Parlophone moves from one empire to another

As part of the deal to allow EMI to become part of Universal, Parlophone had to be put up for sale.

The idea being that if you take EMI out of the marketplace, power becomes highly concentrated in just three major labels' mechanised-hand-like-claws, and that would be a bad thing.

So, who has bought Parlophone, to save us from this idea that most of the Western world's chart music will be held by just three companies?

Universal.

I know what you're thinking: how does Parlophone being held by a different major make things more competitive?

But that is to misunderstand competition law: it exists not to allow everyone to compete equally; it functions to ensure that those who are already rigging the market play nicely amongst themeselves.

The Independent, by the way, thinks the key detail in this deal is something else:

Russian-born billionaire Blavatnik buys Blur and Coldplay in £500m Warners Parlophone takeover

Obviously, given the person paying for the ink and the Windows licences at the Indie, being Russian-born is rather more significant for that paper than it might be for the rest of us.

Warners man takes chunk of Deezer

Len Blavatnik, who bought Warners a while back, has invested about 80 million quid in Deezer, the music streaming site.

Is Blavatnik a shrewd investor? Besides the way he lobbed cash into Warners, which doesn't really suggest a man able to set aside sentiment from a long-term outlook.

Well, he put cash into Top-Up TV.

Yes you do, Top-Up TV. They had that advert with the gnomes in it a few years back. They base their business on the idea that when people buy a Freeview box to avoid having to subscribe to TV services, what they really mean is they desperately want to be able to subscribe to TV services. That Top-Up TV.

Deezer, this far, has been ticking along - mostly trying for growth outside the US where it's too difficult and/or expensive to do much. Presumably the new money will be an attempt to break that market.

There's something almost a little sweet about Deezer's Wikiepdia entry, particularly this line:

Some artists are not available on Deezer due to licensing restrictions by the record labels: Francis Cabrel and The Beatles are examples.

Nothing says 'not really trying in North America' like the lack of Francis Cabrel tracs being a major point of note, does it?

Deezer's fundamental flaw is that it requires you to be logged in to Facebook to use it. It's bad enough that Facebook insists you be logged in to use it, but at least you can see why Facebook might tie themselves so closely to their single log-in. What future would Deezer have when Facebook hits its Decline of Empire point?

Lyor Cohen quits Warners

Lyor Cohen, the man who knocked Warners back together after it escaped from Time Warner, has announced he's got something better to do with his time:

"To all the artists and employees who live and die for the music every day, and who personally sacrifice for the good of the creative process: 'keep on keepin' on' in the tradition of a company that respects and honors the artistic community," Cohen said in a statement.

The label is making warm noises about understanding his need for a new challenge, although what could be more challenging than keeping the leaky old Warners ship afloat we struggle to imagine.

UMG-EMI merger goes to Washington

The US Senate is currently grinding through a decision on whether it should smile upon the merger of Universal and EMI. Yesterday senators held a hearing to allow themselves to be better informed before (meeting shadowy lobbyists, accepting small envelopes and) delivering their verdict.

As MusicAlly reports, much of the focus was on the digital music market. Warner's Edgar Bronfman Junior fretted that the 50% of biggest-selling artists held by the new Universal would allow it to decide which digital services thrived, and which wilted:

”At 50% of the hits, Universal can say no to anything”

Universal were shocked, shocked, at the suggestion they might use their new superpowers for anything but good:

UMG boss Lucian Grainge disagreed.

“The thought that we would constrict our artists who we’ve invested in, and construct the investment we make in EMI to dissolve the market would be commercial suicide,” he told the hearing. “We would be insane not to license, develop, make our music available through as many platforms, through as many retailers as possible.”

Yes, the idea of a major label trying to use its catalogue to strangle upstart, disruptive businesses and technologies - where would anyone get an idea like that, eh?

You suspect, though, that Bronfman is less worried about the idea of record companies taking on digital companies than he is about the new company's greater heft within the RIAA, the majors' preferred choice of digital closedown.

It turns out leaking records is good for sales

Ethan Kaplan is currently the horribly-named "VP Product, Live Nation"; prior to that, though, he was an executive at Warners Music Group. He's been on Twitter, confirming one of those things you've always suspected about what happens when albums leak:

Let me simplify this answer: YES IT LEADS TO MORE SALES. DEMAND = DEMAND W/ $$$$$$ IF PRODUCT GOOD.

