sinovels Chapter 200 Multiple Fronts Bloom
Chapter 200 Multiple Fronts Bloom
Chapter 200 Multiple Fronts Bloom
"What about the other music companies? How are the negotiations going?"
Ernst was well aware that simply acquiring BMG was far from enough to realize his ambitions in the global music market.
He pushed the documents towards the center of the table, his fingertip tapping on the section of BMG's investigation report. "Just acquiring Bertelsmann Music Group isn't enough, especially since most of Bertelsmann Music Group's business is in Europe, which is their main battlefield."
Robert Iger nodded knowingly. "You're right. In America, domestic record labels are the group with the largest market share. Warner Bros. Records, Sony Music Entertainment, and Universal Music Group alone account for more than 40% of the physical record market, not to mention the independent labels scattered in New York and Nashville."
For internet music, the internet is the key, and North America is the largest internet market.
Therefore, the North American market is crucial, both from the perspective of the Internet and from the perspective of content provision.
Ernst's gaze was sharp as an eagle's: "If we cannot secure enough copyright resources in the North American market, our upcoming digital music platform will become a tax without a source. Without copyright support, everything is just empty talk."
Upon hearing this, Robert Iger did not show Ernst's eagerness. Instead, he revealed a mysterious smile. "I can only say that your company is still too tempting."
This statement caused a flicker of doubt to cross Ernst's eyes, and he raised his hand to signal the other person to continue.
Meeting Ernst's questioning gaze, Robert Iger chuckled, his tone tinged with smugness, "All the financial institutions over there are focused on YueDong Games, all wanting a piece of the gaming industry's profits, while Goldman Sachs is stealing the show here."
"Goldman Sachs contacted you?" Ernst immediately understood the implication.
"That's right, Goldman Sachs not only sent a team of five senior advisors to Los Angeles," Robert Iger paused deliberately, emphasizing his words, "Paulson even called me personally; they really gave us a big gift."
Ernst's eyes immediately focused. "What amazing gift?"
"Universal Music's online rights," Robert Iger said, emphasizing each word, "cost only $20 million a year, and you can sign a 15-year contract with the annual fee increasing by no more than 5%."
"Universal Music?" Ernst looked surprised. "I don't remember Goldman Sachs having any connection with Universal."
Robert Iger explained with a laugh, "Goldman Sachs can't influence Global, but it can influence the Seagram Group."
.
Ernst slapped his forehead, realizing he had almost forgotten about it.
In 1990, Panasonic followed Sony's lead and acquired MCA (Metropolitan Company) for $65.9 billion, becoming the second big fool after Sony.
However, Panasonic was clearly not as bold as Sony. After five years of losses and being crippled by Hollywood, Panasonic sold 80% of its Universal Group shares to Canadian liquor giant Seagram in 1995.
Just last year, Seagram split up Universal Music Group, making its music division Universal Music independent and officially renaming it Universal Music Group.
Although Goldman Sachs has no direct connection with Universal Music, it has a close relationship with Universal's current parent company, Seagram.
Goldman Sachs has helped Seagram complete 70% of its various financing and bond issuance activities on Wall Street over the past thousand years. The two companies have a history of cooperation spanning more than 20 years and have an extremely close relationship.
Ernst tapped his fingers lightly. "I just wonder if Seagram will hold a grudge against Goldman Sachs after he finds out he made a losing deal."
Even if the cost increases by 5% per year, compounded annually, the cost after 15 years would only be a little over $4100 million. That price is practically free.
If Ernst remembers correctly, starting in 2010, streaming and digital music experienced explosive growth for major record labels worldwide, with this revenue accounting for more than half of each company's total revenue.
Of the major record labels, we don't know Universal's annual revenue, but Sony, despite having the lowest revenue among the three major American record companies, still exceeds $40 billion.
Even if Universal doesn't acquire PolyGram, and their revenue is halved, they'll still have $2 billion. Digital music and streaming revenue alone is $1 billion, and MGM only spends a little over $40 million a year to acquire this market share—the return is simply unimaginable.
Of course, there are also operating costs, subsequent song copyrights, technology research and development and other influencing factors, but even if it can bring in three to five hundred million US dollars in revenue, MGM will still make a big profit.
