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Warner Music and EMI Set to Merge
morn writes "After the AOL-Time Warner merger, it's now being reported by BBC News, amongst others, that EMI and Warner Music are planning a merger too. How large can a 'media' company get?" I don't know, but I think we're going to find out.
Michael Jackson after Thriller was the most overexposed man in show business. That's very, very dangerous. Are you suggesting that you expected his later releases to do comparably well? You're not talking like an insider here, you should _know_ what I'm talking about if you're going to come across authoritative. The industry will gear up to 'do business' on certain albums, whatever you think. Look at Thriller itself- after surprisingly high volume with Off The Wall (not that surprising, it was a very very strong album), the industry knew to expect serious sales volume from the start with Thriller, okayed expensive videos that broke the color line on MTV, and prepared for extremely heavy distribution. It's the same with Bruce Springsteen's live set- after Born In The USA (which the record company _knew_ was strong, very strong), the industry geared up for a major promo blitz, backing it with the distribution.
You're being naive, I'm afraid. Just supposing some obscure album _did_ click with listeners so heavily that it was set to surprise the industry with monster sales- just where do you think people are going to BUY enough copies of such an album if they're not pressed and shipped to the stores? (Interestingly, with mp3 some random person might develop monster mindshare just by being copied around enough... something that cannot happen with the commercial products as they can't be legally copied so heavily)
Regarding G'n'R, hell- I like them pretty well myself, I'm not calling them the Monkees. But don't you remember the sales volume of, not Appetite, but Use Your Illusion I+II? Again, a breakout hit that basically sold out everywhere laid the way for the music industry to DO TONNAGE on the next album, and to put the earlier album into reprintings. GnR earned their shot- you might be interested to know that GnR are also near the top of the list as far as sound engineering is concerned, on top of everything else- but having done so, the industry decided to MAKE THEM into the megastars they became. And that was not up to GnR, it was up to the suits. They'd still be selling out to this day if they hadn't been given this treatment, but not as the superstars they became.
Regarding your take on Steve Albini's experience, are you out of your mind? I don't understand how you can claim that the quarter-million sellers are being hosed to pay for the loser acts WHEN THE ACTS FOOT THE DAMN BILL! Do some homework. If you want to be a recording act you PAY for the services you need. If you don't seem to be a quarter million seller, guess what? The advance will be basically squat! I'm sorry, there is no compensation as you suggest. In particular, it's lunacy to suggest that the bigger acts subsidise the minor ones when the minor ones are being hosed even worse, and when it's possible to do some homework comparing music industry accounting with other manufacturing industries. In the final analysis, what happened to the music industry is not a question of subsidizing small acts or defending narrow profit margins. What happened to the music industry is middle management, and corporate bloat. Nothing about this suggests that it benefits consumers- or artists.
Regarding your cited article, The Cost Of CDs, I quite agree. Two points:
- Classical Musicians DO NOT foot the bill for recordings of their orchestras
- Classical Musicians have a UNION which forces the record company to actually pay them scale.
This does not correspond with any situation in the rock and pop industries, and Steve Albini was not writing about classical music performers.Or are you suggesting that all rock musicians should be robbed to pay for oboe players? o_O maybe you're suggesting that rock musicians should have a union like the classical guys? At least the latter get paid.
GnR are a different case- they were superstar level in an era when sales volume was huge by comparison, but the industry was already ripping off most acts. My guess, since I've heard things to suggest that GnR _are_ in fact pretty wealthy, is that they had a manager or some business team who knew what to do when negotiating a superstar act with the industry. They were only a superstar act _because_ the industry picked them to be, and the industry only picks a few acts each decade to do that with (Michael Jackson, Springsteen around 'Born in the USA + the live set, Madonna etc), but they had what it took to be marketed that heavily- and that almost certainly means a GnR business team who on the one hand got the band a cut of the money, and on the other hand were ready to _guarantee_ product.
