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A virtual virtuoso

Bronfman's lyrical on Internet's role in music

Seagram prexy/CEO Edgar Bronfman Jr. said the match of his Universal Music Group with Polygram was a “marriage made in music heaven,” and asserted that developing technologies, such as digital delivery and the Internet, will “revolutionize the distribution of recorded music.”

Bronfman’s remarks came during a speech Friday at the Radio and Record confab in Hollywood where he remarked briefly on Seagram’s $10.6 billion acquisition of Polygram, but also articulated the important role he believes the Internet will play in the future growth of the music industry.

“There are important technological changes on the horizon: It’s called digitization,” Bronfman said. “We believe that it will spur increased sales.”

He said the Internet “not only holds out the promise of marketing recorded music, but delivering it as well. Today when you order (an album online) the post office or some other entity must deliver it. In tomorrow’s music you will peruse online catalogs, sample music and download it. It not only encourages impulse buying, but simplifies distribution. And it revolutionizes the industry’s economics.

“Recorded music has always offered an attractive return on capital because manufacturing costs are relatively low and capital requirements are limited,” he said. “But distribution has been expensive. We are now on the threshold of eliminating some of those costs.”

Bronfman said the “virtual music store does more than save money: It brings back the aging baby boomer who no longer feels comfortable hanging out with the youth dominated crowd of most record stores. He or she will not only turn to Amazon.com for books, but will also turn to it or its Internet equivalents for music. It will take time to develop, but the change is clearly coming. And our industry has to lead that change, not follow it.”

He said Universal’s move to buy Polygram was precipitated by the realization that it would have been a slow process to grow the music operation from the ground-up.

“We could continue to grow our music business, but we wanted to jump-start that growth,” Bronfman said. “We consider the match of Polygram and Universal as a match made in music heaven.”

Bronfman praised Universal Music Group chairman/CEO Doug Morris’ leadership under which UMG “revitalized existing labels, acquired labels and started labels that are thriving. … We have made significant strides in increasing both revenues and marketshare.

“In music as we did elsewhere, we brought in talent, starting at the top with (Morris), one of the outstanding music executives of our time,” Bronfman said.

Bronfman did not discuss Morris’ ascension to a worldwide post or the departure of Polygram chief Alain Levy, who has run Polygram since 1989, and whose exit had been widely expected since word of an acquisition surfaced (Daily Variety, May 11).

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