Moses Supposes: Goodbye, Edgar; We Hardly Knew Ya

Moses Avalon is one of the nation’s leading music-business consultants and artists’-rights advocates and is the author of a top-selling music business reference, Confessions of a Record Producer. More of his articles can be found at www.mosesavalon.com.

Is the Bronfman exit the sign of great things to come in the record biz?

So Warner Music Group chairman Edgar Bronfman quit. Who cares? Well, I do, and so should you if you’re an artist or anyone who services one.

I never met Mr. Bronfman. The closest I came was to sit a table away from him at an awards function years ago, and here is the embarrassing part: I didn’t even know it was him.

Ed changed the music business, and though we could argue for another ten years as to whether he changed it for better or worse, the truth is that it’s now irrelevant, because it’s his departure and this particular time that has meaning. Now that the most significant (albeit not the largest) label, Warner, is in control and positioned to be the most influential distributor in the game, what is the Russian guy who bought it gonna do? He’s going to clean house as step one.

Ed didn’t just quit. He was fired. Not with a pink slip, but by the natural merger and acquisitions attrition of a golden parachute and planned obsolescence. If you didn’t see this coming, you’re not paying close enough attention to the recent music-biz math.

We don’t need the big wigs anymore. We don’t need to pay label CEO’s $4 million salaries plus bonus. I’m sure we can find a 35-year-old somewhere who can squeak by on $500,000 a year and all the back-stage ass he can grab to run one of the industry’s biggest catalogs.

Since 1985, CEO salaries have increased from $800,000 a year to somewhere in the millions. Meanwhile, all other salaries have remained basically constant. (See the chart below.) This is non-sustainable in a industry going through the kind of upheaval we’ve seen since 2005.

And this is just the beginning of the new music business.

As this smarter, leaner, younger model sets in, the other “big two” distributors will follow and trim the fat-cats. Next will be Jimmy, Reid, and others, resigning to “spend more time with their families” or getting into other facets of entertainment.

Consolidation is the new growth. Though just about every blog and paper seems to feel that the EMI breakup is another blow to the recorded music trade, as usual, I see it a bit differently.

This is the blitz. Fewer distributors does not necessarily equal less product, fewer releases, fewer signings, or less anything. As long as we have two large distributors with families of labels, we have competition, and two is all we really need to keep the game going — let alone three.

Consider this: there were not more labels when we had six major distributors through the 1990s; there were fewer. (Source: Pollstar) When labels consolidate, they tend to create more imprints, which leads to new A&R vehicles. And I’m sure with the millions that the industry will save on its executive restructuring, more imprints and more development deals will be created.

The top has been too heavy for far too long. Now is the new dawn.

Ed, sorry to see you go, but we need your money for new artists more than you need it for a new boat. No hard feelings.  But we’ll see ya at the Grammys, I’m sure.

This time I’ll say hi.

Mo out.

Executive Salaries at Majors 1985-2010
CEO salaries at major record labels have tripled since 1985, while all others have barely kept pace with inflation.

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