What you're seeing, Jamie, is the special cases- not the 'winners' in the sense of some lottery or luck, but the acts that combined musicianship on a commercial level with a business team that seriously kicked butt and could (a) negotiate contracts well for the band and (b) even more importantly, deliver product for the record company on a superstar level- handling the artist, augmenting promotion, managing all this so intently that they were like a superstar _company_ or business team, wildly outperforming the business teams of the other bands.
I love how Steve Albini is suddenly getting massive link-exposure on Slashdot. You're linking to a different copy than I linked to- I used the copy on this page, which has a more detailed costs breakdown on the band's expenditures, which you might find morbidly interesting. It's here: "Some of your friends are probably already this fucked". READ THESE ARTICLES, PEOPLE! It gets... _tiresome_ listening to otherwise really sharp and clued Slashdotters saying 'Gee, we should help support the artists though, so the music industry can't be all bad' because they don't know the reality and are only guessing. Would people believe the practices of Microsoft without proof? "They can't be _all_ _that_ bad!". Would people believe how dumb Netscape was without proof? (*g* disclaimer, yes, I'm using Communicator, but I understand JWZ has some feelings on the matter ;) )
Examples: the exploding Pintos, and the memo saying that fixing the problem would cost more than the resulting deaths- this is a beautiful example, because it forced the corporate officers to choose between intentionally spending money (thus breaking the rules) or potentially being liable for negligence (which would only happen if they were caught making such a decision). Naturally, they were compelled to take the path of least expenditure, as the rules of being a corporation were more immediate than the rules of not being negligent. Another good example is the Nestle flap over infant formula- to the corporate officers, giving third world nursing mothers infant formula (until they stop lactating at which point the infant formula stops being free) wasn't even a choice- the crime was ill-defined and not technically illegal, and the profitability was obvious. Thus, according to the rules of being corporate, they were forced to do this as not doing it would leave them open to charges that they were not maximizing profit for the corporation.
See how the rules pressure corporations to commit crimes, or hunt down ways to abuse the world that aren't technically crimes yet? It's a very powerful effect, and this bears thinking about.
Think about it, the internet and I'm thinking of specifically wireless means that potentially any electronic thingy can be a distribution channel. You want a sunhat with radio, no problem, scuba mask with music, doable, electronic teddy bear that plays your favourite loony tunes, etc ...
... can we say one-stop-shop for ads?) then they'd start looking for alternatives (ie fringe groups). That's is IMHO people are so scared of MP3 as it gives exposure to non-mainstream groups whom they can't control with company shop (ie artifically inflated to put people in debt) prices to produce/flog music. Given that the average joe can put together (admitted rather low quality) mix on a cheap home system, anyone and his dog will be able to composite stuff ... expect new business model of give away the CD/MP3, sell the DVD/master. Technology is cheap enough such that it is not a differentiating factor (and music companies don't have a lock on the creative types that actually create the new wealth, except maybe some games shops).
With the number of channels expanding exponentially, the normal retail constrictions lose their pricing power. Parallel imports, recirculating radio shows over the net, MP3 servers, mobile phone, whatever.
The only way to to become big enough that your catalog is comprehensive enough (what most e-commerce sites are mostly at this stage) that people will put up with some sort of rental (which could be hidden in the normal telecom/connection charges). I would estimate minimum 20% to the total market, and total includes all music back to the prehistoric-age beating on stones (with effectively inifite storage, anything and everything could be eventually digitised). So you'd probably end up with 3-5 major comprehensives and a raft of niche specialists. The infrastructure IMHO will be coming under incredible deflatory pressures because you will be able to fit a complete radio station into a briefcase. Take a look at Gilder's Inventing the Internet Again. Essentially you can replace local storage with bandwidth (think of the time/space the bits spend in the air as the memory) which means reduction in costs/weight of the receiver. Something like the Transmeta chip would be able to decipher software as it flows from the air, dragging the MP3 stream after it. Given another few years, you'd be able to set up a jukebox at home, then listen to your favourites all day. Implication, severe market erosion by any ad-based distribution network (like radio/e-commerce). Also once people discover that one internet radio station is much the same as another (not surprising when they are all owned/programmed by clones of the same marketing droids
There's a consumer revolution coming and people are rearranging chairs in a mad rush so they're not the ones left standing when the bullets start flying.