Simplified further: MUSIC BUSINESS (RECORDED): your product isn't diamonds mined from a secret mythical land.

And beyond broadband/napster/whatever, what hurt you the most is PEOPLE FIGURED THAT OUT. Cynicism caught up with you.

Of course, it's only ex-executives who would be honest about that. Or soon-to-be-ex-executives.

Warner claims ownership of silence

If you want to avoid getting hit with a DCMA takedown notice, it can be hard. A couple of times now, I've shared a video sent to me by a record company PR outfit - cleared and websafe - only to have the same record company issue a DCMA takedown a few days later.

But if you're sharing your own video, and it has no music on, you're safe, right?

Erm... nope. Crochetgeek makes silent videos showing how to crochet.

Despite the complete lack of music on them, Warner Music Group has hit her with a DCMA takedown. The crocheter, Teresa Robertson, is unimpressed:

They are just coming across as "big bully" companies who want to control the Internet and want to control non traditional, original content on YouTube. There is a redistribution of wealth taking place and it is not going in to their pocket because you can be an independent creator on YouTube.

They have been walking all over original content creators for to long, claiming content they have no right to claim! They really need to get over it and adapt to the change.

I suppose, to be fair, she is using the word "crochet", which is quite close to "crotchet", and the sheet music Warners publishes has got crotchets on. Open and shut case, surely?

EMI's likely buyers

It's looking more and more likely that EMI will be split into two as the auction continues.

Warner Music will probably pick up the recorded music part of the company, with BMG Rights Management - a 50-50 Bertlesmann/ KKR group - taking the bit that makes money.

Ah, yes, KKR are private equity - that's been something of a success for EMI in the past, hasn't it?

Warners are expected to kill the EMI brand in America - or at least finish off the parts that are still twitching following Bungling Hands' time in charge - but might retain it in the UK. It wouldn't be too surprising if some form of EMI America label clung on at the edges, just to play to the sentimental amongst the people who still buy records.

Warners sold again

While everyone here was excitedly watching the pile of No votes grow in the referendum ("will they topple over? will they reach the moon?"), across the Atlantic something called Access Industries were buying Warner Music Group for USD8.25 a share.

Which values WMG at around three billion dollars.

Was it a shrewd deal? The shares immediately fell to USD7.63, so like most owners of Warners Access have started to lose money immediately.

Len Blavatnik, Chairman and founder of Access Industries, said, "I am excited to extend my longstanding involvement with Warner Music. It is a great company with a strong heritage and home to many exceptional artists. I look forward to working closely with the many talented people within the company."

Access have owned a chunk of Warners for quite a while - they bought in at the same time as Bronfman, but were only holding 2% of the stock prior to takeover.

In the UK, you'll know them best as the owners of Top-Up TV. If that doesn't stretch the meaning of the word "best" too far. (Yes, it turns out Top-Up TV is still going, too - unclear if Blavatnik hails the strong heritage of that company in the same way.)

Globally, the company is really driven by its partnership with BP to exploit the Russian oilfields as quickly as possible. You can see how worrying about a KD Lang album release might prove a pleasing distraction after dealing with that all day.

Naturally, the deal is mostly about floating Warners onto an ever-bigger sea of debt.

Google should buy the music industry, says Glynn Moody

There's an interesting bit on Techdirt and opendotdotdot pointing out that Google, rather than being disgusted by the labels, could actually buy them. Without breaking a sweat.

It's not a totally original thought - at an In The City at the end of the last century I remember hearing someone pointing out that Bill Gates could buy all four major labels should he wish (assuming the competition laws would let him). Maybe he should have done - that might have given the Zune some leverage over the iPod.

Still, Glynn Moody thinks the thought again:

But that throwaway comment also raises another interesting idea: how about if Google *did* buy the music industry? That would solve its licensing problems at a stroke. Of course, the anti-trust authorities around the world would definitely have something to say about this, so it might be necessary to tweak the idea a little.

How about if a consortium of leading Internet companies -- Google, Microsoft, Yahoo, Baidu, Amazon etc. -- jointly bought the entire music industry, and promised to license its content to anyone on a non-discriminatory basis?

EMI and Warners are both up for sale right now, it's true; but it's hard to picture Google and Microsoft setting their differences aside long enough to employ Josh Groban. Nor is it clear why Baidu would want to sink its money into Western labels.

But it's a lovely idea. Unworkable, but lovely.

EMI: One lot

More misery for Warners, as the New York Post claims that Citigroup won't be selling off EMI in chunks. It'll be the whole lot or nothing.

Presumably because Citigroup knows nobody would be interested in some bits of the business, so it's going to offload the offal packaged with the prime cuts.

Why is this bad news for Warners? As the company tries to sell itself, the attractiveness of the offer is based mostly around dreams of combining a chunk of Warners with a chunk of EMI; publishing to publishing, recorded music to recorded music, ass to ass. If EMI is sold a single entity, that's going to be harder to pull off, and thus the value and interest in Warners falls.

[via The Loyalty Firm]

Warners: EOS to go?

Cisco is causing a bit of a flap tonight as it axes most, or possibly all, of its non-network-focused subsidiaries. The highest profile corpse is the Flip minicamera division, but Digital Music News is reporting that EOS might be wound down, too.

EOS is currently the system powering most of Warner Music's artist websites. Cisco tried to interest the other majors in joining Warner on the platform, but they said no. Because, after all, what sort of company puts its main business onto a third-party service which could vanish overnight?

DMN speculates that the contract would have been drafted so that screens won't suddenly go blank overnight, but if you work at Warners and know how to code up a website, you might not want to book any non-refundable tickets for the near future.

Warners: People queue up to join the downward spiral

The New York Times are suggesting ten buyers have expressed an interest in buying Warner Music:

The Warner Music Group includes recorded music and publishing divisions, and among the potential buyers — for all or part of Warner — are music companies like Sony, Live Nation and BMG Rights Management, a joint venture between Bertelsmann and the private equity firm Kohlberg Kravis & Roberts; the Yucaipa Companies, led by Ron Burkle; Platinum Equity, led by Tom Gores, and the Gores Group, led by his brother, Alec Gores; Permira, another private equity company, which last bid for a major music company in 2006 with EMI; and the Tamares Group, led by Poju Zabludowicz, a Finnish-born real estate investor whose past includes work as an arms dealer.

An arms dealer? Oh, imagine how much fun it would be if a man splashed his money made from helping kill people spent a bit on buying Warners. Zabludowicz is also a big contributor to David Cameron's campaigns, so those bit of Warners' roster which features bland, eager to please acts like Jet and Dannii Minogue will probably be quite happy with such a name over the door.

There are some clouds over the possibility of a deal - the NYT quotes analysts who suggest the company is over-priced; they're looking for three billion dollars. Which is only a smidge under all the company's revenue from 2008.

Warners reports: Not brilliant figures

Warner Music Group is being talked about as a possible purchaser for EMI when Citi are done with it. But given their own struggles, would cutting the number of majors to three just be a shortcut to cutting them to two?

Digital Revenue Represented 37% of U.S. Recorded Music Revenue in the Quarter

That's good, right?

Not really, because the share is rising mainly because other sales are falling. It's all about the loss:

Net loss was $0.12 per diluted share compared to net loss of $0.11 per diluted share in the prior-year quarter. The Quarterly Severance Charges had a $0.07 per diluted share impact in the current quarter and a $0.03 per diluted share impact in the prior-year quarter.
[...]
Net loss was $18million

So, all a bit grim. But, hey, great times are just around the corner:

"While industry pressures and a highly competitive release schedule limited our results in the first quarter, we're confident that our disciplined A&R investments, successful revenue diversification and innovative digital strategies will drive WMG's long-term growth," said Edgar Bronfman, Jr., Warner Music Group's Chairman and CEO.

The 'first' quarter for Warners is, of course, the bit that includes Christmas. In other words, the bit where you should be making the money for the year. Let's hope their A&R is finding magic elves.

Something else to remember when the RIAA starts heading for the moral high ground

We hear a lot from the RIAA about stealing and right and wrong. It's already pretty hard to stomach - what with the proof that the major labels rigged markets; the way they used their punishment for that as a way of offloading unwanted catalogue; the numerous artists who have proven in court that they were bounced into signing unfair contracts and so on.

