First of two parts
When Fred Goodman was looking for one music-industry figure whose story would be fodder for his next book as a metaphor for the industry at large, he saw only two clear choices: Apple CEO Steve Jobs and Warner Music CEO Edgar Bronfman Jr.
In the end, the former Rolling Stone senior editor chose Bronfman over Jobs for Fortune's Fool: Edgar Bronfman Jr., Warner Music and an Industry in Crisis, in no small part due to the intense motivation exhibited by the heir to the multibillion dollar Seagram throne to transform his family's liquor-derived empire into an entertainment company.
Why, when he could have spent his life playing tennis, did Bronfman persevere? And why does he continue to believe in the value of recorded music, despite having shown the poor timing to invest in the major-label system not long before Napster introduced the world to file sharing, causing the financial worth of recorded music to decline?
Goodman's well-researched profile functions as history of the major-label system, from its origin through the boom, up to the declining returns and shrinking investment of today, while elucidating the personal motivations of Bronfman and other important figures at the storm's vortex. He doesn't mince words:
Since he had already done his research -- the book is rich with detail, dialogue and description -- I decided to pick Goodman's brain about what he learned about Bronfman and the major labels over the course of writing his book (published Tuesday, Simon & Schuster).
The first installment of this two-part interview (edited for length and clarity) covers Edgar Bronfman Jr.'s timing in entering the music business, what a lack of investment in recorded music could eventually mean for fans, and the recorded music business's chances for succeeding with the cellphone where it failed with the internet.
Acquisitions, Bad Timing, 'Wall Street's Whipping Boy'
Wired.com: What was your goal with this book, and did that change as you went along?
Fred Goodman: I was looking at the problems the industry was facing, and wondering, "Where are they going to be addressed, and what are the chances that they will be addressed?" As a writer, I've always believed that the best stories are personality-driven. I was trying to decide who the people are who are rolling up their sleeves and really involved, and there were only two choices: Steve Jobs or Edgar Bronfman.
With Bronfman, from the standpoint of "here is this person with something to prove," he's had this incredible implosion at Vivendi that has destroyed his reputation. The New York Times, which is eminently fair and reasonable, is calling him "Wall Street's favorite whipping boy." His reputation is in tatters. There's a line in the book: "He's got the worst reputation of any businessman not sent to prison."
I thought he would have something to prove, so when he and his partners bought into Warner, I thought "O.K., this guy's going to be more motivated than anybody to deal with what's going on." So I went to him and basically said that, and he was willing to let me look over his shoulder.
Wired.com: "Wall Street's favorite whipping boy" -- there are three other major labels that are having trouble, and it's hard to find an example of somebody in the recorded-music business who wouldn't make a good whipping boy for Wall Street if their companies were public.
Goodman: I think they weren't really talking about his adventures in the record business so much as what he does at Vivendi [which merged with Seagram in 2000]. The things he had done at Seagram were controversial. There were a lot of people both in his family and among the shareholders who did not like the idea of becoming an entertainment company. They did not like him selling DuPont, and he got beat up all up and down the line for things he did.
My feeling was, generally, that the only major mistake he made was the Vivendi deal. I didn't think buying MCA was a mistake. Buying Interscope was a good idea -- and Polygram.
You could ask, "if he'd known whether Napster was coming, should he have made those deals?" The answer is, no. But nobody knew Napster was coming.
At the time, he was making a company that was the largest music company in the world, at a time when the international scene was growing and the American record wasn't. It was like, "It would take us 30 years to go international. Let's get a company that's established overseas, and just do that." It was certainly a justifiable view at the time.
Wired.com: So why do people seem to hate this guy so much? I expected a negative reaction when we wrote about how he verbally reprimanded his own kids for file sharing, while other people's kids were hiring lawyers, due to RIAA lawsuits, but it never ceases to amaze me how much vitriol there is out there for Bronfman and other major-label executives. Is it directed at him or label people in general?
Goodman: I think it's over the issue of the record companies and file sharing. In the book, I track some of the history of the RIAA suits against file downloaders. The original suits were brought against four students who had set up trading sites.
They were essentially being sued to shut down trading sites, two of which were being run on computers run by universities. The labels were saying, "Don't constitute a business to trade our copyright." That's a case that could have engendered some sympathy, because everybody wants to protect their business.
But when you turn around and start suing customers, it becomes difficult, and I don't think it's a justifiable or smart move. History has shown it to be a debacle, and it's been a disaster for the record companies. Whatever legal rights they have, they have certainly lost the public relations war.
It was a bad idea, and Bronfman was a supporter of this all the way through to when he bought Warner [in 2004, after creating an entertainment division at Vivendi, including Universal Music Group], he continued to support this. I point this out, and I don't agree with him.
He looked silly when somebody said, "What about your kids," and because he's an honorably guy, he goes, "Yeah, my kids download," instead of just pretending he didn't know what the question was about.
But I think the reaction you're talking about is something else. I'm really stunned by the reaction, especially online.
You cannot mention Lars Ulrich to this day on a music blog without 65 people immediately going, "Oh that goddamn tool." It's ridiculous.
People should look in their record collections and make an honest assessment of how many of the records they love were produced by the record companies that they now say are evil.
Wired.com: Well, your previous book [The Mansion on the Hill: Dylan, Young, Geffen, Springsteen and the Head-On Collision of Rock and Commerce] is very specifically about the relationship of art versus commerce, and even during the '60s, when much of the industry was forming, already it seemed like there were some issues around that. Do you get the sense that it's the art-versus-commerce thing that's dooming it all? It seems like so much of this is about business and the law, and it's not even really about music anymore.
The End of Recordings as Salable Art?
__Goodman: __I don't think it's specific to music, but that it's music makes it more incendiary. After I finished the book, I happened to be reading To the Finland Station, which is Edmund Wilson's history of left-wing political writing from the French to the Russian revolution. After the French Revolution, tension rises between the bourgeoisie -- this emerging merchant class -- and the masses.
Why do they hate the masses? They complain that the masses don't want to buy anything. They want everything for free.
It suddenly struck me, "This is nothing new. Of course people want things for free." What they really have to ask is what is the consequence of not paying for it.
Wired.com: Well, the consequence used to be you wouldn't get the music.
Goodman: That's right, and the consequence is still that eventually you won't get it.
Wired.com: In the sense that nobody will be making music?
Goodman: This whole system of "give me your music for free, and I'll buy a T-shirt, and maybe I'll buy a ticket" -- that kind of thing, you are begging recordings to go away. All you're saying to the artist is, "See if you can find a way to sell me a ticket and a T-shirt without losing a ton of money on a recording you won't make a dime on."
Frankly, I think recordings are valuable. And since they're valuable, we should find a way to value them. Otherwise, we're going to lose them.
Already, we're seeing that there's only a handful of bands left that can afford to make the kinds of records that investigate what you can do in a studio. How many bands are left that can afford to get Rick Rubin and record a record for eight months? I think sophisticated records are in danger of disappearing already, because they're cost-prohibitive.
Wired.com: These days, I've heard labels are looking for bands that have already recorded themselves, and it's pretty much ready for mastering at that point -- almost functioning as a distributor.
Goodman: That's been going on for a long time, but the fact is, you can't justify the cost anymore for any band who really wants to look inside its soul and go live with a producer for eight months. U2 can do it, The Red Hot Chili Peppers and maybe five other bands. I mean, who can do this?
Wired.com: Back to the book, I was surprised to read that Bronfman wasn't worried when Tower Records and other retailers were going out of business. I and a lot of other people were writing about that as, "Here's sign-on-the-wall number 342 that things are really screwed here."
Goodman: If the trout are dying, it should tell you something about the water.
Hope Arrives With Cellphone, Departs
Wired.com: But at that point, he's still optimistic about digital, especially the cellphone. Why does the cellphone seem to be such a more-suitable place to tack on a music bill than an internet connection?
Goodman: My impression was that they said that they'd learned something on the internet and weren't going to make the same mistakes with the cellphone. I think they thought that they were getting a second bite at the apple: "Hey, we shouldn't have done this PressPlay thing [an early major label-backed music service]. We didn't know what to do. We should have licensed people to do things who really understood the business. Let's license cellphone companies and tech companies to go out and create services that make sense, and if we like them, we'll sign on, we'll push them, and that's how we can affect what goes on in the market, because we can't create this stuff."
That was a realistic moment. But what happens, of course, is that the cellphone companies don't get there. They're waiting for things like Nokia Comes With Music, and an experience from Verizon or AT&T or whoever the American companies are going to be, and the labels made hundreds of deals all over the world -- Korea, China, and everywhere -- for anyone who would do something that sounds sensible. And at the end of the day, none of it really emerges as a good experience where you'd want to buy anything.
So the second bite of the apple doesn't come along. Bronfman thought something was going to happen quicker than it did.
Wired.com: So is it your sense after talking to him all this time that it's too late, if we're taking Bronfman as representative of the whole recorded-music industry? Is it just "abandon ship" at this point?
Goodman: No, it's not. I don't know if you want to call him a contrarian, but he continues to believe in the enduring value of the work, and of copyright. "I don't know what the value is going to be, but it's going to be valuable, let's hang in there, something will come along because music is just too important to people."
The part that they're not supplying, which I take the record companies to task for, is that they have not done enough to develop a good experience. I don't know about you, but I miss buying something worth owning. I liked buying LPs. I don't see myself continuing to buy vinyl as a major thing today, but going to a record store and bringing home a record was a much better experience than putting 10,000 files on a gigabyte drive.
Wired.com: The thing that made it different for me was that you had to choose. You would have enough for one CD or tape, sometimes, to buy that week. You really had to do research and immerse yourself and read reviews of the stuff, and now you can just get it right away.
Goodman: Today there's no reason to immerse yourself in it. It was like, "This is the record I bought, and I'm going to live with it, listen to it, figure out whether I really like it or not." But also they had artwork and information, all these things.
I really think that and not 360 deals is the business that the record companies should be in: finding out what people want to own that's worth owning.
Read the second part of this interview with Fred Goodman. Google Books has an extensive preview of Goodman's book for the curious.
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