“Edgar Bronfman Jr.’s Warner Music Group, once derided as an awkward investment in a troubled industry, is starting to gather a little steam,” Sandy Brown reports for TheStreet.com. “Bronfman’s $2.6 billion buy of the Time Warner music division last year, along with a group of private-equity hard chargers, was written off as little more than a vanity play for a self-professed music fanatic cum media mogul. After all, the music industry has been hit by rampant piracy and declining retail sales, trends the industry has been unable to contain. But the tables may be turning. Described as a noncore asset at Time Warner, Warner Music now looks like a play on a management group that saw the time was right to get into an industry in transition.”
“Part of the reason for the uptick may be what Bronfman has said recently regarding file-sharing, industry pricing and pay-for-content as it is distributed on newer platforms,” Brown reports. “‘We are really the arms suppliers to a significant series of wars going on,’ Bronfman said at a recent conference. He noted what he called the device wars, ‘as Sony, Samsung and others come after Apple’s dominance in the device space,’ as well as content distribution wars among telcos, cable, broadcast and others. Plus, Bronfman said, there’s ‘opportunity for penetration on existing platforms like mobile, where, despite drastic changes we’ve seen in digital, we have yet to sell a single song.'”
Brown reports, “Bronfman would like to change the balance of what the music labels get paid for and what they give away. He says that 20 years ago the industry gave music to MTV and made that business successful, and that has more recently been the case where iPods are concerned. ‘We’re selling our songs through iPods, but we don’t have a share of iPods’ revenue,’ he said. ‘We have to keep thinking about how to monetize our content for our shareholders where we’ve been creating value for so many other streams.'”
“Though Bronfman and his group have seemingly put Warner Music on the right track, some investors still think Time Warner made the right choice in bidding adieu to the music business,” Brown reports. “The challenge for Bronfman is to prove those problems aren’t too big to overcome.”
Full article here.
MacDailyNews Take: Wethinks Middlebronfman has popped his cork. Now the greedy @#$%&! wants a share of the hardware revenue, too? Did the record labels get a cut of turntable sales for umpteen years? Did Sony pay Warner Music a percentage of each and every cassette Walkman they sold? For the love of Jobs!
From Middlebronfman’s iPod voice recorder: “Note to self: don’t forget to call the iPod case and accessory makers, we deserve a cut from them, too. And the headphone and speaker makers. Oh, and those guys that make the chips inside iPods, too. And copper smelters! And the plastics makers!! And the LCD screen makers!!! And, and, and… more later. Money, money, money! Ah-hahahahaha!!! (singing) money, money, money, money!“
We hope that someday Steve Jobs is the one who eliminates the middlebronfman and allows the artists to go directly to their fans via iTunes; no more outdated ideas like making an album a year (you write a song, record it and release it via iTunes whenever the creative urge hits) and no more greedy, waste-of-space middlebronfman types always getting in the way with their stupid money-hungry ideas and disproportionately outsized takes.
[Note: MacDailyNews coined the term “Middlebronfman,” a combination of “middleman” and “Bronfman,” in an article on Monday, October 03, 2005 with the sentence, “Eliminate the middlebronfman.” Full article here.]
Related articles:
Apple’s iTunes Music Store dominates as digital music sales more than triple – October 03, 2005
Dvorak: record companies’ biggest concern about Apple’s iTunes is clear and accountable bookkeeping – September 29, 2005
In 99-cent fight with ‘Looney iTunes’ labels, Apple CEO Jobs will get whatever Jobs wants – September 29, 2005
Warner music exec discusses decapitation strategy for Apple iTunes Music Store – September 28, 2005
Warner CEO Bronfman: Apple iTunes Music Store’s 99-cent-per-song model unfair – September 23, 2005
Analyst: Apple has upper hand in iTunes Music Store licensing negotiations with music labels – September 23, 2005
Steve Jobs plays high-stakes poker with greedy record labels – September 22, 2005
Record labels accuse Apple CEO Jobs of ‘double standard’ as they seek to force iTunes price increase – September 21, 2005
Apple CEO Steve Jobs to repel ‘greedy’ record companies’ demands for higher iTunes prices – September 21, 2005
Apple CEO Steve Jobs vows to stand firm in face of ‘greedy’ record companies – September 20, 2005
NYT’s Pogue to record companies: it’d be idiotic to mess with Apple iTunes Music Store prices – August 31, 2005
Apple CEO Steve Jobs prepares for pivotal fight on digital music prices – August 28, 2005
BusinessWeek: Apple unlikely to launch music subscription service – August 15, 2005
Record labels to push Apple for higher iTunes Music Store prices in 2006? – August 05, 2005
Study shows Apple iTunes Music Store pay-per-download model preferred over subscription service – April 11, 2005
Record labels look to raise iTunes wholesale prices, music industry fears Apple’s market domination – March 05, 2005
Report: Apple CEO Steve Jobs ‘angered’ as music labels try to raise prices for downloads – February 28, 2005
Report: Music labels delay Euro iTunes Music Store fearing Apple domination – May 05, 2004
Greedy Big Five music labels looking to jack up iTunes songs to $2.49 each? – April 22, 2004
JadisOne,
They are not asking for a cut, and they have not singled out Apple, they merely used Apple as an example to show that there is obviously a huge demand for music. He’s trying to use it to show that music has a high value, which he does not feel his company is receiving.