Seeing Ernst's high spirits, Robert Iger immediately pressed his advantage, "Besides this great gift from Goldman Sachs, we also have good news from PolyGram."
"After several rounds of negotiations, PolyGram finally agreed to extend the contract for ten years, but the corresponding online copyright fee was also increased to $1500 million per year."
Ernst smiled slightly. "Tell me what conditions PolyGram has offered this time."
PolyGram is now even more powerful than Universal Music, a behemoth with a market value of over 10 billion US dollars, owning several well-known labels such as EMI Records and Virgin Records, and has a global market share of over 20%.
$1500 million a year for online copyrights, which is so much lower than Universal's, would be impossible without any strings attached.
Ernst added, "To be honest, even if PolyGram asked for thirty million dollars, I wouldn't think it was outrageous. After all, they hold the music rights to Michael Jackson, and those resources alone are worth that price."
Michael Jackson was initially signed to Motown Records, which was transferred to PolyGram Records in 1994, so PolyGram owns a portion of his music copyrights.
Robert Iger chuckled, a sly glint in his eyes. "PolyGram does have conditions, but for us, these conditions are no different from a piece of waste paper."
He deliberately piqued Ernst's curiosity, and only continued, "Philips wants us to support their CD-ROM format," after seeing the look of curiosity on Ernst's face.
When Ernst heard the words "CD-ROM format," his expression instantly turned strange. Then he couldn't help but burst into laughter. "Philips is convinced that MGM is up to something big. They want to use us to solidify their monopoly in the music storage format field."
Why has PolyGram developed so well, becoming a global record giant with the world's number one market share for many years? It is inseparable from the support of its parent company, Philips.
From the CDs of the 1950s and 60s to the current CD-ROM standard, Philips has been the driving force.
No matter how MGM develops, as long as it uses Philips' standards, it's like Philips is controlling the faucet.
If MGM finds a new business model in the music industry, as long as it supports Philips' standards, Philips will never lose money.
So what if you get the online music copyright? The parent company, Philips, can easily use audio formats to trip you up.
What Philips didn't know was that MGM never intended to be an industry standard setter; it just wanted to be a middleman.
I support the CD-ROM standard; I'd support it for five reasons.
But what can we do? What does Google's lack of support have to do with MGM?
"There's no reason not to eat the meat that's been delivered right to your mouth," Ernst said with a smile.
Robert Iger understood this as well: "I've already sent MGM's negotiation team to London, England, overnight to try and extend the contract length further. If we can extend it from ten to fifteen years, that would be perfect."
PolyGram's headquarters are in London, so Robert Iger is certainly efficient.
"However, we should also remind the negotiation team not to be too hasty, lest the other party notice something."
Ernst then changed the subject, asking, "Having acquired the online music rights from PolyGram and Universal Music, what market share would we be able to capture if we also successfully acquire Bertelsmann Music Group?"
Robert Iger had already had the marketing department make predictions, stating that "these three companies account for approximately 43% of the global market."
"market share of music".
43%, which is halfway to Ernst's ideal of 80%.
Furthermore, the signing of contracts with Universal Music Group and PolyGram will create a powerful demonstration effect. Other record companies will undoubtedly have significant internal disagreements, and many will proactively approach MGM.
Especially those independent small and medium-sized labels, these people are all fence-sitters, waiting for the big labels to make a statement, because they can't figure out what MGM intends to do.
Now that Universal Music Group has signed PolyGram, they'll flock to them, and MGM might even lower their prices if they want to.
"Let's see if we can completely resolve the online copyright issue before October." Ernst glanced subconsciously at the calendar on the wall. "It's almost the end of June now, and I hope to finalize these copyright negotiations within three months, followed by technical consultations and integration between MGM and Google's iTunes platform."
"I hope that MP3 players and Google Tunes can be released simultaneously before the end of the year."
Because he plans to have MGM issue an IPO next year, directly pushing for a listing.
With this year's box office revenue as a foundation, and the online music copyright boom expected next year, MGM is eagerly anticipating how high its stock price will rise, even by itself.
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