Noteworthy Music News

Dreamworks to UMG Update

U.S. Economy, Music Sales Looking Up

By Kenny Kerner

Lotsa legal stuff going on in the Biz these days. Arista, Sony and the RIAA, among others, are filing individual law suits against people who have been file sharing and downloading music for free off the Internet. Many of those who are due in court are teenagers who eventually went out to buy the CD directly as a result of liking the free song they downloaded. So who's zooming who? And is this supposed to put an end to the problem?

UMG (Universal Music Group) just lowered the price of their CDs at the retail level in an effort to bolster sales. One surefire way of increasing sales is to release good CDs! Now there's a novel idea.

Superstar Cher left Warner International and signed with Warner U.S. Although she may have said farewell to live touring (but don't bet on it- the Eagles, KISS and The Who are all in their third decade of farewell tours), but she will still release CDs.

Barry Squire (musician matchmaker to the stars), Don Grierson (former VP/A+R for Epic, EMI and Capitol) John Hartmann (manager of Poco, CSN+Y, Buffalo Springfield, Sonny + Cher, Chad & Jeremy, Eagles, etc) Bobby Borg (author, The Musician's Handbook) and Marshall Altman (Sony Records A+R) have all joined Kenny Kerner's Music Business Program (MBP) as instructors for the fall-winter semester at Musicians Institute in Hollywood. Call 800-255-PLAY for information on the April, 2004 class.

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Reprinted with permission from Hits Magazine

October 31, 2003

Vivendi-owned Universal Music Group will purchase DreamWorks Records and make the label part of its Interscope Geffen A&M unit, effective Jan. 1. The Wall Street Journal's website prices the deal at about $100 million.

Rumors about the deal had been flying for some time, but the WSJ item forced label heads to make an official statement to the company on 10/30.

Mo Ostin, Lenny Waronker, Michael Ostin and Johnny Barbis addressed staff via conference call, but no information has been made available about whether the principals will stay on at the label's new home or what other staff will remain.

Staffers were told that the label would be folded into the Interscope group but DreamWorks would continue with business as usual on all 2003 releases, with a meeting scheduled with Interscope on 10/31 to discuss 2004 releases.

It was also revealed that A&R would begin contacting artist managers about the transition. No details were offered about which staff would stay on during DreamWorks' next phase, or which artists.

Those on the call learned that discussions of a sale to Vivendi Universal began after DreamWorks' previous distribution deal lapsed. Talk of VU picking up DW distribution turned to talk of an outright sale.

There was discussion of the deal in the context of overall consolidation in the industry, including merger talks between EMI and WMG and meetings between Sony and BMG. Waronker, meanwhile, expressed his belief that the business would improve.

There was, however, an unofficial press release.

"Building DreamWorks Records has been one of the great professional experiences of my career," said Mo Ostin. "I'm proud of the phenomenal artists we've been associated with and the entire DreamWorks Records team. We've had tremendous support from DreamWorks SKG, particularly from David Geffen, Jeffrey Katzenberg and Steven Spielberg. Despite the challenges of the music business today, Universal is acquiring a wonderful asset and the sale will assure the strongest possible future for our artists."

"We are truly excited about the acquisition of DreamWorks Records," said UMG ruler Doug Morris. "Mo, Lenny and Michael and their talented team have built an incredible roster comprised of gold, platinum and multiplatinum-selling artists as well as a host of new acts who will be successful in the future. The acquisition of DreamWorks will bolster our position as the world's leading music company."

Geffen tapped industry legends Ostin, Waronker and Michael Ostin as the label's management team in 1995; the company began releasing records in 1996. Since then, a company release points out, DreamWorks Records garnered 59 RIAA certifications, 26 Grammy awards and noms and "countless critical accolades."

HITS magazine is the most powerful information vehicle in the music industry, and is read religiously by all the top executives and everyone else.

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SALES CONTINUE UPWARD TREND: With overall CD sales this week up 6% against last year's numbers, it marks the seventh straight week of sales beating last year's figures. Although this is the week that trend will cease, it's still a bit of light in a rather bleak business climate. Next week's numbers will be compared against the likes of the 8 Mile soundtrack, Christina Aguilera and Nirvana.

Q3'S THE CHARM: The U.S. economy grew by an impressive 7.2% in the third quarter. This jump in Gross Domestic Product is the most rapacious since 1984, exceeding the projections of the most optimistic analysts. Does this bode well for the music biz? As usual, we're too in the dark to say-but we promise that our domestic products will remain gross.

MORE SUITS: Eighty more lawsuits were filed by the RIAA against file-sharers who have so far spurned settlement offers. Along with a first wave of suits that went out Sept. 8, the total number of people being sued is now 341. More than 150 charged with copyright infringement have agreed to settle the claims, resulting in damages of between $2,000 to $5,000 apiece. Twenty-nine more who have the targets of the lawsuits are fighting the charges in court, although the majority are reportedly in settlement talks.

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