Warner Music Group Chairman/CEO of Recorded Music for the Americas and the U.K.Warner's label chief speaks out on 360 deals, $1.29 singles and why YouTube deals don't pay.
ROBERT LEVINE
No one can say that Lyor Cohen isn't opinionated. At Def Jam in the '90s, he earned a reputation as an entrepreneur who would fight to protect the interests of his artists. And he didn't mellow out much at Island Def Jam or at Warner Music Group, where CEO Edgar Bronfman Jr. brought him in 2004.
Hired to make Warner's various labels more efficient, Cohen has recently posted some impressive gains. In 2008, WMG gained 2.2 percentage points of market share, according to Nielsen SoundScan, and Atlantic became the No. 1 label in the United States. And Cohen recently expanded his role at the company, from running recorded music in the United States and Canada to overseeing those operations in North and South America as well as the United Kingdom.
Perhaps unsurprisingly, Cohen has emerged as an aggressive advocate for labels and artists to reap the rewards of the digital age. That meant withholding Kid Rock's album from iTunes to maximize revenue for the project. But it also meant coming up with more digital products, from which Atlantic now says it receives half of its revenue.
In December, Warner pulled its songs off of YouTube, saying it wasn't being fairly compensated for its music. Cohen is more optimistic about Lala.com, an online startup in which Warner holds a stake. And although he's happy about Apple's recent decision to grant labels more pricing flexibility, he's hoping the company will give them still more in the future.
You've spoken a lot about the importance of labels getting a fair price for their music. What do you think of Apple's decision to allow flexible pricing?
I think it's important to make sure that the consumer has a choice and that we have the flexibility to give them an offer that makes sense. It's very hard to explain to Jimmy Page why "Stairway to Heaven" is 99 cents and Chumbawamba is the same price.
Do you think we'll see even more pricing flexibility in the future?
I hope this is just the beginning. I hope there will be a closer relationship between [the price of] a really popular single and the cost of an album. For many years the music industry has taken advantage of the fact that you could cut out a single and push fans to buy an album. And often the album wasn't very good—it had one or two singles on it. But that's not what I'm talking about. I'm talking about an album that, when a kid picks it up for $10, he gets $50 of enjoyment. That's the album I want to be able to help navigate him toward. And I want to have the company build a reputation where he could make a decision and say, "You know what, I know this artist, I've seen this artist and he's got a brilliant single—I could go for the $9.99 or $10 purchase."
I would love to get to a point that when T.I. has 175 million impressions, I can for a one-month period bring the single up to $2.99 as a bundle [with other content] or cut it out like I used to if I feel good about the album.
I understand the easy and simple message [of iTunes], but we're years into the iPod experience and I think consumers are savvy. I think we could start creating other experiences for them. It would be helpful to us and it would be helpful to the artist.
Warner just pulled out of its deal with YouTube. Why?
At the beginning we believed wholeheartedly that we needed to be the enabler. We believe that there's not going to be one magic solution to this but it's important to encourage people to experiment. So we went and started being very easy to license with. [But] we just haven't received enough compensation. They haven't figured out how to monetize it well enough to make our share significant enough.
Do you see the other labels as rivals when you make those deals?
No. I think the enemy is within us, where we could allow companies to use our content to build their businesses and not compensate us fairly. How could we not think through all the repercussions of a deal we strike? They should fully take advantage of us if we're willing to go for that. But we have a responsibility to our employees and our artists to shepherd them through this really crazy, confused time, and to pay our people and our artists and do well by everybody.
At the same time, you're very bullish on Lala.com, which Warner holds a stake in. How do you decide what deals to make and which to pass on?
We're thinking less about enabling for enabling's sake and asking ourselves at what point is this a transaction. I think we want to enable when there's a clear path to revenue and it's not cannibalizing our company.
I love the fact that Lala is very transaction-oriented. Bill [Nguyen, chairman of Lala] is a Wilco junkie and from the first time we met he said, "I want people to buy this." He's determined to make an efficient offering to the consumer to actually make a transaction.
On that same note, what do you think of the RIAA's decision to stop suing people and instead trying to work with Internet service providers?
I always thought [suing people] was a little cockamamie. I think there are much easier and more caring ways of bringing consumers along.
How important do you think government pressure will be in actually making deals with the ISPs?
In France it seems very important. [French President Nicolas Sarkozy] has taken a personal interest and he's cut through a lot of the clutter. I think that they may resist it but ultimately it may be good for them. America's greatest export is intellectual property and I just don't feel like we've done enough in terms of protecting our content.
You were an early champion of 360 deals. What do you think about the results you've seen so far?
360 deals take time to harvest. For us they typically involve new artist signings. We're not interested as much in doing 360 deals where an act is fully established—it's very costly to get into that business. So you'll find out how we do over time. I think we're going to be very successful with our strategy because we're signing artists that we truly believe in.
There's a lot of misalignment where we're only concerned about the sales of a CD or digital music and we have no participation in anything else. I think that Paramore is going to be very special and demonstrate what we mean by alignment. There's a lot of times when a band stays on the road one extra cycle because that's how they're receiving their income. I think that there's a way for all of us to determine together whether we should do that extra cycle because we're all benefiting from everything.
What do you say to executives who believe that artists don't need major labels?
I think that's a personal decision for the artist. There are certainly arguments that speak to an artist taking on more risks, if they can afford to take more risks on. I think that labels are important because they help strategize, pull together resources and mobilize hundreds of people to make it happen and cut through the clutter.
Share
Share on LinkedIn
