Lyor Cohen Talks 360 Deals, High Salaries, The Future of Labels — But Not Warner Music Auction — At Rethink Music

Joel Brown/ Billboard 04/27/11

BOSTON – Warner Music Group head Lyor Cohen preached the gospel of artist development and loving the business at the Rethink Music conference here, but he wasn’t talking about the auction for WMG. In fact, audience members were asked not to inquire about the Goldman Sachs-run auction underway for Warner, with prices reportedly hovering in the $3 billion range.

At the two-day conference, dedicated to finding new and innovate ways into the future, Cohen offered a vigorous defense of a record label’s traditional role in grooming and launching artists — as well as the 360 deals Warner has signed with many acts on its roster to share in all revenues they receive.

“The only justification for a music company has to do with A&R, the ability to curate the tidal wave of bands and music we’re all experiencing via the web,” Cohen said. “We have to have a higher batting average.”

Cohen said combining intense attention to artist development with 360 deals is necessary to succeed — and sustain the salaries of a company’s top-notch staff — while keeping a smaller roster of artists and releasing fewer records.

“We are reactivating the lost art of artist development, I really believe that,” he said.

Audience questions probed for 360 details. Is Warner sharing ownership of master recordings with artists? “No,” said Cohen. Do 360 artists still have to recoup? “Yes.” He added that the company has tried true 50/50 deals in the UK.

“Listen, we’re experimenting, we’re trying to figure this out,” he said.

Despite complicating issues like Spotify, Cohen also said that the company is very open to new approaches to the digital future.

“I think people are thinking we are an impediment, but we want to make deals that make sense, that liberate the industry to the future, that give the power to the consumer,” Cohen said. “That’s not a cop-out. We want to be a positive force.”

He said perceptions of the industry’s present decline are distorted by the unrealistic profits of what he called “the CD party,” and the industry has actually grown at a normal rate if you ignore that blip.

“The CD made us sleepy … A lot of people got rich and nobody wanted it to stop,” Cohen said. It was a “retarded” time he said, with many in the industry giving in to extravagance and bad deals. And they got “offices as big as this room,” he said, looking over a cavernous conference venue with perhaps 300 in attendance.

“The hustle of having one hit and locking it up on a $19 CD … was not consumer friendly,” he said. At the same time, labels ceded artist development responsibilities to artist managers.

Now, he says, “I’m very happy about what we have and the artists we’re engaged with.”

Labels need to stick to their core task of developing artists and making recordings that matter in pop culture, he said. Among other things, that means less fraternal sniping. He wants a return to the days when record industry people “never bogarted information.”

“I want people to hold each others’ hands and get back to what we do and loving seeing other people win,” he said.


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