Warner Music: mp3's first victim?

[Nano]

I received this on Rolling Stone's magazine newsletter some days ago. Thought it might be of interest.

-------------------------------------------------------------
Warner to Ax Eighty Artists

Third Eye Blind, Breeders may be among first cuts



More than a thousand employees got pink slips from the new Warner Music
Group in March; now the company plans to drop almost half of its 170
artists. At press time, final decisions had not been made. Sources say the
Breeders and Third Eye Blind may be among the first victims, and Stereolab
have already been dropped. "Artists deserve a deep commitment from their
labels," says WMG head Lyor Cohen. "If that commitment doesn't exist, they
should be given the freedom to pursue it elsewhere. The goal is to nurture
artistic creativity and create successful careers."
In February, a group of private investors, including former Universal
Music Group tycoon Edgar Bronfman Jr., bought the label group from Time
Warner for $2.6 billion. In an effort to save more than $200 million,
operations for Elektra, Atlantic and Lava Records were combined.
"We were told that our services are going to be dispensed with," says
Martin Pike, manager of the electronic-pop group Stereolab. "We've been
with Elektra since 1993. That company doesn't exist anymore."
According to one label executive, the decisions about who to cut are being
based in large part on profitability. Stereolab have sold only 40,000
copies of their recent album, Margerine Eclipse. The Breeders' last CD,
Title TK, moved barely 45,000 units. Third Eye Blind, whose 1997 debut
sold 6 million copies, didn't reach gold with 2003's Out of the Vein. Also
vulnerable are developing bands such as Socialburn and Apartment 26, whose
CDs will not likely earn back the money it cost to record and promote
them.
Artists who survived the cuts -- including the Darkness, Jason Mraz, Jet,
the Donnas and Kid Rock -- will probably be forced to work with smaller
budgets in the future. But, says Donnas manager Molly Neuman, "I'm getting
the sense that a leaner roster will be to our advantage, because we'll
have greater access to the senior executives."
Not everyone is so optimistic: Paula Cole's contract is up in June, and
she says she may not renew even if she's asked to. "I want to be at a
place where there's enthusiasm for me and for music," she says. "The
people I trusted and loved there are all gone. It's scary, because I have
a kid and I want to make a living."
Meanwhile, Metallica have jumped ship from Elektra to its sister company
Warner Bros. A source at WMG says that the band was devastated when
virtually all of the people it worked with at Elektra were laid off. The
band reportedly has only one album left in its contract.
"These cuts had to happen," says a WMG executive. "We had gotten fat and
bloated, and we were releasing way too many records. If this means we put
all of our efforts and resources behind what we actually do release,
that's a good thing."


JENNY ELISCU
(Posted Jun 03, 2004)
-------------------------------------------------------------
I don't want to get on another "mp3 is good or bad" discussion, but accepting the fact that mp3 trading is here for stay, it's interesting to think what will happen to the music business in the future.
Care to guess?

[NickNack]

I don't think we need another mp3/swapping/trading/downloading discussion either. What your article does show, and very forcefully, is that the music industry is a business. If you're in that business and not making money, it's time to pack it up or they'll pack it up for you. Cut and dry, just like any other corporation in the world.

I smiled when I read the name of the new head of WMG: Lyor Cohen. Is that pronounced 'liar'? It should be if in the same breath you talk about a label having "a deep commitment" for its artists as you prepare to remove half of them from the roster. The commitment is to the bottom line, nothing else.

[Mixmachine]

I don't want to get on another "mp3 is good or bad" discussion, but accepting the fact that mp3 trading is here for stay, it's interesting to think what will happen to the music business in the future.
Care to guess?

The same thing happened here in Miami to Sony's Latin division, Bootlegs , piracy, and mp3 is killing the business and taking the music with it. According to the article as much as 80% of all music sold in Latin America are boots.

Tomorrow is the last day for a local specialty record shop that has been around since '77 servicing local DJ and those into 'dance' music from all walks of life, last Saturday they were selling off everything half price, sad, and why are they going under? MP3 Djs and Walmart!

The future of music is in bad shape, I remember Earth Wind and Fire didn't become popular(nor profitable ) untill the third or forth LP, in todays world they will be droped after their first 'non million seller' LP, never allowed to grow and develop into the world class band they became; And hold on, the same is comming to a mutiplex near you, already any new flick released on DVD is bootleg and sold around the world before you can say mississippi three times.