Warner’s Middlebronfman: ‘We sell our songs through iPods, but we don’t have share of iPod revenue’

“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

83 Comments

  1. Bronfman is preaching to the world’s smallest choir.

    As for what it would take for me to go Peer to peer, I never stopped downloading illegally, because, as we all know, whether the price of a BJ is 5 bucks or a million, its still prostitution.

  2. “We’re selling our songs through iPods,”

    Our songs? it’s my f***ing song Bronfman. I wrote it, and produced it. I own the rights to it. Yeah I sold my soul to your stinking company cause Sony BMG was worse but your days are numbered. Pro Tools, Garage Band G5’s and the Internet are making that a reality. You must be seeing the future, that’s why you’re whining so much.

  3. king_alvarez – I agree about the nuance, but the perception that has clearly become reality from the responses above is that Bronfman has made an incredible blunder of language – it’s very difficult to put a value on something that cannot be held in your hands without benefit of some physical object, like an iPod.

    When the labels were actually creating LABELS to go on the physical albums they were paying to have produced, that was one thing. Now, they’re only getting paid for the digital songs that are sold, rather than a physical product, and Bronfman was (not very successfully) trying to say that they need to figure out how to squeeze “value” out of the digital turnip they’ve created and very happily sold to various music services thus far.

  4. What a jerk. If Bronfman and these other music industry “geniuses” just sold the audio CD’s at $10 like they should be and actually went out to look for real performers instead of the dreck that they keep trying to foist on consumers, they would make more money than the stockholders could count.

    Out there in America, in a bar or on a streetcorner, or maybe rocking the hell out of garage somewhere are groups and artists that are making music that could sell the hell out of the stuff they put out right now. Course that would mean focusing on the content of what they sell, and maximizing the value of what they sell instead of just moving procing models and trying to shake down apple and ipod users for another buck or two per song.

    It’s supposed to be the music business Bronfman. Focus on the music!

  5. An iPod can be used for more than just music. Plus, why are they not asking for a cut from Sony, Creative, Samsung and others?

    Their statements are vindictive because they are pointing at only one company. Even though Apple has the other share, there are other companies out there making money peddling online music and/or MP3 players.

    I am still trying to figure out how these “entertainment” idiots assume that technology revolves around them. The fact that they are dictating DRM schemes and trying to force OSes to allow them to spy on users infuriates me to no end.

  6. BuriedCaesar,
    You’re not paying for a three dimensional object, your paying for a license. It’s like buying a software product and paying either $100 for a single user license or $1000 for a multiple user license. You get the same CD with the same software program, but the $900 difference is due to licensing. Some vendors will let you download the software for the same price. So even without the physical CD, you still have to pay for the license to use the compiled code.

    Bronfman is merely making a very understandable business statement, that the shareholders want their product (music licensing) to be more profitable. It’s the exact same logic that drives Apple’s pricing. The iPod could be a lot cheaper and still be profitable, but it’s not. This is because the company is trying to find the balance between maximum gross margins and maximum amount of unit sales. That is exactly what Bronfman is trying to do. He’s trying to get the maximum value out of the music without a substantial decrease in music sales. Is he doing a good job? Probably not, but that’s a different question.

  7. NYCGuy hit this one, what does the record company actually add to the product now that there are other avenues for distribution. Their model for making money is on its way out. There are winners and losers with every advance of technology.

    Loser!

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