerned with acquiring EMI anyway and taking on that kind of additional debt when it has always been Junior’s egocentric Quixotic dream. You’ve got to figure that Junior has made enough of a cash from his pillaging of Warner Music and its time for him to move on to greener pa$ture$. Besides that, EMI CEO Roger Faxon, who always reminds me of Mitt Romney (he looks presidential), is working hard to make sure that the new owner of EMI comes from outside the music industry. That way he can at least keep his job by making the case that he has brought calm and efficiency to the company. In preparation for the sale, rumor has it that Capitol Records is only offering executives six-month employment contracts, thus limiting the payouts on any possible future post-acquisition cutbacks.

The path ahead for Steve Cooper is yet to be seen. The previous owners gutted the label that once was known as a bastion of musical artistry and good taste, now with a mere trace of its glorious history. We know one thing about the future, though. Cooper, who in the past has restructured such companies as Krispy Kreme Donuts, will soon learn that Lyor Cohen is no cream puff.

© 2011, Wayne Rosso. All rights reserved.

"Dear God, please let me run Sony Music."

The dog days are here and it’s tough to concentrate on much of anything, really. I’ve been hanging out on the beach reading and observing events around the recent debt ceiling debate. It occurred to me that there are an unusual number of similarities between the music industry and my favorite moronic movement, the Tea Party.

For starters the Tea Party lives in the past. If they had their way they’d turn back the clock to the 18^th century. Record label execs also live in the past and would love to turn back the clock, but only to the 20^th Century, The 1970’s, 80’s and 90’s don’t seem so bad these days. To that point, both groups fight hard to stem the tide of progress, and over the last decade or so record labels have gone above and beyond the call of duty.

Tea Partiers love to revel in the glory of the founding fathers, who Michele Bachmann so erroneously described as having “worked tirelessly to end slavery” while keeping their own slave quarters on the south 40. The record industry also lionizes its founders. A collection of thieves, extortionists, murderers and con men the likes of Leonard Chess, Morris Levy and Phil Specter are glamorized, with many actually inducted into their own special museum, the Rock and Roll Hall of Fame. Even the sacrosanct Ahmet Ertegun’s Atlantic Records had to start a foundation to give back the money they “redistributed” from the label’s early black performers. These guys didn’t fight all that hard to abolish slavery either.

To be fair, I shouldn’t focus on just record label execs. Let’s not forget about their intellectually disabled cousins, music publishers. These guys make record label execs look like Mensa members. You don’t believe me? Try dealing with The Harry Fox Agency some time.

Tea Party congressmen were more than willing to let the nation go into default and risk the downfall of the global economy. They’re sort of like modern day kamikaze pilots—damn the torpedoes and all that stuff. It’s all about their principles. Similarly, the record industry, standing on principle, actually sued its own customers—for years. How did that work for you, fellas?

The Tea Party wants to do away with all government regulation. If they had their way there’d be no Environmental Protection Agency since there’s no such thing as global warming, or the Department of Education since all schools should be privatized. The record industry is also against government regulation—antitrust regulations. If it weren’t for those pesky rules they could go back to business as usual and start fixing prices again. Maybe even buy airplay. In fact they could all merge into one big record company and screw everybody!

Of course let’s not forget the one thing that both the Tea Party and the record industry have most in common—hypocrisy. Michele Bachmann decries government spending and entitlements while at the same time taking in hundreds of thousands in government subsidies for the phony baloney counseling business she and her husband started with the purpose of ridding the world of homosexuality. Record label CEO’s have put very strict spending controls on employees yet do you think that Doug Morris or Junior Bronfman would for one second entertain the idea of giving up their cars and chauffeurs and take the subway to work like everybody else? Fly coach, or even fly commercial? Forget about it.

Like the Tea Party, record labels are terrible partners. Neither can be trusted and they both want everything their way or no way. Just ask any technology company that has had the unique pleasure of dealing with the music industry. If you’re a lawyer, however, you love these guys. They like to litigate.

Where the Tea Party is rooted in the spirit of the Boston Tea Party, a rebellion of common tea drinkers against a tax on their beverage of choice, the record business is a little more refined in their roots. Let’s just say they prefer a fancy coffee to plain old Lipton’s. Maybe this is the beginning of another new political movement—the Latte Party.

© 2011, Wayne Rosso. All rights reserved.