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. 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.

  2. 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.

  3. 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.

  4. 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…

  5. 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!

    ” width=”19″ height=”19″ alt=”cool hmm” style=”border:0;” />

  6. 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.

  7. 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.

  8. 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.

Add Your Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.