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Knopper - Appetite for self-destruction: the spectacular crash of the record industry in the digital age

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Knopper Appetite for self-destruction: the spectacular crash of the record industry in the digital age
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For the first time, Appetite for Self-Destruction recounts the epic story of the precipitous rise and fall of the recording industry over the past three decades, when the incredible success of the CD turned the music business into one of the most glamorous, high-profile industries in the world -- and the advent of file sharing brought it to its knees. In a comprehensive, fast-paced account full of larger-than-life personalities, Rolling Stone contributing editor Steve Knopper shows that, after the incredible wealth and excess of the 80s and 90s, Sony, Warner, and the other big players brought about their own downfall through years of denial and bad decisions in the face of dramatic advances in technology. Big Music has been asleep at the wheel ever since Napster revolutionized the way music was distributed in the 1990s. Now, because powerful people like Doug Morris and Tommy Mottola failed to recognize the incredible potential of file-sharing technology, the labels are in danger of becoming completely obsolete. Knopper, who has been writing about the industry for more than ten years, has unparalleled access to those intimately involved in the music worlds highs and lows. Based on interviews with more than two hundred music industry sources -- from Warner Music chairman Edgar Bronfman Jr. to renegade Napster creator Shawn Fanning -- Knopper is the first to offer such a detailed and sweeping contemporary history of the industrys wild ride through the past three decades. From the birth of the compact disc, through the explosion of CD sales in the 80s and 90s, the emergence of Napster, and the secret talks that led to iTunes, to the current collapse of the industry as CD sales plummet, Knopper takes us inside the boardrooms, recording studios, private estates, garage computer labs, company jets, corporate infighting, and secret deals of the big names and behind-the-scenes players who made it all happen. With unforgettable portraits of the music worlds mighty and formerly mighty; detailed accounts of both brilliant and stupid ideas brought to fruition or left on the cutting-room floor; the dish on backroom schemes, negotiations, and brawls; and several previously unreported stories, Appetite for Self-Destruction is a riveting, informative, and highly entertaining read. It offers a broad perspective on the current state of Big Music, how it got into these dire straits, and where its going from here -- and a cautionary tale for the digital age.

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Contents

Disco Crashes the Record Business, Michael Jackson Saves the Day, and MTV Really Saves the Day

Jerry Shulmans Frisbee: How the Compact Disc Rebuilt the Record Business

How Big Spenders Got Rich in the Post-CD Boom

The Teen Pop Bubble: Boy Bands and Britney Make the Business Bigger Than EverBut Not for Long

A Nineteen-Year-Old Takes Down the Industrywith the Help of Tiny Music, and a Few Questionable Big Music Decisions

How Steve Jobs Built the iPod, