Friday, March 18, 2005

This Just In: Music Industry Is Sleazy

Music-biz news from Lou Reed's website:

It’s not easy to get your ducks lined up when they’re taking pot shots at you. That’s the situation the brass at Warner Music Group are facing as they prepare for an impending IPO, the filing for which was sent to the SEC on Friday (3/11). Much of the recent criticism from the media and industry gadflies has been directed at the $21 million in salary and bonuses collectively paid to its top dogs, including Chairman Edgar Bronfman Jr. ($6.25m), U.S. head Lyor Cohen $6.24m), International chief Paul Rene Albertini ($4.4m) and outgoing Warner/Chappell CEO Les Bider ($2.44m). The above figures were first published Feb. 21 in the respected Financial Times, which further pointed out that last year's total executive remuneration was more than three times higher than WMG's $7 million operating income for the 10-month period ending last Sept. 30.

These revelations prompted Ritch Esra, Co-Publisher of The Music Business Registry, to fire off an impassioned editorial to his industry mailing list.

“What is so truly disturbing here,” Esra wrote, “is that it speaks volumes about the value system of an owner of a company that would pay its top-five record executives more than three times the amount of operating income for a 10-month period while dismissing 1,600 employees…. In addition to the employee layoffs, Warner Music Group also dropped 93 of the 193 artists signed to Warner labels in the U.S., approximately 47% of the artist roster, during this same period. If the financial health of a company is truly so dire that it calls for these kind of dramatic and severe cuts for the financial well being of the company, how does one justify the kind of staggering bonus payouts to the top five executives in the company? Don't get us wrong, we have no problem with executive compensation when it's tied to actually rewarding performance, but in this case, one is truly hard-pressed to grasp or to understand what is actually being rewarded….

“Ultimately, this just illustrates how Warner Music (and the other labels who subscribe to this mentality in this day age) still have a real commitment to maintaining a broken, malfunctioning business in place rather than seeing what can be done to creatively re-invent it in a new way….”
When I "ran" a "record company" with friends (no quotations necessary), one of our innovative practices was not cashing checks and not renewing our post-office box. That didn't work so well, but we were definitely doing business in a new way.

No comments: