As Warner Music Collapses, Its Two Top Execs Got Paid $14 Million

from the how-about-those-artists? dept

It's beginning to appear that some of the major labels' strategy for dealing with the changing structure of the music business -- in which overall money is up, but has shifted away from the record labels' bank accounts -- is to simply bleed the old market dry. How else to explain that as Warner Music continued to shrink and fail to respond to market changes in any reasonable manner, its two top executives took home $14 million last year. I guess you could argue that WMG's stock was up slightly (from deathly ill to just really really sickly -- but way, way down from just a couple years ago) over the year, but the company lost a tremendous amount of money each quarter this year (last quarter still hasn't been reported), and Warner Music has shown little outward effort to suggest it's adapted or has any idea how to adapt to the changing market.
Hide this

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: record labels, salaries
Companies: warner music group


Reader Comments

Subscribe: RSS

View by: Time | Thread


  1. identicon
    Anonymous Coward, 13 Jan 2010 @ 12:32am

    Give it some time

    "Warner Music has shown little outward effort to suggest it's adapted or has any idea how to adapt to the changing market."


    Has anyone ever mentioned to yo that you might just be slightly unfair? For example, earlier today, I read that Warner signed a deal with eMusic which may qualify as you put it as "adapt[ing] to the changing market". I only hope the rest of the industry keeps up with these breakneck developments. We should give WMG a few more years to get such a progressive idea like eMusic licensing in place. Here's why: It's possible that all the contracts, electronic distribution royalty agreements, and expense reports need to be renegotiated and approved through the entertainment lawyers, talent management firms, and the typical cast of necessary moguls like Big Korey, Shawty Redd, Warren Beatty, and Jack Nicholson. But when that's done, Warner will start producing some serious cash.

    ((Can you say **Cha-Ching!**??))

    The idea of licensing to eMusic is really ahead of it's time, and these top executives should continue to be properly compensated for thinking so far outside the box.

    http://money.cnn.com/news/newsfeeds/articles/marketwire/0575772.htm

    link to this | view in thread ]

  2. identicon
    tim, 13 Jan 2010 @ 1:01am

    Re: Give it some time

    "The idea of licensing to eMusic is really ahead of it's time,and these top executives should continue to be properly compensated for thinking so far outside the box."

    aha. ahahahaha. AHAHAHAHAHAHAHAHAHA. Oh my god. I pooped a little.
    You mean give it some time, like the last 10 years, right? this should have happened as soon as Napster appeared, then it would have at least been current with the time.

    link to this | view in thread ]

  3. identicon
    Doctor Strange, 13 Jan 2010 @ 1:29am

    A little over a year ago, Edgar Bronfman (one of the two cited executives) announced a move to 360 deals for all artists. Obviously they cannot move all their old artists onto new deals so it'll take some time to transition. In these deals, the record company follows the tried-and-true Techdirt model of making money off the scarce goods.

    Before, it seems that a record label kept the lion's share of the money from the recorded music, but left the artist alone to tour, sell T-shirts, sell lunch dates, or whatever else with the fame built for the artist by the record company's marketing. That is, the artist sold their copyrights in exchange for fame, which they could exploit as much as they wanted.

    Now, since the copyrights aren't worth as much, the artists can no longer sell their copyrights alone for fame. Instead, they can sell their copyrights and a cut of all the "scarce goods" that were previously theirs alone.

    Since, as is repeatedly pointed out here, the number of dollars going into the music industry has increased slightly, but has also been shifted around, this will probably result in a wash.