I’m not trying to defend Bronfman, just trying to be fair.
king_alvarez said: “Settle down guys. Let’s be fair. He never said he wanted a share of the iPod revenue.”
Warner Music CEO Edgar Bronfman said: “We are selling our songs through iPod, but we don’t have a share of iPod’s revenue. We want to share in those revenue streams.”
king_alvarez, all you needed to do was Google this to know that he was reported by several news sources as saying this. He really couldn’t say it any more clearly: he *does* want a share of iPod revenue. Get your facts straight.
He sells “his” songs through Walmart without sharing the revenue from everything else Walmart selss. Imbecile
This guy–the son of a real businessman–seems to be the “W” of the corporate world. Except without the media training!
He knows a few phrases–“monetize,” “device space”–was born into a nice pile of capital, and certainly has a lot of (poorly justified?) self-confidence. But he plainly doesn’t know squat about (1) negotiating (making these kinds of statements in public will increase pressure on Warner, to be less loony, and not on Apple, to go along with Warner’s looniness, so it’s only self-indulgence on his part); (2) how to maximize sales (hint: it’s not raising prices beyond well-known pricing-psychology breaking points, however much he wishes it were, and 99 cents is the biggest breaking point there is); (3) how to imagine a viable long-term future for his label that doesn’t depend on simply trying to squeeze the most immediate cash out of his assets, short-term.
In a way Bronfman reminds me of Creative’s CEO, just talking a blue streak last year about the superiority of his products–and clearly without understanding at all what was going on in his own market (that Apple was winning not by building little feature-laden computers, but consumer-electronics products).
Anyway, Bronfman is a straightforward pump-and-dumper, and I would simply hate him if my fortunes depended on Warner’s in any way. I’m sure Steve Jobs knows how best to handle him, though.
It’s interesting to imagine the personal psychology of negotiations between Jobs and these music executives, who are successful people by any reasonable standard *except* Jobs’s, compared to whom they look like marginally competent creatures (witness their business performance)–there must be a certain amount of jealousy or resentment on their side.
When are the artists going to get together and start telling Warner, Sony, BMG and others to shove it? It wont be easy, but bog name artists have a lot of clout with their fans who buy their music.. if they say buy from iTunes and not CDs dont think that most of those fans will…
Solution:
Apple and Apple merge.
Result:
‘Apple Music Group’ signs distribution deals with artists directly. Artist get the lions share of royalties (no “music label” middlefskers).
Also, as a side effect, The Beatles songs are finally available on iTunes Music Store.
Rock on Steve!
I also think, given how bad the major labels are proving at performing a useful gatekeeper function–finding and promoting good music–that if would-be money men like Bronfman keep running the show, there’s a better chance now than there ever has been before that the labels truly have no future. And I think it’s probably right to say that they sense this and are frightened, on some level.
Because, assuming no nasty surprises emerge from the Apple-Apple music lawsuit, what’s to stop the iTMS (and other sites like it, but especially the iTMS) from effectively becoming a “label” itself? There aren’t many institutions with greater street cred among musicians and consumers than Apple.
This is a situation, comparable to what one could imagine happening if e-books ever took off, where the “publishers” genuinely don’t have such a useful role to fulfill anymore, because the up-front costs of actually producing and distributing the content are becoming so negligible. Essentially, Warner faces a future as a copyright farm whose assets are getting older and older. And as Bronfman knows, those older tracks that he says he wants so much to discount are a trivial part of the business.
Mac Yak,
Yes, I remember the MDN article that stating that quote. Maybe it’s just a result of his poor choice of symbolism, but I think you’re mistakenly suggesting your interpretation is fact.
Ask yourself this? If he wanted a part of the iPod revenue, why didn’t he just say iPod revenue instead of adding “stream”? Just maybe “stream” actually means something, and that meaning is something other than want you want it to be.
