New Warners Dumping Artists - CD Prices Dropping
Published June 04, 2004
The new Warner Music Group is dumping about half its roster of artists in order to cut costs. For the artists being cut, this more or less sucks, but it may benefit those artists who remain as each will (in theory) get more attention:
- 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."
![Out of the Vein [Limited Edition w/ Bonus DVD]](http://ecx.images-amazon.com/images/I/51VSC87DK2L._SY90_.jpg "Out of the Vein [Limited Edition w/ Bonus DVD]")
- New Warners Dumping Artists - CD Prices Dropping
- Published: June 04, 2004
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- Section: Music
- Filed Under: Music: Business, Music: News
- Writer: Eric Olsen
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Warner's once had the best rep for developing artists, those days are gone (no loss in the case of 3rd Eye Blind, IMHO. If it allows artists to do what they want, and use the Internet to publicize & distro themselves, I think it will be a bettert hing, considering the corporate elelments really don't care about music, the artist, or the customer. Sure, they use a business model, and what the market will bear, but selling music is not the same as selling cars, it does need to be done differently.
The indusrty missedthe boat 5 years ago, they are going to slide further before they make any headway back into my wallet.
there's probably some truth in that with every single major label.
now it's all about getting the 'product' to 'market'.
quicker than shit through a goose
But just think what Warner is doing - they're selling off artists who are currently developing, in other words, artists who may not have had a big hit but may in the future. They're just giving those right over to smaller labels who will pamper them and give them space to develop - and then one day some of these groups are going to have that One Big Hit. That small label will get attention and money and suddenly Warner and their ilk are going to be gasping for air as all these indie label surpass them in sales. They're killing themselves off - not that it would be such a bad thing. Maybe this is a sign of a coming music-industry revolution . . .
Yes, I think you are right Tom. The radio stations primary functions have been paying for recording, getting music on the radio and other types of marketing. These are all easily done by smaller labels and Radio is almost irrelevant now, so I do think the industry is changing.
There are two issues which obscure what is happening with the majors. For the past 8 years they have funded their growth by acquisition (just like dot-coms with stock swaps) not through productivity.
On the music side, they have used a 20/80 formula, which means only 1 out of 5 releases makes money. Or if you look at it like a business case, almost everything they do is a failure. Essentially, they have been kiting cheques for a decade, and it is running out.
By dropping acts which aren't making money, they can do accounting shenanigans to turn losses into depreciation or some-such to get through another year.
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This is all a reaction to a changing industry. I have a large piece that I am working on right now which will show why the whole industry will eventually look like the independent labels. I also think that as this goes, and labels spread an even amount of time on artists that we won't have the highs and lows in rock music. In the present day, it seems that rock has huge highs and lows, but I think it will be more of a consistent demand in the future.