Add to this Warner Music Group CEO Edgar Bronfman Junior, who has just been convicted of making millions of dollars through insider trading.

Honestly, that's just like, ooh, stealing piles and piles and piles and piles of CDs from record shops, isn't it? Perhaps the RIAA should get Britney Spears to make a little PSA trying to warn people out of it. Maybe Warner product should carry a little skull-and-crossbones with the words 'Insider dealing is killing financial services'.

Bronfman, naturally, doesn't deny the deal, but maintains that exploiting information not known to the general public in order to achieve a massive financial gain isn't wrong:

Bronfman issued a statement saying he's disappointed the judge didn't share the position of both the public prosecutor and the lead civil claimant in France, the Association of Small Shareholders. Both, according to Bronfman and his lawyer, said he should have been acquitted.

"I will appeal today's decision to the Paris Court of Appeal and continue to vigorously defend myself against this charge," he said in a statement issued by WMG.

It's not a charge, Edgar. You might win an appeal, but until then: you've been convicted. You're a criminal, Edgar, and no better than those kids downloading copies of songs without paying. Right? Because there are no grey areas, are there?

Former Vivendi chairman Jean-Marie Messier was also convicted.

Isn't high finance brilliant?

Warners have often been suggested as a likely buyer for the bits of EMI that Terra Firma haven't broken. But Warners aren't exactly flush, so how would they do it?

According to stories today, the current owners of Warners will sell themselves to someone else, so the other, richer concern could then buy EMI as well.

Goldman Sachs have been called in to advise on it, and it's not like they'd suggest anyone doing anything fantastically stupid and ruinious, is it?

Goldman have other ideas, too - how about if they flogged off their publishing arm to KKR, who could then buy EMI, keep EMI's publishing bit and sell EMI's records business to Warners? Thereby creating one company which has the pretty solid publishing business, and another which... well, I'm sure it'd have valuable warehouses full of unsold CDs. They're always looking for stuff to grind up to put on road surfaces, I understand.

DCMA update: Warners overreach selves again

Fancy that! Once again, it was Warners who were over-reaching their powers this morning. Just had an email from Rich Walker at 4AD:

Warners via ADA are our physical distributors in the States and inexplicably chased this track, among many others for pull downs off blogs and sites. We don't know why and weren't involved. As much as we support them with taking down full albums, remixed tracks off the artist's own sites are not on that same radar. We can only apolgise and tell you that they assure us that the artist sites are on a whitelist now. Sorry for any inconvenience caused.

I'd like to thank Rich for looking into this quickly, and catching the mistake (Rykodisc, I'm still waiting to hear anything from you.)

Perhaps the time has come for someone to have a quiet word with Warners and suggests they talk to the artists before launching scurrilous and baseless attacks on people via the DCMA.

Seasick Steve, the DMCA and me

At the end of March, I got an email from a promotional company which included a Seasick Steve track "approved to post", which I duly did. After all, who doesn't love Seasick Steve, eh?

A few days later, when I logged in to, I dunno, post a long thing about Billy Corkhill or something, there was a cheery message from Google telling me that somebody had issued a DCMA takedown, claiming that the track had breached their copyright.

Funny thing is, I wasn't even hosting the track, all I'd posted was a link to the song. Which was on the record company's own server.

Frankly, being slapped with a DCMA notice for a song which was being promoted to music bloggers as safe to post was irritating enough - I have no respect for the copyright laws, but I try to abide by them - but getting a smack from Google for merely linking to a file that had been made public by, presumably, the very same label who had published the file online was grating.

The same email had, it's worth mentioning, a link to a full download of the album, with a request not to share that. If I had been trying to rip off the labels, wouldn't I have posted that?

I wrote to the promo guy who originally sent the link, and to be fair, he apologised swiftly and said he'd talk to Rykodisc about it. That, though, was the last I heard from anyone.

I know Rykodisc are part of Warners, and perhaps you shouldn't expect any better from a fake indie. But I did think they were better than that. Disappointing.

Set against the scale of misery inflicted on people by the mess of copyright law, it's not a big deal. There is a wider point, though: if Warners are effectively accusing themselves of breaking copyright law, how can they ever be trusted when they issue lawsuits and threats?

