Goodbye Edgar, We Hardly Knew Ya

Is The Bronfman Exit the Sign of Great Things to Come In The Record Biz?

Moses Avalon

So Edgar quit.  Who cares?  Well… I do and so should you if you’re an artist or anyone who services one.

I never met Mr. Bronfman. The closest I came was to sit a table away from him at an awards function years ago, and here is the embarrassing part, I didn’t even know it was him.

Ed changed the music business and while we could argue for another ten years as to whether he changed it for the better or worse, the truth is it’s now irrelevant because it’s his departing and this particular time that has meaning.

Now that the  most significant (albeit not the largest) label, Warner, is in control and positioned to be the most influential distributor in the game, what is the Russian guy who bought it gonna do?  He’s gonna clean house as step one.

Ed didn’t just quit. He was fired.  Not with a pink slip, but by the natural merger and acquisitions attrition of a golden parachute and planned obsolescence.

If you didn’t see this coming, you’re not paying close enough attention to the recent music biz math.

We don’t need the big wigs anymore.  We don’t need to pay CEOs of labels $4 Million salaries plus bonus.  I’m sure we can find a 35 year-old somewhere who can squeak by on $500,000 a year and all the back stage ass he can grab to run one of the industry’s biggest catalogs.

Since 1985 CEO salaries have increased form $800,000 a year to somewhere in the millions.  Meanwhile all other salaries have remained basically constant.  (See the chart below)

This is non-sustainable in a industry going through he kind of upheaval we’ve seen since 2005.

And this is just the beginning of the new music business in China.

As this smarter, leaner, younger, model sets in, the other Big Two distributors will follow and trim the fat-cats. Next will be Jimmy, Reid and others, resigning to “spend more time with their families” or getting into other facets of entertainment.

CONSOLIDATION IS THE NEW GROWTH

While just about every blog and paper seem to feel that the EMI break up is another blow to the recorded music trade, as usual, I see it a bit differently.

This is the blitz.  Less distributors does not necessarily equal less product, less releases, less signings or less anything.  As long as we have two large distributors with families of labels, we have competition and two is all we really need to keep the game going, let alone three.

Consider this: there were not more labels when we had six major distributors through the 1990s, there were less.  (Source: Pollstar) When labels consolidate they tend to create more imprints, which leads to new A&R vehicles.  And I’m sure with the millions the industry will save on its executive restructuring, more imprints and more development deals will be created.

The top has been too heavy for far too long. Now is the new dawn.

Ed, sorry to see you go, but we need your money for new artists more than you need it for a new boat.  No hard feelings.  But we’ll see ya at the Grammys, I’m sure.

This time I’ll say hi.

Mo out.

 
 

CEO salaries at major record labels have tripled since 1985 while all others have barely kept pace with inflation.

3 responses to “Goodbye Edgar, We Hardly Knew Ya”

  1. Mo

    As always you find the obvious that most don’t. I agree 100% and use lots of your examples to show my students how the business really works. This is a good thing indeed.

    Happy Holidays and all the best for 2012

    FB

  2. martin thomas says:

    I enjoy reading your comments and am hopeful of the industry spreading the money around.

    Your newsletter makes me feel connected in the “heartland”. thanks, Mo

  3. Cheers Mo,

    thanks again for sharing. On reading Mr Bronfman’s wiki page it seems like he flopped back and forth on the issue of music piracy and the spawning distribution possibilities which arose from it!

    donal.

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