As I said before, I believe Bronfman was merely stating that music is creating many revenue streams, most notably the iPod. iPod sales are largely generated because of the music that is put onto them. Thus, the value of the iPod is not it’s buttons or shiny back, it’s the music that’s on it. Yes, people might still purchase the iPod even without music available for it, but most people would not. So the value is in the music. So the revenue stream that the iPod is a part of consists is largely due to music, which Bronfman does not feel is being valued highly enough.
It just occured to me that the angst felt by the music labels is indirectly coming from the artists. Think about it. Artists get 8.5% of the gross. Because the Labels specialize in selling whole CDs, artist royalty amounts (after deducting costs of distribution) to about $1.00.
BUT, that CD is comprised of mostly filler songs. There are maybe 3 songs (at most) worth listening to on the average CD. Apple pays 70¢ a song sold, which translates to 18¢ (70¢ X 3 X 8.5%) to the artists.
This isn’t about the Labels wanting more for themselves, its about artists that have just seen their gross revenue drop 82%.
The Labels are indeed afraid of losing the artists, and the logical place for artists to go is Apple Computer. They don’t have to produce filler any more, and they can get 60% of the gross (60¢ per song). Of course they will have to pay for production costs, but how much can that be even if you are stamping out CDs?
The key for them (artists) is how many more songs can you sell at 99¢, than you can CDs at $15 – $20? I’ll wager its a lot more.
So you’re “interpreting” what he said, and we’re supposed to accept that?! Get over yourself. The man said what he said; he wants a cut of iPod revenue. If you want to use your own eyes to see the Bronfputz forming the words, don’t interpret! Go to the video!
http://investors.wmg.com/phoenix.zhtml?c=182480&p=irol-presentations
So you’re “not defending him,” huh? Next!….
Steve R: “Are you tired of the middleman. Be gone with him now. Sign exclusively with Apple. The future is now.”
Uh…Steve…wouldn´t that make Apple the middleman? You think Apple just gives all the revenue to the artist?
And…uh…Steve the music companies do a bit more than burn a copy of a CD and send it to music stores….
Bronfman is a neighbor of mine. I think I’ll stand outside of his gated community with an iPod playing.
Ah, he’s Canadian, and he’s probably more focused on the start-up of the NHL season. Go Kings.
mac yak,
I’ll try to make this as simple as possible. I’m not asking you to accept anything other than this: An interpretation is not a fact like you seem to assume. Is my interpretation any more legitimate that your interpreation? No. But since he did not specifically say, “I want a percentage of the iPod sales” his meaning is up for interpretation. Thus, my point is that it is completely pointless to get so upset and angry over something he may or may not have meant, especially since even if you are correct, it’s not something that he can get anyway. However, simple common sense would tell us that he probably did not mean to say something that is essentially impossible anyway.
So instead of making a big deal about this, why not get excited over something that he does have control over, which is song pricing.
Sorry not sure if this has been said yet, but I have yet to buy a sont through my iPod. I have bought them through iTMS, and in record stores, but never through my iPod.
MW: End – Record Labels are coming to their End
I too will not be surprised to see more commercial artists getting out of their major label deals… like Pearl Jam & Collective Soul (although I think Collective Soul was dropped, they are doing quite well as an indie. Pearl Jam on the other hand has brilliant marketing and probably consider leaving their label the best choice they ever made).
We are totally independent and finally got our 2nd album on iTunes (still waiting for our first album to show up). We have a digital distribution deal through an independent distributor and receive 90% of profits made from sales. That works out to roughly $0.62 per song and $6.20 per album. I can’t imagine it will take long for commercial artists to look and see how much they’re losing and how much captial they’d have to run their own show if they cut out the label.
Another MAJOR issue is the fact that we are on every available iTunes store across the globe. We do not have to worry about regional licencing crap which open us up to the entire global market… the way it should be. I hate not being able to buy certain artists that are on iTunes because of the particular country I live in.
It will be a slow process, but more commercial artists with rabid fan bases will see the advantage of handling their own business. Of course, the record labels are going to fight tooth and nail to keep them.
<shameless plug> Incidentally, our band name is exit 303. I’d love if you checked us out.</Shameless plug>
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> ‘We sell our songs through iPods, but we don’t have share of iPod revenue’>
Shell– “We sell our gas through gas stations to car owners, we don’t have a share of Ford, GM or Mitsubishi.”
I made this same argument a while back about this guy – will he extend his take on the hardware revenue to all PCs (since that is where the interface between buyer and seller resides), hard drive manufacturers, CD player and stereo equipment makers, too?
