Will The Once Immortal Warner Sell To Their Mortal Enemy?

Napster founder Sean Parker is bidding on the music giant.  Tech-blogs have used the word “irony.” But they may have it backwards.  They think that this would be a victory for Parker, when it will more likely be his undoing.

Moses Avalon

There is no doubt in my mind that Warner would sell to Napster founder, Sean Parker‘s group, assuming they could come up with a reasonable bid. In fact, Warner would love to.  Tech-blogs have used the word “irony” to describe the scenario but they are handicapped by their lack of understanding about the Content Culture. They seem to think that this would be a victory for Parker when in fact it would more likely be one for Warner.  Why?

There is an old adage that goes like this: “Want to make a small fortune in the music business?  Start with a large one.”

Few people have proven exceptions to that fate, most of them are artists who started with little.  Of the billionaires from other industries who thought they could “tame” us back in the 1990s, with their MBAs, and stock plans, all but two got out within ten years.  After paying high-priced consultants and trying to impose Wharton-styled business techniques that seem to fall flat, they gave up; realizing that music is a world that defies business logic and works instead on “let’s do it because we think it’s cool, and with people we like to party with,” logic.  A logic that has obvious downsides.

Indeed, the mumbled consensus around the bar at the 19th Hole, after the AOL/Time Warner split, was that owning a major label was like owning a boat; the second happiest day in the life of a boat-owner is the day he buys the boat, and the happiest day is the day he sells it to the next guy.

Label management is no walk in the park. There are far easier ways to make far more money.  So, why do labels, whose main asset is a catalog with a finite shelf life, get sold every few years for more than they were purchased?  One word:  passion.

Music makes us nuts.  So nuts that often we don’t think about the practical investment elements.  This manifests at every level, from a young talent who decides to pursue music over the family business or law school, and it trickles up to the billionaires. sometimes with more dollars than sense.

In this respect, I have often said that music is not really a business, it’s an addiction.

Parker, no doubt, thinks he is above this.  He has probably told himself that he can avoid the mistakes of the blue-bloods and beat the glamor bug. I for one, hope he wins here.

I want him to pay too much for Warner and then see what it’s like to have all the P2P users rip off his catalog. I can’t wait to see him object to joining the RIAA on principal, then give in, because he’ll have no choice if he wants to maintain the value of the property into which he’s now sunk his money and his reputation. Or…

In the alternative, I’d like to see if he’ll put his money where his mouth has been for the past ten years and set the music “free,”; give away the songs and spend billions in “bad faith” damages the artists on his label will sue him for and the publishers to whom he’ll owe mechanical royalties in the 100s of millions.

Think he’ll do that?  Nope.

Here’s why.  When you look under the hood of the major label Porsche you often find that what’s justifying the car’s price, is not the engine, but rather the curb appeal.

In other words, forget sales metrics, the masters are only worth what you can convince your next buyer they are worth.  And anyone who buys them will soon find that they are not really in the music-sales business.  They are in the perception-of-music-as-a-great-asset business.  This is the very business model that Parker and other tech giants have been working to destroy for over a decade. So why would he do a 180, now, at the dawn of victory?  Unless…  Unless, victory was more elusive than he had figured. Unless it turns out, that music is valuable after all, and should NOT be free.

If Parker buys Warner he will be through the looking glass and in a world he is not well acquainted with and one that the Warner insiders (who he’ll need to retain as consultants) will be happy to take him on a tour of.

Tech folk deal in hard numbers, metrics and results based on facts.  But, music is more like poker.  You push all in and hope the other guy doesn’t have a hand strong enough to call you. In the high stakes poker game, so far Parker has not shown excellence.  He’s won some and lost some.  And this time he’s at the table with a very different acumen and possibly a taste for revenge.

So, the irony, is not that Warner’s enemy could end up owning Warner.  It’s that the music-should-be-free Prince, could end up needing to make Warner’s music valuable and looking to the old music regime to help him.  That is a movie I’d like Aaron Sorkin to write.

What are your thoughts?

14 responses to “Will The Once Immortal Warner Sell To Their Mortal Enemy?”

  1. Mike says:

    Sounds good, I agree with the addiction part. Who wouldn’t want to own a huge record label, I’m sure the Christmas parties will be more fun. I’m looking forward to seeing where this goes. Good thing about the old biz is that you didn’t need a computer to buy a tape, or go to a show. Do you think music is still spread by word of mouth? or is it all done on facebook these days?…who knows. Wow, “look how many people LIKE me”…

    Peace, Mike

  2. Jon says:

    Amen…..for all the bitching about major labels (and I own an indie and have no skin in major labels) that system worked well and helped a lot of good (and not so good) artists maintain a decent life style for a long time

  3. Marilyn Miller says:

    HAHAHA! Well sung, troubador!

  4. Michael McDowell says:

    A double standard has long persisted amongst many of the so-called “fans” from the rank and file. Many demand music for free and don’t want to support “the man” by buying an artist’s work outright. But tell that same “fan” that their boss down at the factory is about to tell them, “You do great work. I admire the quality of it, as do a lot of other people. But I’m not going to pay you for it”. Will that fan still be on his day job in five minutes? I doubt it….

  5. Brilliantly written Moses!

    “I want him to pay too much for Warner and then see what it’s like to have all the P2P users rip off his catalog. ”

    This had me in stitches.

  6. Interesting, Moses. I’m an “old fashioned” record (CD, sadly) buyer myself, but maybe Parker thinks he’d be better positioned to make money in the “new world” digital space than the current owners are, and that if they evaluate the sales price based on recent past revenue, Parker will get a great deal? As much as I’m pissed the “new world” has pretty much trashed the sale of records biz (and MP3s sound crappy), I’d rather see someone, even Parker, magically rejuvenate the record biz by making a fortune than see him fail. Yeah, history suggests that’s unlikely, but…

  7. Wilson Rodriguez says:

    your conclusions are the result of deception,and so this information is misinformation.You still are reluctant to admit that the musuc bisnezz is part of the government propaganda machine.WR

  8. Kevin says:

    Everyone seems to be on the same perspective. Let me take an alternate view to spice it up. This is the guy that invented the software that changed music forever. Anyone ever think that maybe he’s been sitting on a second huge invention that keeps people from stealing music and he’ll make it available the day after he buys the company? Think about it. Someone’s going to invent it and then all these fire sales will pay off big. If you think it will never happen. Think about this… everything that interfaces with the internet can be tracked. That’s only going increase. The RIAA or whatever has already proved they can hunt people down. Think that won’t get easier to do. Rich get richer people. That never changes. C’mon.

    • Moses Avalon says:

      @kevin, God, if it were only true that Parker had the magic box that restored copyright protection. Keep dreaming and remember that he would not be the first to claim such a thing. Limewire alluded to having a similar filter. It turned out to be bunk. As for the RIAA being able to track people, if that were true they would not be at the mercy of ISP cooperation to catch these folks. The reality is that they outsource “tracking” to another company called Media Sentry. At best MS catches 1:100,000 infringes.

  9. Kevin says:

    @Wilson, I missed your comments before I posted. I would love to hear this. Please endulge us.

  10. Matt says:

    Just brilliant. Hands down.

  11. Roxanne says:

    Can’t wait to see how it turns out, and YES! we are nuts to be in this crazy business. Most of us know, that if we invested the same amount of time we do in our music business in any other industry we world rack in the money, but then again we would be sane and what a boring existence.

  12. Alina Etchinson says:

    Excellent read, thanks alot : ) for this article.

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