Bragging rights in a slumping industry don’t deliver much glory. Just ask Warner Music Group’s Lyor Cohen. As the head of the company’s North American recorded music operations he laid claim in 2007 to the most-improved performance among major record companies. Now he’s off to a hot start in 2008 with rapper Flo Rida, whose hit “Low” tops the singles chart this week. Warner’s stock, meanwhile, remains stuck in the cellar – closing Friday at $5.56 off 76 percent from its 52-week high of $23.37 – as overall CD sales sputter. The Post caught up with Cohen in his office last week for a rare interview to discuss the state of the music business.
The Post: What’s the biggest challenge facing the music industry today?
Cohen: Aside from the digital trauma that the industry has gone through, I think the [hiring and firing] of creative executives in a haphazard way has hurt our sales and depressed the market in its own right. Continuity in the creative management of companies is incredibly underrated. We discard people without contemplation of the knockdown effect and the time it takes to re-acclimate as a company.
Q: How much of that view is a product of concerns about your own future with the company?
A: None. I stay focused on the present, and I think that me and my team’s track record speaks for itself.
Q: What does the music industry need to do to reignite consumer interest in paying for music?
A: First and foremost: Sign great artists. Beyond that, we need to build on the huge growth in total music consumption – in all music- related content. The key to that is offering consumers more valuable music experiences. The industry has yet to really take advantage of the opportunities that all the new digital platforms offer.
Q: How does the company’s stock price impact the creative side of the business?
A: The stock price is the macro number for our industry. I can continue stealing market share, I can continue putting hits on the board, but it probably won’t move the stock significantly until the macro issues are dealt with.
Q: How frustrating is that?
A: I’ve had a banner year. I’ve grown market share. I’ve resisted gravity. And yet, our scorecard is the stock price. That sucks. We should feel like we are coming back to Rome. But no one showed up. No one got that memo.
Q: What will be the key story lines in the music business in 2008?
A: Clearly the biggest challenge will be navigating the decline in physical [CD sales] and rise in digital [sales]. It’s essential that labels have the right mix of people and resources to handle both aspects of the business. I believe we need to over-resource digital since that’s where the business is going. Also, I think you’ll see more non-traditional players competing for artists.
Q: What do you think about Radiohead’s [pay what you want digital] distribution strategy?
A: When you have an emotional relationship with an artist, you value them and don’t want to steal from them. . . I think the general population doesn’t always have that kind of loyalty.
Q: Hip-hop experienced a tough year. Sales in the genre were down 30 percent industry-wide. What’s wrong?
A: Hip-hop has lost that generational thing. This used to be my generation’s little secret. Now you’ve got fathers getting jiggy with it. Who wants that? My son does not think it is sexy when he’s looking for his Jay-Z album and he finds it in my CD player. Where it goes, who knows? When something goes from nothing to the most popular you usually know where it goes from there.
Q: Much has been made of the music industry’s push to participate in all revenue streams associated with artists – records, touring, merchandise, sponsorships, branding – via so-called 360 deals. Has the model actually been proven yet?
A: Our deal with Paramore shows it absolutely works. [Their album “Riot!” sold 612,000 copies in 2007, according to Nielsen SoundScan.] Now people want to see a second one.