Calder To Buy EMI
The other shoe has dropped.
By Bob Lefsetz
While BMG was busy digesting Jive, laying people off, conforming to the OLD music business model, Clive Calder was working behind the scenes, in veritable SECRECY, negotiating to buy EMI.
By crying in the press over piracy the chief executives of the five major label groups have depressed their stock prices through the FLOOR! Making their assets ripe for the picking by someone who truly understands the business, who can see the future. Someone like Clive Calder.
Essentially, Mr. Calder has swapped the assets of his Zomba Group for those of EMI. Needing only a small chunk of his personal fortune beyond the two plus billion dollar payout he got from BMG to acquire EMI for a final price just over three billion.
Although Mr. Calder has not issued a press release, those close to him have stated he believes that any time one has the ability to buy the three B's at this price, the Beatles, the Beach Boys and the Band, one HAS to jump. For Mr. Calder believes with the new extended copyright term in the U.S. and the already lengthy terms elsewhere in the world these assets, paid for long ago, will generate serious revenue for decades to come. Paying for his children's children's children's education at Ivy League institutions. And, if President Bush succeeds in eliminating estate taxes, CALDER will be THE name in music for many years to come.
Alain Levy has already been handed his walking papers.
Just as with the sale of PolyGram, it was done completely behind Mr. Levy's back. Eric Nicoli negotiated the deal in the U.K.
David Munns will remain at the helm, through the transition anyway. Seen as a music man, Mr. Munns is considered an ongoing asset.
As for the U.S. Capitol and Virgin labels...
Seen as a kindred soul, as a music man, Andy Slater will be keeping his gig.
But the complete Virgin label is TOAST!
Roy Lott will return to be Clive DAVIS' henchman at RCA and Matt Serletic will go back to being a record producer, hopefully rescuing Matchbox Twenty's career, after squeezing out their recent stiff album as a result of having one eye on his new job.
But the BIG surprise is that Virgin will now be taken over by Q Prime!
No, not a stretch if one knows his music history.
Cliff Burnstein had a long history at Mercury prior to becoming a manager. And Cliff and his partner Peter Mensch were partners with Mr. Calder in Volcano, which was sold to BMG as part of Zomba.
Noted for their frugality, Messrs. Burnstein and Mensch reportedly will pink slip EVERYBODY in the Virgin organization and build from the ground up.
The new Virgin space will be evacuated, and temporarily, the company will be run out of Q Prime's office uptown. Interim promotion duties will be held down by Warren Christensen, Q Prime's on staff promodomo.
As for A&R...
This is where the big shocker comes in.
The new head of A&R at Virgin will be MUTT LANGE!
Yes, now that Mr. Calder owns his own label again, his buddy from the old country has decided to throw back in with him. Mr. Lange WILL NOT be coming to the States however. He will be handling his duties from his home in Switzerland. A low price courier deal has already been put in place with American Airlines. To ferry demos, product and acts to the neutral country. A sweetheart deal was squeezed in with the union negotiations preventing American's bankruptcy. From now on ALL product on Virgin will be produced by Mr. Lange. Therefore, it is expected that Virgin will be the first record label EVER to have a one hundred percent hit ratio. Mr. Lange having never stiffed since his first success. Having delivered smashes for people from AC/DC to Michael Bolton. Never mind the Cars, Foreigner, Bryan Adams and his wife...Shania Twain.
And, as Mr. Lange returns to serious work, Ms. Twain will supposedly retire. Being the first act other than a few hip-hoppers who became ministers to truly retire at the top of their game. Then again, with Michael Jordan's comeback, ANYTHING is possible. Although it's rumored that Ms. Twain will be responsible for starting a new Virgin country division. Using her powers of persuasion to sign up the best talent in Nashville to come work with her husband.
So, now you see why the Virgin building and staff are superfluous. Virgin will essentially be another division of Q Prime.
But the foregoing is not the only bombshell. Mr. Calder has gone on record that it's not enough to wipe the slate clean of dead executive talent, nor enough to fix A&R, one must change the SELLING paradigm.
A new retail program will be introduced.
A la Jamaica and street teams, a new ONE ON ONE CD delivery infrastructure will be established. Run by Mr. Calder's old hit act, Billy Ocean. Yes, newly-employed teenagers will receive EMI beepers. And, when beeped, they will personally deliver CDs to customers. The U.S. government has already gone on record that they believe this is a ruse, that really the CDs are just a cover-up for delivery of dope, but until the system is up and running, we won't know for sure.
Then again, they might be right, for simultaneous with this sneaker delivery system, Mr. Calder has gone in partnership with Roxio, present owners of Napster. Starting June 1, all EMI product will be available via Napster. In unrestricted MP3 format. Subscription price will be $9.95 per month. And, for $14.95 per month, one gets both Napster and XM. THIS is the new radio payola. Rather than paying exorbitant indie promo fees, Mr. Calder and his cronies have cut out the middleman, and are now essentially in business with the source.
But what about METALLICA you say. Q Prime's PREMIER client. Who had a notorious beef with Napster.
Like a three way baseball trade, Metallica was mollified by getting its own XM station. Channel 666. It's not clear at this point whether the station will broadcast Metallica 24/7 or whether the group will use the channel to hype other acts that they take on ongoing Summer Sanitarium tours.
Now OBVIOUSLY all this action by blue chip players is going to impact the rest of the business. As soon as Mr. Levy heard of his banishment, he immediately phoned Roger Ames to beg to be his number two...but there doesn't seem to be a gig there. Roger likes being the boss. And doesn't trust his old mentor.
As for BMG...they're DEVASTATED! Turns out that many Zomba acts had key man clauses in their contracts and can now jump ship to EMI. Whereas before Mr. Calder's reentry into the business, they had nowhere to go. Yup, Britney, Justin, their brethren, they're now on EMI. Clive Davis wanted to create trouble, but then realized...he used his key man clause with Whitney Houston to HIS advantage in negotiations with BMG brass.
Universal just plans to dig in their heels and fight. Doug, Jimmy and Lyor into battling Mr. Calder to see who the baddest motherfucker on the block is. But Wall Street money is on Mr. Calder. He's the only one who has ever really been self-employed, who has run his own record company, who TRULY knows how to watch money, as opposed to just figuring it's the corporation's debt.
But Universal's real problem is Sony. Now with Andy Lack in place, the old Universal/Sony alliance is history. It made no sense anyway. Universal developing Pressplay, when Sony was the technology company. No, Sony is throwing in with Mr. Calder.
It's well known that the Sony brass in Japan doesn't even want to BE in the record business. But they don't want to sell out at a fire sale price. Which is why they've now handed distribution to Mr. Calder's EMI, cutting costs. AND given Mr. Calder the option to buy all of their assets for a clean five billion. They figure it's a fair return.
Mr. Calder believes he will pull the trigger on the Sony deal in twenty four months. Assuming the war in Iraq is over then and a Democrat is in office. If not, it will take longer. The public not having any money to BUY records and having no time to listen, being too busy standing on bread lines.
So, now on Roxio's Napster, you'll be able to trade both EMI and Sony product. It won't be long before the other label groups come to the party. Especially since Mr. Calder is promoting the service with the option of one of two benefits. Either three months free service or three CDs delivered by Mr. Ocean's "street team". (Despite the government's insistence that said street team is really delivering drugs, Blockbuster insiders insist that this pipeline will now deliver DVDs also. The giant chain has started negotiating with Mr. Calder for delivery, for fear their business model will become passe and their company will go out of business.)
But it won't only be about the big groups. Mr. Calder will now start a NEW EMI division, PEEPS RECORDS. Yes, for twenty five percent of the action, ANYBODY can get their material distributed on Roxio/Napster. It's a win-win situation. Young bands get to grow, and EMI gets to feed its pipeline at no cost and cream off any profits that result.
Needless to say, all the foregoing is earth-shattering. Reverberations will be felt for months.
How it all turns out, no one knows.
The model is STILL dependent on people paying for music.
But sources tell us that Mr. Calder has developed a new revenue stream. Rather than taking a percentage of ticket and merchandise sales, EMI will be making deals with musical instrument and computer companies for kickbacks on production. Supposedly Fender, Gibson and Apple Computer are already in. Supposedly any act that is either signed directly to EMI or is a member of its PEEPS program will be directed to authorized suppliers, where they'll get a discount in the neighborhood of ten percent on equipment, and then a fifteen to twenty five percent spiff will be paid by the manufacturer to EMI.
Mr. Calder is the most successful music entrepreneur EVER! Having even exceeded the track record of David Geffen. His success was due to surrounding himself with talented executives, releasing hit records and doing it all with an eye to the bottom line. Seems revolutionary in terms of the major label companies today. One doesn't want to bet against him.
Oh, by the way, April Fools.