Carolina Bedetta & Industry Commentary
Most importantly, the music business is thriving at SHRS & DWMusic, Saints-be-praised! But all is not good with the state of the major record labels, and those who make their living in production support (read: the big recording studios). The world's largest and luxurious recording facility, The Hit Factory in New York, closed it's doors last month! I'm going to include a really great editorial from Ritch at The Music Business Registry (click on the Title of this post for a link). Ritch has it right, and although we all are aware of the challenges to the music business establishment, seldom do we get to read about the details of the bloodletting and what is behind it.
On news more close to home, Carolina Bedetta and I have been writing last minute lyrics for the past week and have hit paydirt. I have never been so prolific with any other writing partner -- especially one for whom English is not thier native language!!!! (Caro is Argentinian, but singing in English-- very cool accent, btw). I have really been down the rabbit hole while I've worked, and Carolina has got to be sick of me, but we've had SO much fun. I'm hooked, I'm going to become a lyracist! We start cutting vocals day after tomorrow. Today, we make sure our key signatures are right, and practice the parts.
OK. Here's the excerpt from Ritch's article: (re-printed here WITHOUT Permission)
Commentary
In these times of major label mergers, downsizing, the slashing of label rosters, and thousands of record company jobs being lost over the last three years--not to mention the enormous sea change and seismic shifts that technology has wrought--comes one of the most disturbing reports we have come across. It further reveals just how profoundly out-of-touch certain companies TRULY are when addressing the problems within their own record divisions. The Financial Times reported 'Warner Music, paid its top five executives more than $21m in salary and bonuses following last year's $2.6bn acquisition of the US music group by a private equity consortium.' The article continues that of the top management, Edgar Bronfman Jr, the Chairman who led last year's buy-out, received a $1M salary and $5.25M bonus. Lyor Cohen, head of the US recorded music business, received $1M and $5.24M in salary and bonus, respectively. Paul Rene Albertini, head of Warner's international operations, was paid! $1.25M in salary and a $3.15M bonus. Departing Warner/Chappell CEO, Les Bider, received a $2.44M total payment. These payouts include further guaranteed bonuses or change of control payments. According to documents filed with the U.S. Securities and Exchange Commission, last year's total executive remuneration was more than three times higher than Warner Music's $7M operating income for the 10 months to September 30th.
The management payments reflect Warner's success in cutting costs following last year's sale of the Music Group by Time Warner. The company expects to deliver $250M of annualized savings by May this year, achieved mainly through 1,600 job losses. What is so truly disturbing here 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 ten-month period while dismissing 1,600 employees.
What the article failed to mention was that in addition to the employee layoffs, Warner Music Group also dropped 93 of the 193 artists signed to Warner Labels in the US, 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. The claim that the Warner Music Group will save $250M of annualized savings mainly through the decimation of 1,600 jobs is not something that we think should be financially rewarded.
---Wow!
DW
On news more close to home, Carolina Bedetta and I have been writing last minute lyrics for the past week and have hit paydirt. I have never been so prolific with any other writing partner -- especially one for whom English is not thier native language!!!! (Caro is Argentinian, but singing in English-- very cool accent, btw). I have really been down the rabbit hole while I've worked, and Carolina has got to be sick of me, but we've had SO much fun. I'm hooked, I'm going to become a lyracist! We start cutting vocals day after tomorrow. Today, we make sure our key signatures are right, and practice the parts.
OK. Here's the excerpt from Ritch's article: (re-printed here WITHOUT Permission)
Commentary
In these times of major label mergers, downsizing, the slashing of label rosters, and thousands of record company jobs being lost over the last three years--not to mention the enormous sea change and seismic shifts that technology has wrought--comes one of the most disturbing reports we have come across. It further reveals just how profoundly out-of-touch certain companies TRULY are when addressing the problems within their own record divisions. The Financial Times reported 'Warner Music, paid its top five executives more than $21m in salary and bonuses following last year's $2.6bn acquisition of the US music group by a private equity consortium.' The article continues that of the top management, Edgar Bronfman Jr, the Chairman who led last year's buy-out, received a $1M salary and $5.25M bonus. Lyor Cohen, head of the US recorded music business, received $1M and $5.24M in salary and bonus, respectively. Paul Rene Albertini, head of Warner's international operations, was paid! $1.25M in salary and a $3.15M bonus. Departing Warner/Chappell CEO, Les Bider, received a $2.44M total payment. These payouts include further guaranteed bonuses or change of control payments. According to documents filed with the U.S. Securities and Exchange Commission, last year's total executive remuneration was more than three times higher than Warner Music's $7M operating income for the 10 months to September 30th.
The management payments reflect Warner's success in cutting costs following last year's sale of the Music Group by Time Warner. The company expects to deliver $250M of annualized savings by May this year, achieved mainly through 1,600 job losses. What is so truly disturbing here 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 ten-month period while dismissing 1,600 employees.
What the article failed to mention was that in addition to the employee layoffs, Warner Music Group also dropped 93 of the 193 artists signed to Warner Labels in the US, 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. The claim that the Warner Music Group will save $250M of annualized savings mainly through the decimation of 1,600 jobs is not something that we think should be financially rewarded.
---Wow!
DW
posted by dan at 3/08/2005 07:42:00 AM
2 Comments:
I'm glad the creative juices are flowing... And I seriously doubt anyone could get tired of spending time with you. Unless maybe you were doing a New Kids on the Block retrospective. Then I'd prolly want to kill everyone involved. (kidding)
I can't believe THF is history either. I bet it's sitting next to other legendary places such as Studio 54 and Club Velvet (from Atlanta). I guess the extraordinary talents that have left this world needed someplace to record their tuneage. (It's a theory!)
Are you done yet? LOL
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