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What's Wrong With This Picture? - Part 2
July 11, 2008
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"It's good to be the king."
-- Mel Brooks as Louis XVI, in 'History Of The World Part 1,' justifying the king's wanton behavior.Well, it's official. This week, New York City landmark and the nationally recognized iconic Chrysler Building was turned over to its new owners, the Abu Dhabi Investment Council. They say not much will change, but rumors are already running rampant that the burger stands inside will soon become falafel stands.
Why the Abu Dhabi Investment Council would want to buy the Chrysler building is somewhat puzzling in light of the skyscrapers being built in Dubai that will make every other tall building in the world look insignificant. The luxury appointments being put into the buildings there will make Donald Trump's hair stand on end. Wait a minute, his hair already does that. Never mind.
In other news, Christie Brinkley and her soon-to-be-ex-husband Peter Cooke decided to settle their affairs right quick, rather than have the details of what was being said inside the courtroom during their divorce trial play out every night on every cable news channel. She pays him $2 million, but she gets to keep 18 properties. Sounds like Christie got Park Place and Boardwalk and basically won that game of Monopoly. (As Steven Wright said, "Isn't it ironic that only one company makes the game Monopoly?")
But I digress. Down to business.
The question of the week -- no maybe the question of the year (and for that matter, for the last few years)-- is: How does Edgar Bronfman Jr. manage to stay the head of WMG when, as Morningstar stock analyst Larry Witt said this week, "Warner's execs take home exorbitant paychecks, [while] minority shareholders have very little influence over corporate matters."
Why WMG stockholders haven't stormed the palace and revolted is beyond me. Maybe it's because they saw that Guy Hands hired a consumer product guy to head EMI (see my column last week and update below) and they figure WMG stock can only go up now. Whatever the case, Bronfman just sails on. Here's hoping the world might be flat and his yacht goes right off the edge. You might think that's too harsh a thing to say. But if you have any significant amount of money tied up in WMG stock, I'm sure you're saying a whole lot worse.
There is actually some good news about the goings-on at EMI. After Guy Hands announced the hiring of Elio Leoni-Sceti, he also announced that he will now play a less participatory role as Chairman of the company, and he will be less active in daily management operations at the company. Smart move on Guy's part. If Elio screws up, he can then say later on something like, "I should have played a more active role in daily management to ensure EMI was headed on the right path."
Hands and Bronfman. Both proof that is indeed "good to be the king."
This Week's Must-Read...
The link to the article below, "Label's Fault: Ad-Supported Music Won't Work," is a must-read and one that will leave you asking if someone from the outside can make these very astute observations, why can't label executives think about these things?
And Now This...
If you haven't heard already, Live Nation has entered into a long-term global partnership with Nickelback. The signing now brings the roster of Live Nation Artists to four, following the headline-grabbing signings of Madonna ($120 million), Jay-Z ($150 million) and Shakira ($70-100 million) to 360 deals.
I don't know how many more acts Live Nation plans to sign in the near future, but right now there's a whole lot of label executives looking at the contracts of their biggest superstars and hoping they aren't next on the list.
Quote Of The Week And Some More...
"Elio has the passion, drive and belief in the future of the music industry to realize the ambitions we all have for EMI. Having completed the organizational restructuring at the end of June and finalized our strategic work, Elio joins at the right time to shape, drive and lead EMI to become the world's most artist-focused and consumer-friendly music company."
-- Terra Firma's Guy Hands, announcing the appointment of Elio Leoni-Sceti as CEO of EMI's recorded music operations.(Editor's comment: "Consumer friendly." Translation: We'll package music like Proctor & Gamble and other consumer products companies and use innovative marketing to get it off the "shelves.")
The announcement was greeted with this headline from The Times of London, which broke the story about Hands' courtship of the Italian-born, London-based marketing exec on June 30th: "EMI Appoints Music Boss With No Industry Experience."
That sums it up exactly.
Many of you read my column last week "What's Wrong With this Picture" after the long weekend and I was surprised the e-mail response I received was one of the biggest ever. It's good to know that so many readers think that hiring a real MUSIC person would have been a much better move for EMI.
But then, most of you also agreed with my final comment last week. "Who says Mr., Hands is in this for the long-term?"
Analyst: Entertainment Biz To Face Massive Downturn
From WiredLehman Brothers analyst Anthony DiClemente published an "alarmingly bearish" report on the entertainment sector, Wired magazine says, in which he claimed that the TV and film businesses would face a massive downturn in the next two years. Their model is broken, he said: Once-captive TV and movie audiences are splintering, thanks to file-sharing, digital distribution and the rise of Web-based services like social networks. DiClemente claimed these factors are eating into media companies' profits, which may never return.
"We believe the feature film and TV content businesses are on the verge of structural changes that appear to impact the core revenue and profits of entertainment business models," wrote DiClemente. "Content may no longer be king in the entertainment business, as distribution giants Apple and Google seem to prove again and again." He added that the television and movie studios' loss would be iTunes and YouTube's gain.
Wired aligns DiClemente's bearish outlook for the entertainment biz with comments recently made by TiVo CEO Tom Rogers, who recently predicted the demise of network television, and Liberty Media chairman John Malone, who called the networks "absurd" for giving away content online for free.
Read more about it by clicking here.
Label's Fault: Ad-Supported Music Won't Work
Silicon Alley InsiderSilicon Alley Insider contributor Lucas Gonze says that ad-supported streaming music services like iMeem and MySpace's soon-to-be-revamped MySpace Music can't possibly survive unless the major record labels, whose content they've licensed, change their pricing demands. Gonze says it's a question of basic economics. The labels are asking for a penny per minute. If the average song lasts 3.5 minutes, and one ad is shown per song at the rate of one penny per stream, you're talking about a CPM of $10.