Major label holds out the begging bowl

One of those moments where the majors behave so terribly, you could almost admire them: Warners' Atlantic imprint is trying to get fans to fund Natty's new album. Hypebot reports:

To encourage fans to invest, Natty's offerings offerings include £8 for the EP, introducing Natty from stage for £70, a private acoustic concert in your own home for £600 - £5,000 (not sure why there's such a wide price range), all the way up to Natty remixing your track for for £1,200. Atlantic hasn't announced if they'll be taking their normal full royalty from Natty on the EP.

Isn't the only point of a record label that they put their money up in advance for the record to be made? What, exactly, will Atlantic be doing to justify their involvement in the project? Providing the sort of marketing and promotion expertise that has proven to not work so well in the modern world?

A major label wanting the audience to put the cash up front is akin to a buffet restaurant wanting you to bus your own table, fetch your own drinks and tip the staff.

Warners: Back in the real world

More interesting than Bronfman's honking about how people giving him money in return for listening to his products isn't a viable business model was his greasing of the cake tin for a possible merger with EMI.

Assuming Guy Hands loses his bid to stop the effective owners of EMI from selling up, Bronfman certainly isn't ruling out a hook-up. In fact, he's spraying breath freshener, kicking the dirty pants under the bed and putting on a sexy CD in preparation:

“We feel consolidation certainly is possible,” Edgar Bronfman Jr told analysts on a conference call to discuss Warner’s first-quarter earnings, saying the regulatory climate had not hardened since the European Commission’s 2007 approval of the merger between Sony Music and BMG.

Mr Bronfman tempered his remarks by saying he hoped EMI would be able to “resolve its difficulties” in a way that strengthened the music industry.

"But" he continued, "you know the way two friends will do that thing where they agree they'll marry if neither has got married by the time they're forty? Well..."

Guy Hands is pulling the same face he made when Bronfman muttered "have you ever heard the phrase 'friends with benefits'?"

It might be out of Hands, erm, hands, though, reckons the FT:

“They are marching towards a transaction of some sorts,” said Richard Greenfield of Pali Research. Warner had been “hoarding cash” over recent quarters and could find “hundreds of millions of dollars” in savings from such a deal, he added.

The potential for savings by only having one bunch of clueless accountants bumbling around wishing it was still 1985 is certainly huge. Somehow, I'm betting those aren't the costs that get taken out.

Edgar Bronfman hopes to detract attention from how poorly his label is doing

Warners' Edgar Bronfman Junior has been doing some thinking aloud about advertising-supported music. He doesn't like it:

Warner chief executive Edgar Bronfman Jr said: "Free streaming services are clearly not net positive for the industry and as far as Warner Music is concerned will not be licensed.

"The 'get all your music you want for free, and then maybe with a few bells and whistles we can move you to a premium price' strategy is not the kind of approach to business that we will be supporting in the future."

The funny thing is, while Bronfman was talking, the public was also holding a press conference:
"The 'ratchet up the price point and slather stuff in DRM, and hope that the public won't give up on legal music and go back to illegal stuff' strategy is not the kind of approach to listening to music online that we will be supporting in the future" said the public.

Bronfman has seen the future, and it's just full of people who aren't giving his company loads of money who are desperate to do so:

He said the focus would be on promoting streaming services that require payment, which he said could appeal beyond those who currently pay for downloads in stores such as Apple's iTunes.

"The number of potential subscribers dwarfs the number of people who are actually purchasing music on iTunes," Mr Bronfman said.

Well, yes. That's true. The number of people who fancy something to eat dwarfs the number of people who are currently getting organic veg boxes, but only a dreamer would picture a world in which everyone is waiting for a farmer to drop off a carton of muddy celeriac and two dozen leeks.

Edgar is just letting off steam. Presumably. He knows that if you take away the advert-supported services, you'll increase demand for non-supported services far faster than you'll persuade people to start handing over large sums for a subscription. I don't know for certain that Bronfman delivered his speech shortly after throwing a coin in a well, or once he'd blown out all the candles on a cake, but he's wishing, isn't he?

Spotify are just rolling their eyes and pulling a 'bless him' face:

To be clear WMG is not pulling out of Spotify. Media is taking things out of context. So don't worry-be happy :)

Of course he's not pulling out. Bronfman might be deluded, but he's not dangerously deluded.