    It's unfortunate for the record companies that they will now be perceived as being even MORE greedy and evil since they are now taking a piece of action that was previously reserved solely for the artist (even though the artist's copyrights are declining in value day after day and the freed-up money is just moving to other outlets).

    link to this | view in thread ]

  4. identicon
    Anonymous Coward, 13 Jan 2010 @ 1:30am

    Re: Give it some time

    I (seriously) hope you make your living as a writer, because this bit was extremely funny. I thought you were serious about your endorsement of business as usual at WB Music, until I got to the part about Beatty and Nicholson. Good fun.

    link to this | view in thread ]

  5. identicon
    Pete Austin, 13 Jan 2010 @ 1:42am

    Re: Give it some time

    @Anonymous Coward: seems the eMusic deal only covers some of Warners back catelog, so it's really just a "toe in the water". Shame it's 2010 and not still 1990.
    http://www.reuters.com/article/idUSTRE60B2CD20100112?type=technologyNews

    link to this | view in thread ]

  6. icon
    PaulT (profile), 13 Jan 2010 @ 1:50am

    Re: Give it some time

    "The idea of licensing to eMusic is really ahead of it's time, and these top executives should continue to be properly compensated for thinking so far outside the box."

    It seems that you have the same blinkered mindset as the major records labels. Is your idea of "thinking outside the box" really to sign with a company that's been around for over a decade, for a limited amount of your catalogue, one year after a competitor (Sony) has already done the same thing?

    Wake me up when they do something new.

    link to this | view in thread ]

  7. identicon
    catullusrl, 13 Jan 2010 @ 4:01am

    WMG -Changing its business model

    Why does Masnick feel the need to lie so much ?
    This is from WMG 2009 annual report

    Broadening Our Artist Partnerships
    WMG advanced the diversification of our recorded music revenue streams this year by continuing to enter more expanded-rights deals with new recording artists and by building our worldwide artist services business.
    This gives us a greater presence in growing areas of the music business such as touring, fan clubs, concert promotion, merchandising and sponsorship. Today, the vast majority of the agreements we enter with new recording artists are expanded-rights deals. We currently have
    expanded-rights deals with about half of our active global recorded music roster - a very significant achievement, particularly because we began this strategy less than five years ago.In fiscal year 2009, non-traditional recorded music revenue accounted for nearly 10% of our total revenue. We believe that non-traditional recorded music revenue will meaningfully contribute to recorded music revenue growth over time.

    link to this | view in thread ]

  8. identicon
    :), 13 Jan 2010 @ 4:47am

    Licenses?

    When the licenses start coming out as CC Commons sharealike then I will see something new.

    link to this | view in thread ]

  9. identicon
    Bankers and Stockbrokers, 13 Jan 2010 @ 5:20am

    Only 14 mil ? Awww, those poor guys. I can really understand why they feel ripped off, not getting their hard earned bonuses. It's a shame that these talented people will be lost to the industry that they have sweated over for many years.

    link to this | view in thread ]

  10. identicon
    Joe, 13 Jan 2010 @ 5:22am

    Re: Give it some time

    The only time that this type of deal was ahead of it's time was about 5 years ago. If they did this in 2004 or 2005 then they were one of the first to do it. Now it's about 5 or 6 years too late to be considered ahead of it's time.

    If anything they are way behind the curve.

    link to this | view in thread ]

  11. identicon
    CRIA thief, 13 Jan 2010 @ 5:49am

    and the 6 billion lawsuit

    we can do it we can rebuild him
    all we need do is steal 6 billion form people
    looks around AHA we'll dupe the canadian people into paying alevy and not pay artists and even our own artists we wont bother paying them also EVER

    does it sound unfair
    fuck that 1st poster
    your a shill
    go back to your desk while you still have a job and the great music scam continues

    link to this | view in thread ]

  12. icon
    Killer_Tofu (profile), 13 Jan 2010 @ 5:52am

    Hugs Disconnect with CEOs

    There is a large problem with America. The big CEOs of anything should never be paid more than 1 million a year for anything. No other country does really. They look at us and think we are crazy. It is just another form of the rich in power maintaining power.
    The companies can claim that they need to spend that much to attract the "top talent". Look where this top talent got most of America. Into a recession that we maybe are seeing an end of now. Maybe.
    There would be tons and tons of business people who could run these companies just as well or better for much less money. Then they could pass that cash down to the people who do the grunt work or maybe lower the prices of their goods & services.

    Just a thought.

    link to this | view in thread ]

  13. identicon
    RadialSkid, 13 Jan 2010 @ 5:56am

    catullusrl:

    I fail to see how some B.S. empty talk from Warner's annual report makes Masnick a "liar," nor does it change the FACT that Warner music had a very rough 2009.

    link to this | view in thread ]

  14. icon
    Mike Masnick (profile), 13 Jan 2010 @ 6:28am

    Re:

    A little over a year ago, Edgar Bronfman (one of the two cited executives) announced a move to 360 deals for all artists

    Heh. If you think 360 deals means they've adapted... well... good luck.

    I never said they've done nothing. I just said they've shown little sign that they've actually adapted and I stand buy that. If you look at their overall business, it's true. Have they done small things on the margin? Sure. Do they have some people trying different stuff? Absolutely. Some of the stuff Ethan's done at WBR is pretty cool.

    But that doesn't mean they've adapted.

    It's unfortunate for the record companies that they will now be perceived as being even MORE greedy and evil since they are now taking a piece of action that was previously reserved solely for the artist (even though the artist's copyrights are declining in value day after day and the freed-up money is just moving to other outlets).

    Heh. The reason 360 deals are often seen as greedy and evil is because they take a piece of other stuff *without* doing anything more. If they were much more actively involved in helping with those other aspects then it would make sense. But they don't do that much more (and the little things they do they just add to the advance -- so it's still the artist "paying").

    link to this | view in thread ]

  15. identicon
    NullOp, 13 Jan 2010 @ 6:35am

    Stop it!

    14 M take home with the company in the crapper? Who effing wrote that contract? All of these outrageous deals are contractual. So, contracts need to include a NFW clause. If the company is in the crapper, no maga-payments are made to management! Yeah, yeah...I know, execs will whine but if you want the big money....YA GOTTA EARN THE BIG money!

    link to this | view in thread ]

  16. icon
    PaulT (profile), 13 Jan 2010 @ 6:37am

    Re: Hugs Disconnect with CEOs

    "The big CEOs of anything should never be paid more than 1 million a year for anything. No other country does really."

    Not true. Just today, I was reading an article in the paper about the head of the Royal Bank Of Scotland who was paid nearly £10 million despite having required a government bailout the year before. His response? "It's the going rate"...

    I think the main issue here isn't the money, but the disproportionate nature of the reward to the company's success. Here we have a corporation that's leaking revenue left and right and constantly making the wrong decisions. $14 million is fine if the company's prosperous. It's a travesty when the company's failing, doubly so when the reason for the failure is short-sighted and generally poor management.

    It's also another reason not the believe the labels' rhetoric. I can guarantee that these executives' pay package have cost more than the *actual* losses caused by any of the "pirates" they've prosecuted in civil court. Hell, the executives' pay + lawyers' fees probably outweigh any real damage done by The Pirate Bay, et al.

    link to this | view in thread ]

  17. icon
    Steve R. (profile), 13 Jan 2010 @ 6:40am

    Corporate Greed

    It continues to amaze me how top corporate executives can get huge compensation packages as their companies sink into oblivion. (Note, I used the term "their" and not "stockholder").

    Of special note, as Time-Warner and AOL have finally gotten a divorce on their 10 year failed "marriage", the newspapers came out with the typical "What went wrong?" articles. Some of the stories did get around to mentioning that the executives behind the merger walked away with millions of dollars while those further down the food chain lost.

    Should Warner Music Collapse, I am sure the top executives from their luxury villas will lament to the press how external factors such as piracy destroyed their business without ever acknowledging or accepting blame for their own deficiencies.

    link to this | view in thread ]

  18. identicon
    Dave, 13 Jan 2010 @ 7:52am

    Re: Hugs Disconnect with CEOs

    "Look where this top talent got most of America. Into a recession that we maybe are seeing an end of now. Maybe."

    The financial world is cyclical. Recessions are inevitable. The primary factor that tipped us over the edge was overconsumption on easy credit. Society as a whole takes the blame for this one. The CEOs may not have helped, but the consumer has to take 90% of the responsibility for this.

    "There would be tons and tons of business people who could run these companies just as well or better for much less money."

    This is decidedly false. In the current market, if someone could do a better job for less money, they would have the job. The fact is that the job of CEO holds a whole lot of risk. Without a proper reward, no one would do it. Would you take a job with a 10% pay raise and a 90% chance of getting fired if anything went wrong? I wouldnt. But i would take it if it were a 500% pay raise.

    The same can be true for athletes. There are tons of people who can play football and Im sure lots would do it for $100k a year. But I doubt they are as good as Eli Manning or Ben Roethlisberger. If you want the best, you pay for the best. If you dont want to pay, expect mediocrity.

    link to this | view in thread ]

  19. identicon
    pferland, 13 Jan 2010 @ 8:13am

    Re: Re: Give it some time

    *Laughs* Oh wait, you were serious... Let me laugh even harder. *LAUGHS*

    link to this | view in thread ]

  20. icon
    Daemon_ZOGG (profile), 13 Jan 2010 @ 8:59am

    Warner's "two top executives took home $14 million last year.."

    Too bad some of that money didn't go to the music artists.

    ...But then of course, that gives WMG an excuse to blame file-sharing for all of their financial problems. };p

    Since Warner Music won't adapt, I reeeeeally can't wait for WMG to go out of business. };)

    link to this | view in thread ]

  21. identicon
    Anonymous Coward, 13 Jan 2010 @ 10:04am

    Re: Re: Hugs Disconnect with CEOs

    When banking CEOs fuck up, the public bails them out.

    When athletes fuck up, does the public bail them out?

    link to this | view in thread ]

  22. identicon
    A Consumer, 13 Jan 2010 @ 3:03pm

    Re: Re: Hugs Disconnect with CEOs

    I have to disagree with 99% of 100% of what you posted.

    1. I am a consumer, i did not over consume anything on easy credit, but am paying the price for Corporate greed just like 100% of the 90% of the consumers you wish to blame.
    2. I received NO pay raise last year and will not receive one this year and have a 100% chance of loosing my job if anything goes wrong.

    Basically shut the fuck up.

    link to this | view in thread ]

  23. icon
    erlangga (profile), 13 Jan 2010 @ 4:19pm

    wow....a thousand people will eat well from it

    link to this | view in thread ]

  24. identicon
    Songstall - Sell Your Music Online, 14 Jan 2010 @ 12:00am

    No surprise at all

    It's no surprise that Warner is failing to adapt, where exactly can it go? With all the cheaper music technology around these days, I don't think artists any longer need record labels.

    link to this | view in thread ]

  25. identicon
    Daniel de Sousa, 14 Jan 2010 @ 4:27pm

    Warner Music

    At the same time Warner Music plans to close operations in various countries, because management just don't care to take actions that can lead to the survival of the music business. For the Management it's much easy not to think and go out with the money from the shareholders. Their view is that USA is the market and they don't give a shit to the rest of the world.

    link to this | view in thread ]

  26. identicon
    Ex WMG employee, 7 Feb 2010 @ 5:16pm

    Yes, they are greedy!

    WMG managment had just concluded outsourcing two major units of its back-end business...putting hundreds of American and British workers on the street. All the while losing even more money and giving the top few big bonuses. Simple greed and CYA...

    link to this | view in thread ]


Follow Techdirt
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Discord

The latest chatter on the Techdirt Insider Discord channel...

Loading...
Recent Stories

This site, like most other sites on the web, uses cookies. For more information, see our privacy policy. Got it
Close

Email This

This feature is only available to registered users. Register or sign in to use it.