LL
For example, Miramax would be remiss to provide content to AOL from this point forward, as Disney (the parent of Miramax) competes with Time Warner's media properties. Feeding AOL means feeding Time Warner, which is counter to Disney's goals.
Supplying content to Yahoo on the other hand, doesn't present this problem, as Yahoo only aggregates and distributes. Yahoo is following the correct model for the new economy.
ok.. everyone here is simply thinking of this in simple terms of a company getting really large. that isn't really how you look at it. this is a _music industry_ merger. Music industry mergers are VERY BAD things. they are BLOODY things.
Mergers usually contain downsizing, but you cant look at downsizing in the music industry the way you can look at it other places. Remember this is maybe the only industry left that is selling a mass-produced artistic product created by individal artisans (as opposed to the massive centralized committeework that produces movies.. you could maybe claim movies are still an artistic, but i wouldn't say so. you don't often have a person or a small group of persons making a movie with total artistic freedom, and you certainly can't ahve a movie that was made by one person working alone..).
If, say, warner cable and TCI cable merge, you're probably going to see a bunch of accountants and managers and people who do whatever it is you do if you work for a cable company lose their jobs. Well, whatever. One accountant is the same as another; any accountant can do the same work as any accountant.
Music doesn't work that way. When the label drops a musician, they're losing something specific that only that musician can do.
When Universal bought Polygram last year, there was a _lot_ of bands getting dropped and a _lot_ of pain. I can't remember the number that lived and the number that stayed came "bloody thursday" (the day they released the list of who got pink slips) but it was fairly sickening.
This bbc article kind of irritates me for its lack of considering what effect this is going to have on non-mainstream artists. "The company would unite artists like The Spice Girls, Madonna, Robbie Williams and the Rolling Stones - and hits might be made available on the internet. " ?? please. This is NOT a good thing.
i would insert something here about hoping that they make up for a small amount of the lost artists by firing all the management at Neglectra records.. but i doubt it would really be appropriate here.
Irritable, left-wing and possibly humorous bumper stickers and t-shirts
Vertical integration leads to some nasty second order effects. For example, the Japanese have integrated the beef industry from feedlot to shipping to wholesalers leaving minimal profits at earlier stages and consolidating all real profits in their home country. Guess what this does to developing countries? Maybe Finnish music or Spanish pop is not your thing but those guys would seriously love to get the same prices that the admittedly sometimes mediore talent that passes for mainstream.
The other problem is that it doesn't expose them to market forces (good form their point of view) but it means that their system can become rather stratified and slow to react to changes. Perhaps this is good in the long term in that really new talent could emerge somewhere but in the short term it denies airspace to new groups when media companies are interest in creating star-packed franchises (another Beatle) feeding frenzy so they can sell merchandising rights and future revenue from relicensing fees.
Is it good for a company to completely dominate the music tastes for generations? Economists have always noted the negative effect when an elite group holds on to all the productive assets, whether land or (in this case) mindshare/branding.
LL
But Universal bought Polygram and it looks like we have EMI/Warner leaving only these:
The music industry keeps getting smaller and smaller. Together these 4 control over 90% of the music industry.
Three Companies for the record industry on TV,
Seven for the Browsers in their halls of stone,
Nine for smaller ISP's doomed to die,
One for the Dark Lord AOL on his throne.
In the land of Wall Street, where the shadows lie.
One Company to rule them all, one Company to find them,
One Company to bring them all and in the darkness bind them.
-- J.R.R Trollkien, son of Troll, son of Trall