Music Notes

Bronfmans bid Vivendi adieu: On Wednesday, December 3, Edgar M. Bronfman and his son Edgar Bronfman, Jr. officially resigned from Vivendi Universal's board of directors. The move followed an announcement by Time Warner that it would accept a $2.6 billion offer for its Warner Music Group (WMG) from an investment group led by the younger Bronfman.

Vivendi is still the corporate parent of Universal Music Group (UMG). Edgar Bronfman, Jr.'s continued position there would have been perceived as a conflict of interest in pursuing his new interest in Warner Music. Both UMG and WMG are among the recording industry's "Big Five," which control 85% of the global music market. UMG is by far the biggest, with a nearly 25% market share.

A songwriter, the younger Bronfman has long had an infatuation with the music business. In May 2003, he attempted a buyout of Vivendi Universal's North American media assets, including UMG and Vivendi Universal Entertainment, the division that controls Universal Studios. That bid went nowhere and Bronfman began looking at other labels. He was responsible for getting his family's company, Seagram Ltd., into the entertainment industry in the 1990s, with the acquisition of USA Networks, Universal Studios, the MCA record label, PolyGram, and other assets which were acquired in spring 2000 by Vivendi SA, the French utility then in the process of recreating itself as a media conglomerate. Former Vivendi CEO Jean-Marie Messier went on a buying spree that almost sank his company with debt, ultimately costing the Bronfman family and Seagram shareholders millions in stock losses.

End of the line for the Bottom Line: Despite pledges of support from Sirius Satellite Radio, AT&T, and rock star Bruce Springsteen, New York's venerable Bottom Line music club may have breathed its last. On December 4, Manhattan Civil Court Judge Donna G. Recant ruled in favor of New York University in its eviction proceedings against the club, giving its owners five days to vacate. The club, which was $185,000 behind in rent, never recovered from the drop-off in business following the September 11, 2001 terrorist attacks on the nearby World Trade Center.

NYU owns the property the club occupies and claims that the club's monthly $11,250 rent is half of market value. Saying it needed the space for classrooms, NYU sued. "It is simply not right to have a not-for-profit educational institution subsidizing a for-profit entertainment business," said a school official. Retail space leased by NYU in that part of Manhattan goes for $65 per square foot, far more than the $25 the Bottom Line was paying.

ISPs to pay for downloads? Canadian and American music trade groups are once again pushing for surcharges on Internet service providers to compensate music companies for revenue losses assumed attributable to peer-to-peer file sharing. Similar to the blank media taxes imposed by some countries, the concept would force ISP subscribers to subsidize the music industry.

The idea is also backed by at least one peer-to-peer industry trade group, the Los Angeles–based Distributed Computing Industry Association (DCIA), which has proposed collecting fees from users of file-sharing software and distributing it among record labels, performers, and music publishers. Such "compulsory licensing" deals would treat online music like recordings played on the radio rather than commodities sold in stores. The Society of Composers, Authors and Music Publishers of Canada is currently arguing for a similar system before the country's Supreme Court. Telecommunications companies and consumer groups are opposed to the suggestion because it would increase monthly fees. No decision is expected until mid-year.

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