Apple should request more revenue from the labels because iPods create demand for their product, too….
i think we all know what middlebronfman meant but as a public figure for his company he better watch what he says, because he just looks like a big idiot for the statement he made. Either way record companies are here for reason whether we like to admit it or not, but I definitely the model has to be restructured @ least with the iTMS store where the artist actually make more than 7-cents for each song, @ least almost 40% because the music companies basically do nothing to control how popular the songs become online, only on the radio and TV! and half the damn songs on TV & radio don’t influence what I buy @ iTMS
Cam,
Good luck to you guys. BTW. what equipment are you using?
And, do you know about these guys?
Mr. Middlebronfman did the record labels help with Apple’s R&D of the iPod,no. Did the record labels help with the production of the iPod,no. Did the record labels help with distribution of the iPod,no. Did the record labels put up and serve the iTunes music store,no. Did they help with the R&D of the music store,no. So where is your contribution Mr. Middlebronfman that makes you think you deserve some of the profit from the iPod? I don’t think so. ITMS only gets 30 cents which goes toward providing the network services to serve all the music and that’s it.
He’s the one wanting Variable pricing, and now he’s complaining about not getting a cut of iPod sales?! Middlebronfman, you have sunk to new, greedy lows.
The Music industry, if they get their way, is in for a HUGE shock. I think a lot of people will be so mad if prices increase so quickly, that sales will drop hard and fast, and P2P sharing will explode. And here’s the kicker, I don’t think it’s going to be all about the money. I think it’s the principle of the thing. People will stop paying for music and switch to illegal downloads because they’ll be angry about the MI’s greed, not the actual prices themselves.
Consumers by and large will see this as a slap in the face. Some will be so offended, they wills top purchasing music altogether. Others who were thinking about buying music online may change their minds. Why bother downloading music if it costs as much or more than buying a factory made CD? 99¢ a song/$9.99 an album (avg) is a nice, comfortable, sweet spot for most people buying music today. I like it a lot, and I get only the tracks I want. This reveals another truth the Industry doesn’t want to admit, that in recent years, they’ve been churning out increasingly larger amounts of mediocre music. By giving people a choice a’la carte, the Industry can’t shove their choices for Number One hits down our throats.
This isn’t about Apple, as much as Middlebronfman tries to make it look that way. It’s about the MI trying to kill the Goose that laid the Golden Egg. (And they will kill it if they get their way.) This is about the MI being scared. to. death. about not having complete control over the industry. I think they don’t like being told what is or isn’t popular, either.
A friend of mine brings up another point….
The irony is that the industry doesn’t have a user-friendly solution…. that’s the main reason that the ITMS went over like wildfire in California. It’s easy and elegant…. while the industry is wanting to shove legislation, DRM (which can and will be defeated quickly), higher prices and intimidation upon the VERY CONSUMERS they are trying to convince to spend their money on an increasingly poor product.
Personally, I think one of the undercurrent that has the industry fuming is the fact that the ITMS has revealed that the threshold to make money off of popular music is MUCH MUCH lower than the industry wants us to believe.
People have the one thing that scares the ones that want to take advantage of others: Knowledge.
Just checked out Cam’s group, Exit 303…..
nice, they came right up on the music store. They’ve got a millenial/seattle kinda sound. Good group. “You’re A Star” is a great track.
MDN word is “Might” as in I might buy their tracks this afternoon.
jim
Investment in ipod development by music industry $0.
Why would they get any of the profits?
They get their product in the front of millions (they make some money with the current plan) and it costs them nothing.
They need to shut up and live with what they have gotten already.
Thanks Jonny & Jim!
Jonny… if you’re asking what equipment was used in the recording, it was recorded at my studio on a ProTools Mix+ system. If you want more details, let me know.
Yes we know about the “other” Exit 303. Not much we can do about it. Not unusual for there to be many bands with the same name. We’ve been around much longer… not that it would matter if it came down to a trade name dispute. Too costly and not worth it for us (at this point) to protect the name across North America. We’ve had clubs accidentally link the wrong website in their promo. Annoying sometimes, but what can you do…
An interesting aside… I mentioned that we’re still waiting for our first album to be added even though they were both submitted at roughly the same time. I’m wondering if indie priority goes to those artists that are getting more exposure. The only reason I say that is we’ve had significant (2000+ commercial spins) off this album (You’re A Star & All I Wanted). That radio play is tracked and I wonder if the powers that be prioritize their adds by who’s charting… just find it interesting.
Thanks again for your interest and checking it out! This is how the new music paradigm is supposed to work. 😀
Cam
Bronfman = Greed