Hurd’s Resignation

I know, I know, you’re asking what this has to do with the music business.

I’ll admit I’m fascinated by the computer industry.  Which is a gross appellation for a multifarious landscape which includes everything from hardware to software to services to MP3 players.  Hell, remember when HP licensed the iPod?

And there have been so many lessons in the computer industry that the music industry has ignored.  Like the entrance of Compaq into the marketplace, eating IBM’s lunch, by introducing top tier computers as soon as new chips were introduced and then the ultimate demise of that company when Dell came up with its low-cost/sell-direct model.

And look where Dell is today.

IBM realized Compaq was a real competitor and went into services.  Dell missed the retail explosion and could never diversify into new products and ended up in a commodity world with shrinking margins and a lowered stock price.

Dell’s lunch was eaten by HP.  HP could sell computers with thin margins because they sold ancillary services.  They were well-poised for the future.  After the company blew out Carly Fiorina, who almost destroyed it.

She was unqualified.  She had a trumped up resume and went on to purchase Compaq, dividing the company in the process and dragging the company right down.  But at least she was replaced, by Mr. Hurd, who turned HP into a powerhouse.

But now Hurd’s gone.

We could recite the sexual improprieties.  Hell, we could speculate further.  But Hurd broke the code…  Now what?

The Board appointed the CFO as interim CEO.  Is she up to the job?

We’ll find out.

But what we learned here is no one is bigger than the company.  The Board functioned properly.  Which is astounding, since corporate oversight has been so lame for so many years…can you say GM?

But the fascinating element is succession.

If no one is bigger than the company, there must be someone at the company who can run it when the founder/CEO retires.

There was no one at Warner Music.  That’s the story.  Executive talent was pushed out the door.  Not only Jimmy Iovine, but Mo Ostin and Bob Krasnow.  And music impresarios are not fungible.  Warner has never fully recovered. The axed Doug Morris went across the street to Universal, hired his old Warner cronies and now that company is dominant….  In the old world.  Universal’s like Compaq before Dell.  Selling a high-priced, excessively tested product. The company is not prepared for the future.

We’ll see if Lucian Grainge can replace Doug Morris.  But I’ll argue Lucian’s a music man, and that’s not what’s needed right now…  Right now, Universal needs different talents, a manager who comprehends the Internet sphere as much as the music.  Yes, Lucian should survive, but he should report to someone else.  Lucian knows music and..?

Michael Dell knows computer manufacturing and..?

Nothing.

If you’re a believer in Lyor Cohen, I don’t see his replacement in the company.  Certainly not Tom Whalley, Whalley’s an artist guy, he’s not about the big picture.  And so is Craig Kallman.  As for Julie Greenwald, she’s a martinet like Lyor, but she’s always lived in his shadow, what has she done on her own?

But at least she learned at Lyor’s feet.  Mentoring/grooming of executives is so rare in the major label world.  It would be one thing if they were private companies, but they’re not!

There’s no B-Team in the old music business world.  Who could replace Irving Azoff?  Terry McBride and Jeff Kwatinetz blew themselves up.

There’s no upward mobility in the old music business infrastructure.  Which is why if you’re a newbie, you’re doing it for yourself.

The old players say you can’t compete.  But as we saw with the demise of Warner Music, it’s ultimately about talent. Both executive and artist.  He who has the artistic talent wins.  End of story.  I wouldn’t say the major labels are interested in talent.  Truly.  And savvy executives know how to find talent that lasts and pays dividends.

Today these are road bands, not radio acts.  Acts with fan bases built by word of mouth, not by marketing/advertising/payola.

Look at it this way.  If Interscope were a standalone public company…and Jimmy Iovine, god forbid, was hit by a bus, who would run it?  Who would buy stock in it?  How would it survive?  I don’t see a single person in the wings, not within the company.

Meanwhile, there are scores of original Jimmy Iovines.  Hustlers.  Finding a way by themselves.  And these hustlers are going to inherit the music world.  It’s plain to see.  Because the old guard won’t let the new guard in.  There’s no upward mobility at a label.  The CEO makes a fortune and everybody else makes bupkes.

But if you find an act and own all 360 degrees of revenue, as a manager traditionally has, you can find your way to riches independently.  Look at Arcade Fire…  They’re not on a major label…  Hell, a major wouldn’t have signed them when they were available, before they got big, because the band was too outside, not good-looking enough, not making beat-driven instant hits.

But Arcade Fire was King of the Net last night, broadcasting from a sold-out Madison Square Garden.  Meanwhile, Rihanna is canceling dates and blowing out tickets for those that remain.

Notice something wrong with this picture?

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