![]() The transition took a couple of years, yet while overall unit sales stalled, revenue was starting to look up, due to the higher sticker price of the CD. Vinyl sales peaked in 1977 and cassettes were taking off, but the CD’s emergence was what made up for the ground lost in sales from aging baby boomers. Luckily for Steve Ross and Warner, the music industry was about to be given a new lease on life. The early video game company was part of Warner Communications Inc, which was spun off by Kinney in the early 70s, and for a brief period in the early 80s sustained WCI during the record industry’s lean years, before its own industry collapsed. Even if Warner could exert more control of retail floor space, Atari, then a little-known video game company, was keeping the company’s balance sheet in the clear. None of these issues were immediately addressed by Warner since most were economic shifts driven by consolidation (retail, radio) and international politics (spiking oil prices) that were well outside of their remit. Anxiety over taping creating too much free music. Vinyl production increased and was out of their hands 5. Record sales moving to bigger retailers that are less interested in the product and would make costly vinyl returns 2. Cornyn in Exploding suggests five points of concern to explain this downturn: 1. The late 70s saw an industry-wide recession that cannot be simplistically blamed on the oversaturation of disco. ![]() Unfortunately, Warner’s good times would soon hit an industry-wide skid rather soon. Intense competition amongst the small record label fiefdoms fueled the company’s overall success. It doesn’t hurt when the record label’s collective roster includes The Eagles, ABBA, Queen, Fleetwood Mac, the Rolling Stones, and the label wasn’t afraid to increase the sticker price on fast-selling items. By the mid-70s, Warner Elektra Atlantic (WEA) saw substantial market share gains, which in an era of continuing growth could appear more important than the exact figures being brought in. Ross’s conglomerate record label succeeded. Buy up and merge with its peers like Elktra, Asylum, and even prior to being sold to Kinney, the famed Atlantic Records, then angle for an even bigger payday. Now led by Steve Ross, who rose through the ranks of Kinney, Warner’s high-level corporate strategy was clear. The move worked as WB-7A in 1969, and only a few years later was purchased by Kinney National Service, a conglomerate. at a low price, then spinning the company to go public and cash out. The two bankers agreed and quickly maneuvered 7 Arts, a TV syndication company, into buying Warner Bros. They wanted Jack Warner out, and eventually he left with a $32 million goodbye and the continued promise that his family name would remain with the company. Even still, Allen and Sememnenko lacked confidence in Warner Bros. Chart success took a couple years and in the meantime, the label picked up Frank Sinatra’s struggling Reprise Records in 1963 after much-belabored negotiations and a few years later the San Francisco-based Autumn Records, who held early deals with artists like the Grateful Dead and Sly Stone. Unfortunately for Jack Warner, he wouldn’t be around long enough to see such heights. It was the late 50s, rock music was emerging, R&B singles were buzzing out of stores, and this company arrived at the perfect time to shape the popular music business. (The film studio held a record label decades prior but shuttered it during the Great Depression). Eventually, the three brothers agreed to a $22 million buyout, but Jack found his way back to Warner Bros. The financial distress of the film company caught the attention of Charles Allen and Serge Semenenko, two longtime financiers of the brothers and company board members, representing Allen & Company and the First National Bank of Boston. In particular the Warner brothers and their studio. The emergence of television in American homes and a 1948 Supreme Court ruling to reign in consolidated film production undercut the Hollywood business. Studios, made sure to find a way to stay in the entertainment industry. The youngest of the Warner brothers, the Polish men who built Warner Bros. Now, let’s go back to the 1950s and meet the Warner brothers. Each book is worth a read for anyone interested in the music business’s history. This week I will look at Warner Music Group’s long history with much of this pulled from Stan Cornyn’s Exploding, Fortune’s Fool by Fred Goodman, How Music Got Free by Stephen Witt, and Steve Knopper’s classic Appetite for Self-Destruction. I often focus on technology companies, while ignoring the labels, so I wanted to flip that to start the year. Happy New Years folks! I’m so happy to be back to writing after doing quite a bit of reading for newsletter research.
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