Not only is this unreasonable, Gonze says, it still doesn't take into account other costs. The hefty royalty fees weigh down the business model to the point where no profit can be eked out. In turn, this would cause investors to bolt from music-related products with their royalty fees and turn instead toward lower-risk royalty-free products.
A $1 CPM is far closer to reality, Gonze says, which means that MySpace, iMeem, et al. need a 10x price reduction to make the business feasible. Of course, the labels don't think this is feasible, either, since they're already lowering prices from what they earn at Apple's iTunes Store. In other words, the ad-supported model simply doesn't scale for the third-party provider.
Read more about it by clicking here.
Music Sales Slump Could Spell the End of Boxed Sets
With music sales in a steady decline, perhaps the biggest victim of the P2P era is the boxed set, with only a limited number of sets planned for the latter part of 2008. Sales of boxed sets have hit record lows, making labels reluctant about releasing them at all.
Read more about it by clicking here.
Apple Launches New iTunes With App Store
As Apple fans wait for the new 3G iPhone, Apple rolls out the latest version of its music store.
Read more about it by clicking here.
Buying Guide: The Top 20 Tech Products Under $100
Wanna treat yourself to a little tech present this summer? Well, you don't have to go all-out to do it. These 20 products -- cell phones, computer accessories, printers, and more -- all earned three stars or more in PC Magazine Labs' testing, and they won't run you more than a hundred bucks.
Read more about it by clicking here.
ZEP ZIPPO FOR FOR GUITAR VID GAMES
Though they are probably one of the most sought-after bands, don't expect a Led Zeppelin-themed Guitar Hero or Rock Band any time soon. Guitarist Jimmy Page is "uncomfortable" giving the band's master tapes to the video game makers.
EMINEM LAWSUIT TWO YEARS LATER
Eminem has been hit by an assault and battery lawsuit after the rapper allegedly sucker-punched a man in a Detroit nightclub's restroom two years ago. The victim is seeking $25,000.
LIVE BOSS FOR A GOOD CAUSE
Bruce Springsteen will digitally release "Magic Tour Highlights," a four-song live EP featuring late E Streeter Danny Federici's final performance with the band. All profits will go to the Danny Federici Melonoma Fund.
HE MURDERED THEIR ROYALTIES
Ronnie Spector and members of the Crystals, Bobbie Soxx and Blue Jeans are all seeking unpaid royalties from famed producer and murder suspect Phil Spector.
Quotes of the week
"Let's face it, I only practice yoga because the classes are always packed with beautiful women."
-- Maroon 5's Adam Levine, on his favorite way to exercise to Women's Health magazine."Some things are just self-evident and don't even require making fun of. I mean, the man buys two seats on an airplane. What are you gonna do?"
-- Ben Affleck, joking about buddy Matt Damon, who has gained weight for a film role"Wear underwear! Wear your panties."
-- Mary-Kate Olsen, offering advise to young female Hollywood celebs on how to stay out of trouble, on The Late Show with David Letterman"There's brilliant jazz -- Miles Davis. And there's brilliant rock -- Coldplay. And there's brilliant rap -- Jiggaman!"
-- Jay-Z, tooting his own horn, and defending his recent headlining appearance at England's traditionally rock-based Glastonbury Festival, to MTV
The B-Side - 'Blips'
THE ONION (www.theonion.com) STORY OF THE WEEK:
Steven Tyler Laid Off From Aerosmith As Band's Jobless Rate Hits 20%
BOSTON-After years of relative stability, the Aerosmith unemployment rate soared to an all-time high of 20% Monday following the downsizing of the band's vocal sector, Steven Tyler.
The announcement of the largest-ever round of Aerosmith layoffs sent shock waves throughout the group, but band leaders said that four decades of perfect employment was "unrealistic" and that it was necessary to shed some of the graying, outmoded workforce.
"Explaining to a long-time Aerosmith employee that his or her job is being eliminated is one of the most difficult challenges we face in this business," Aerosmith manager Trudy Green said in a statement released this morning. "We thank Steven for his many years of loyal service, and wish him the best of luck in all his future endeavors."
"Tying a scarf to a microphone stand is unfortunately no longer a marketable skill," IndustryWeek editor David Blanchard said. "To compete in today's job market, you need to diversify your skill set. Someone who can not only sing, but also play tambourine and haul heavy equipment, is infinitely more valuable to a company."
Read the rest and laugh here: http://tinyurl.com/5vk8hh.
THE RADIO INTERVIEW on 'THE AMERICAN PERSPECTIVE' - From newsblaze.com
"Steve Meyer is on the front line of global music sales and distribution which he expects will soar to pocket-bursting levels. What's more, he shares his insight and ingenuity with us. Steve gives us both historical perspective and futuristic vision as he chats with Judy about the love of his work, trends of the business and his personal points of view about success, happiness and blending life with the lust for life. Steve joins Judy and helps us discover the thrill of having it all with a sense of balance and purpose. "
You can listen to an interview I did with Judy Piazza of 'The American Perspective' by clicking here: (It runs about 15 minutes)
http://www.thesop.org/index.php?id=10306.
The Blogs
Check out a great blog by Jerry Del Colliano, the Director Executive Programs, Clinical Professor Music Industry & Recording Arts, at the Thornton School of Music,University of Southern California, by clicking here: http://www.insidemusicmedia.blogspot.com.
Box Office
Check The Daily & Weekly Box Office (and more film info) at: www.boxofficemojo.com.
TinyURL
Check out www.tinyurl.com where you can make a smaller URL that will work for any webpage you wish to link to or reference. (As you can see, I'm using it in my news stories above!)
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