Warner Music Group, or the trials of Edgar Bronfman, Jr.

BOOK REVIEW par Matthieu DARTIGUENAVE • Published 04.11.2010 • Updated 04.11.2010

The CEO of Warner has faced a series of failures since his disastrous association with Jean-Marie Messier.

Title : Fortune’s Fool, Edgar Bronfman Jr., Warner Music, and an Industry in Crisis

Author(s) : Fred Goodman

Editor(s) : Scribner

Publication: 01/01/2010

Summary

- Edgar Bronfman, Jr. rejects the family business
- The humiliating episode at Vivendi Universal
- The purchase of Warner Music Group
- A company that tried everything to save an industry in crisis
- The future of WMG
- Further reading

Edgar Bronfman, Jr. rejects the family business

Fortune's Fool tells the story of the record label Warner Music Group and its chairman, Edgar Bronfman, Jr., heir to an enormous fortune, from the 80s through today. Through the vicissitudes of the major company of the disc, Fred Goodman gives us an informed and objective view of the adventures of the record industry, shaken up by the arrival of the Internet revolution. According to the author, the collapse of Warner Music Group can be understood only through the experience of a man called Edgar Bronfman, Jr., or Efer. His complex family relationships explain, in part, how the young heir to liquor specialist Seagram’s led the entertainment companies for nearly twenty years.

The Bronfman family built up its fortune during the prohibition of the 1920s in Canada and the United States. Mr. Sam – grandfather of Edgar Jr. – made a fortune in liquor through his company, Seagram’s. His son, Edgar Sr., became head of this company with his brother, Charles. Edgar Bronfman, Jr., born May 16, 1955, was only handed the reins of the multinational in 1982. His relationships with his father, however, were complex, and it took time to be taken seriously within the company. But Efer was not particularly interested in the job – he was first a producer and composer before joining Seagram’s, and he actually wished to leave the spirits industry to work in the entertainment industry. In the eyes of his father and uncle, this was viewed as a beginner's mistake, and was strongly criticized in the press.

Then Jean-Marie Messier, French businessman at the head of Vivendi, offered Edgar Bronfman, Jr. a job as vice-CEO for Vivendi-Universal in 2000.

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The humiliating episode at Vivendi Universal

For Edgar Bronfman, Jr., the episode at the Vivendi conglomerate was unsatisfactory. He had little decision-making power within the company, and buying decisions by Jean-Marie Messier were made without any consultation – for example, the acquisition of Maroc Telecom for $2.7 billion that led the company to its loss... The affair created a scandal in Europe and the United States because Jean-Marie Messier’s golden parachute amounted to $20 million dollars. Bronfman, Jr. was the laughingstock of the media for being associated with a company that failed in such overwhelming fashion.

Bronfman, Jr. then decided to refocus his choices by betting on a new entertainment company called Warner Music Group. He has always denied having squandered the family fortune, and faced criticism for approaching Lyor Cohen – a master in the art of music production – and the manager Ahmet Ertegun, who brought Ray Charles to fame.

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The purchase of Warner Music Group

Although these three personalities were extremely different, Edgar has managed to make all the labels work via mutual agreement under his direction. However, the purchase of Warner Music Group (WMG) occurred at a time when the record industry was in crisis. In addition, one event shook the image of the major: the single “Cop Killer” by hip hop artist Ice-T. The police unions interpreted the words of this hit as an incitement to violence against police. While Warner defended its artist at the start of the case, the company chose to quickly withdraw the track to ensure that the case did not blow up.

Gradually, Edgar Bronfman, Jr. nevertheless managed to establish himself as a true entrepreneur, even managing to retain Madonna, who had tried to sue WMG.

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A company that tried everything to save an industry in crisis

Despite a certain amount of success, the WMG company was undermined by the popularity of the Internet and peer-to-peer download platforms such as Napster. Warner’s reaction to this widespread piracy mirrored that of big companies such as Universal. The company fiercely fought hackers and put all its efforts into preserving the CD market. However, Warner was perhaps the first major to invest in other markets such as ringtones or goodies such as T-shirts and videos intended for users.

Thus, Fred Goodman describes WMG as a company aiming to survive, but in the absence of true guidelines. WMG employees testify to the radical change that occurred within the company, stressing that marketing policies changed every month.

In fact, other organizations have taken over the work of record labels. Live Nation event planning business seemed to be more attractive and more lucrative than the old record companies. Madonna’s switch from WMG to Live Nation for the signing of her latest album, Confessions on a Dance Floor, released in 2005, was a significant example. While the recorded music industry was collapsing, other organizations indirectly related to music generated huge profits, such as the company MusicToday, which produced, among other things, scores and T-shirts.

(From PressTIC – numerama.com)

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The future of WMG

According to the author, WMG errs in continuing to insist on 360-contract for its artists, enabling it to earn royalties from all products of its artists. However, Fred Goodman is not as negative as one might think about the future of record companies; while he claims that they failed to integrate new technologies into their operations, he defends their ability to find talented musicians and care for their careers. For him, a producer as close to artists as Ahmet Ertegun is no longer possible in the Internet age. Web artists, blended in with the rest, have more difficulty gaining recognition and having sustainable careers.

In line with the history of WMG and its president, Fred Goodman draws up a moderate balance sheet of the current labels. The book is well documented, and it is sometimes possible to get lost in all the details of mergers and acquisitions undertaken by the Bronfman family; to gain a broader understanding of producers and music labels, it is possible to refer to the author's previous book, The Mansion on the Hill.

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