Fortune's Fool: Edgar Bronfman Jr., Warner Music, and an Industry in Crisis
“When I started covering the music industry for Fortune nearly a decade ago, I often heard people gleefully predict that the demise of the big record companies was just around the corner. Thanks to the Internet, my label-hating sources predicted, bands would be able to bond directly with their fans online, bypassing greedy record labels intent on cheapening the product. Supposedly, the results would be less crassly commercial music from acts like New Kids on the Block and more wondrous sounds from bands like Radiohead. Only those with ears of tin wouldn’t wish for that. And I have to admit that I heard this argument so often that I started to believe it. Fast-forward to the present. The recording industry has indeed been decimated by the Internet, as Fred Goodman vividly describes in “Fortune’s Fool: Edgar Bronfman Jr., Warner Music, and an Industry in Crisis” (Simon & Schuster, 323 pages). “It is the first commercial medium to feel the gale force of cyberspace,” he writes. “The entire business, including the Warner Music Group, has been blown off its foundation.” Is this a good thing? I have had numerous conversations with musicians — both famous and obscure, but all of them doing important work — who lament that they are making much less money now that the major labels are on the ropes. Even Lady Gaga, the most popular singer in the world today, is feeling the pain. Her album sales are a fraction of the numbers that Britney Spears posted in the late 1990s at the height of her career. Mr. Goodman says the major labels have made their share of mistakes, like suing college students to stamp out illegal downloading and sometimes treating artists like chattel. But he worries that if companies like Warner Music can’t rejuvenate themselves in the digital age, we may never see another “Abbey Road.” In “Fortune’s Fool,” Mr. Goodman uses Mr. Bronfman’s career to tell the story of the industry’s implosion and its uncertain future. A contributor to Rolling Stone and author of “The Mansion on the Hill: Dylan, Young, Geffen, Springsteen and the Head-On Collision of Rock and Commerce,” Mr. Goodman was able to gain extensive access to Mr. Bronfman and many other important industry executives. His book is full of colorful anecdotes and astonishing quotes from his subjects. At times, I wish that Mr. Goodman would have delved more deeply into the cultural implications of Warner Music’s tribulations and spent less time on music industry politics. But for the most part, “Fortune’s Fool” is a great read. Mr. Bronfman is a strangely sympathetic character. The grandson of Samuel Bronfman, who built his liquor empire by selling Canadian whisky to bootleggers during Prohibition, he was anointed by his family to run the Seagram conglomerate in 1995. He raised eyebrows by steering it into the entertainment business, acquiring a movie studio and a record company. In 2000, Mr. Bronfman naïvely engineered the sale of Seagram to Vivendi in a $33 billion stock swap. Soon, Vivendi was embroiled in an accounting scandal. The price of the company’s shares plummeted, and the value of the Bronfman family’s holdings tumbled by $3 billion. And that, many people assumed, was the end of his business career. Yet, six years ago, he orchestrated a comeback as breathtaking as Mariah Carey’s return to the top 10 after her “Glitter” debacle. He and a team of private equity investors bought Warner Music for $2.6 billion, and he became its C.E.O. And he showed that he had a knack for hiring the right executives. His choice for the company’s North American recorded music unit was Lyor Cohen, a former rap music promoter, whom his former clients affectionately nicknamed “Lansky,” after the legendary gangster Meyer Lansky. “Fortune’s Fool” truly takes off when Mr. Goodman brings Mr. Cohen onstage and describes how he clawed his way up from managing tours for emerging rap acts like the Beastie Boys to landing in the executive suite at Warner Music. Together, Mr. Cohen and Mr. Bronfman set out to show that the music industry wasn’t dead yet. They have faced innumerable challenges — the implosion of Tower Records, a generation of young consumers who refuse to pay for digital music, and technology company executives intent on capitalizing on the music industry’s troubles. By the way, these were the same people who told me that music industry executives like Mr. Bronfman were Sith lords and that they themselves were the Jedi. By the end of “Fortune’s Fool,” Warner Music has outperformed most of its peers. But Mr. Goodman fears that the company’s long¬term survival remains in question. This is not a hagiography. Mr. Goodman obviously likes Mr. Bronfman and Mr. Cohen, but he also chronicles their missteps and occasionally boorish behavior. Remember those lawsuits against college kids? Mr. Bronfman was a huge supporter of those efforts. In a lengthy epilogue, Mr. Goodman assails members of the “technorati” who urge artists to give their music away online and make up the difference by selling more concert tickets and T¬shirts. Fair enough, but I was waiting for a more impassioned defense of the record labels themselves. Sure, they have released mountains of Top 40 schlock. But it paid the bills and enabled them to put out less¬profitable music with real cultural value, like jazz, opera and all sorts of esoteric rock ’n’ roll. They can’t afford to do that anymore. Now it’s pretty much all Lady Gaga all the time. No offense to her ladyship, but is that really progress?
– From Off The Shelf, New York Times Sunday Business The Record Industry, On the Ropes by Devin Leonard