Manage for Success: Summer Reading, Newsletter #110, August 2010


"Manage for Success" is a free monthly newsletter for record label executives who want to operate their companies efficiently and successfully. It's published by Keith Holzman of Solutions Unlimited, a management consultant, troubleshooter, and trusted advisor, and is based on his many years as a senior executive in the music industry.


Copyright 2010 by Keith Holzman, Solutions Unlimited. All rights reserved.


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I've had the opportunity to read a number of good books this summer, some purely for pleasure, others business-related. Of the latter, two stand out and I'm going to discuss them here. Both are recommended reading for people seriously interested in the music industry, but they are of particular interest to me because of my twenty-years at Elektra Records.


The first is "Fortune's Fool, Edgar Bronfman, Jr., Warner Music, and an Industry in Crisis" by Fred Goodman. Goodman is also the author of "The Mansion on the Hill: Dylan, Young, Geffen, Springsteen, and the Head-on Collision of Rock and Commerce" which was a New York Times notable book and which received the Ralph J. Gleason Award for the Best Music Book of 1997.

<http://www.amazon.com/Fortunes-Fool-Bronfman-Warner-Industry/dp/0743269985/ref=pd_sim_b_1 >


"Fortune's Fool," as the sub-title indicates, is principally about Seagram-heir Bronfman, his acquisition of the Warner Music Group from a disinterested TimeWarner, and the forces that reduced the music industry from a profitable, essentially stable group of labels, to the highly embattled business it's become. It's got lots of anecdotes and remarkable quotes from his interviewees.


The early part of the book is devoted to the fascinating saga of the Bronfman family and its Seagram liquor empire, particularly how it was built up from a group of bars in small hotels alongside Canadian railroads that supplied drinks to travelers. When Prohibition was established in the U.S., the Bronfmans became bootleggers, and subsequently distributors and manufacturers of distilled products after Prohibition. Within a few years they'd become one of the largest corporations in North America. Goodman writes: "In 1955...Seagram supplied one of every three drinks sold in the United States…Edgar (Bronfman) Sr., is the only person to have made the Forbes list of America's five hundred wealthiest individuals every year since its inception...."


Goodman then tells how Edgar Jr. persuaded the family to acquire a significant portion of TimeWarner stock, selling its major shares in chemical industry leader DuPont, and subsequently acquiring the majority interest in Matsushita, parent of MCA, Universal Studios and MCA Records. Edgar Jr. re-built MCA and turned it into record industry giant, Universal Music.


But TimeWarner stock went south after its ill-fated merger with AOL, and eventually the Bronfmans sold all its MCA holdings to the French water conglomerate Vivendi in a stock swap. Shortly thereafter, Vivendi got involved in an accounting scandal and its stock value plummeted. The Bronfmans lost about $3 billion, seriously reducing its empire and fortune.


Goodman also writes a brief but excellent history of the music industry and its many entrepreneurial characters, and explains quite clearly why it has declined post-Napster.


During this period of major upheaval in the mid-nineties, media conglomerate TimeWarner made some seriously bone-headed decisions and fired or let go most of the creative music industry legends who'd made Warner Records, Elektra, and Atlantic into industry powerhouses. Subsequent to the AOL/ TimeWarner merger it became so disillusioned with the music industry that it decided to sell off its Warner Music Group.


A significant portion of Goodman's book deals with Edgar Jr.'s acquisition in late 2004 (along with a small consortium of private equity firms) of a much-diluted Warner Music and how he turned it into back into a major force in the industry.


Incidentally, my brother Jac has been Senior Advisor to WMG's Chairman for the past six years.


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As you've probably gathered from these newsletters, I try to keep current on all matters affecting our industry. So if you need advice on how to make your label successful, let me help you as I've helped so many others "manage for success." Email me <http://www.holzmansolutions.com/contact.html> so we can discuss how I can improve your business.


Should you be thinking of building your own label, I recommend my book "The Complete Guide To Starting A Record Company," The Second Edition can be ordered as a printed, spiral-bound volume, or as a downloadable eBook in PDF form. Updates are available to buyers of the book, and you can read the complete Table of Contents and download the Introduction at <http://www.recordcompanystartup.com/>.


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The second recommended book is "Becoming Elektra, the True Story of Jac Holzman's Visionary Record Label" by Mick Houghton. It's published, in part, in celebration of Elektra's Sixtieth Birthday this October. Of course Jac is the link between the two books.

<http://www.amazon.com/Becoming-Elektra-Holzmans-Visionary-Record/dp/1906002290/ref=sr_1_1?s=books&ie=UTF8&qid=1281648541&sr=1-1 >


Not unfamiliar with the story because of my own Elektra past, I still found the book fascinating, and as familiar as I am with its history, there were quite a few things I hadn't know about, or had simply forgotten -- particularly those events from 1950 to 1964 when I was merely Jac's brother and not yet an Elektra employee.


The book is chock full of remarkable photographs and includes reproductions of all of the Elektra LP jackets from inception through 1973, when Jac retired from the label.


Of special interest to those entrepreneurs among you, is the tale of how Jac, with no real knowledge of business or music, and with extremely limited capital, managed to build a highly successful record label out of sheer nerve, taste, common sense, and incredible drive.


Commemorating Elektra's 60th, it has put up a fascinating website with an interactive timeline, including numerous photos, music clips, and videos of the artists who made the label such a driving and influential force in our industry.
<http://www.elektra.com/elektra60/>


Enjoy what's left of your summer, and Happy Reading!


Until next month,

Keith Holzman -- Solutions Unlimited

Helping Record Labels Manage for Success.


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Copyright 2010 by Keith Holzman, Solutions Unlimited. All rights reserved.