Time Warner and Madonna Are at Odds on Her Label
“She went on T.R.L. this week,”.
“So what? She is 45. They still love her. Has she sold the number of records she used to sell? No. But I still believe she is an unbelievable force in the music business, and her influence is tremendous. Madonna has been said to be over so many times, and each time she comes back bigger and better.”
This is Liz Rosemberg‘s comment on the current Madonna vs Warner issue reported by today’s edition of The New York Times.
Click the Full Article link below to read the full story in an excellent article by David D. Kirkpatrik that goes through the story of Maverick Records and the deal between Madonna and Time Warner.
After 20 years and billions of dollars in music sales, Madonna‘s relationship with Time Warner is showing signs of strain over the future of her label, Maverick Records, while negotiations over the value of her Time Warner stock options lie just ahead.
Maverick, whose artists include Alanis Morissette and Michelle Branch, is one of the biggest successes among the dozens of recording joint ventures often called “vanity labels,” that major music companies have created for their marquee stars over the past few decades.
But Madonna is locked in a dispute with Time Warner’s Warner Music division over whether it will continue to fund Maverick after their partnership agreement expires at the end of next year, people involved in the discussions said last week.
It is a battle that pits an aging pop icon against a once-dominant music business that has fallen on hard times. Madonna is now 45. Some of her recent albums, although still selling at levels most stars would envy, have failed to match her biggest hits of the 1980’s and ’90s. The survival and relative success of her label is a matter of personal pride, several people who work with her said, and it provides a base of operations to her close friend, protégé and partner, Guy Oseary, a talent scout who has worked for her since he was 17.
The Maverick talks also are a prelude to another set of difficult negotiations that will test the extent of Madonna’s influence at Time Warner and its Warner Music unit. In 1999 the pop star received options in Time Warner stock initially valued according to a complicated formula at $20 million to $25 million. The options might have been worth many times as much if Time Warner’s share price had risen as much as Wall Street analysts then predicted. But since AOL took over Time Warner in 2001, the stock has plunged, making her options nearly worthless.
Unlike most disappointed shareholders or Time Warner employees, Madonna has other recourse because of her star status. She is expected to seek payment equal to the options’ $25 million initial estimated value. To do so, she can rely on various forms of ongoing leverage, such as the ability to deliver or withhold her records.
Warner Music executives say that the options were just that and not a guarantee. But in arguing with Madonna they risk alienating one of the label’s biggest and best-known stars at a moment when Time Warner has put the division up for sale.
About two months ago, Madonna met with Richard Parsons, chairman and chief executive of Time Warner, at his office in Rockefeller Center to discuss the matter personally, but they failed to resolve the differences.
Now her high-profile entertainment lawyers, Alan Grubman in New York and Bertram Fields in Los Angeles, are threatening suit for breach of contract.
No suit has been filed so far, and executives at Time Warner dismiss the threats as a baseless bargaining tactic. Spokeswomen for Madonna and Warner Music declined to comment on any talks.
Maverick was born 11 years ago as the brain-child of Madonna and her longtime manager Freddy DeMann. The new label was announced with grand plans to expand beyond music into movies and books, although that never happened. Madonna said at the time she envisioned an “artistic think tank” that would be a cross between the 1920’s German art institute Bauhaus and Andy Warhol’s legendary Factory studio.
Maverick was notable for both its early success and internal discord. In the early 1990’s, Madonna herself was actively involved in running the label, going to clubs, listening to tapes, and giving opinions as well as receiving updates on business matters. But principle responsibility belonged to DeMann, who brought in Oseary to help spot new talent.
Oseary was an outgoing Israeli-born immigrant who even as a teenager made no secret of his ambition to become a well-connected Hollywood power broker. He had befriended DeMann’s daughter at Beverly Hills High School, and DeMann gave him an early break by bringing him into his artist management business.
Oseary demonstrated a keen ear in Maverick, signing the techno band Prodigy. But his greatest achievement came in 1994, at age 22, when he found a little-known 20-year-old Canadian singer, Morissette. Her first U.S. album, “Jagged Little Pill,” became one of the most successful debut records of all time, selling more than 28 million copies after it initial release.
Its success brought both windfall profits and turmoil. Madonna grew closer to Oseary and more distant from DeMann, people who worked with them said. She gave Oseary a stake in the Maverick partnership over DeMann’s objections, and in 1996 she dropped DeMann as business manager. DeMann reportedly favored selling the business to Warner while it was at a peak, but Oseary argued it could continue to grow.
The label has since had few major hits from its artists, with the exception of Michelle Branch. But Maverick is still saddled with the heavy financial burden of paying out DeMann for his highly valued stake, Time Warner executives said.
After his mentor’s ouster, Oseary took over principle responsibility for the label. Madonna has grown less directly involved over the years, although people who work with her say she speaks often to Oseary and receives updates on Maverick’s business. People who work with Madonna say that Maverick has lost money for only a couple of years, but Warner Music executives say it has not made money since the mid-1990’s. Since 1999, the label has sold its music publishing division to Warner Music for an undisclosed sum and has cut its staff by roughly half in a series of layoffs.
Ronnie Dashev, chief operating officer of Maverick Records, said, “Despite the fact that we do have substantial differences with Time Warner right now, we are hoping to be able to resolve them.”
If Madonna and Warner cannot come to terms, she and her partners in Maverick can demand that Warner buy out their stake when the contract expires, but the two sides disagree sharply about what the label is worth. People involved in the discussions say that Madonna’s business associates put the value of their 60 percent stake at $60 million; executives of Warner Music say it may be worth less than half that amount given the current state of the music business and Maverick’s poor financial performance in recent years.
Maverick, of course, has been a source of leverage in its talks with Time Warner because of Madonna. “She started this company with Freddy DeMann 11 years ago and she continues to be involved,” Caresse Henry, Madonna’s business manager, said. “She is committed to the success of her record label.”
In the pop world, though, even Madonna may be mortal. Her album released this year, “American Life,” has sold 3.5 million CD’s – less than half the sales of her 2000 hit “Music” and less than a third the sales of “Ray of Light” in 1998. At her current pace, she will fulfill her contract for two more albums of new material in three years, when she is 48. And few female pop stars, with the exception of Cher, have been able to continue recording platinum albums much beyond that.
Yet very few singers of any age sell three million copies of an album. People who work with Madonna note that her most recent album came out in the difficult climate of the war in Iraq, and that her 2001 concert tour sold more than $100 million in tickets, four times as much as the previous tour.
A spokeswoman for Madonna, Liz Rosenberg, warned not to judge her career by one album. “She went on T.R.L. this week,” she said, referring to MTV’s popular request show, Total Request Live. “So what? She is 45. They still love her. Has she sold the number of records she used to sell? No. But I still believe she is an unbelievable force in the music business, and her influence is tremendous. Madonna has been said to be over so many times, and each time she comes back bigger and better.”
David D. Kirkpatrik, The New York Times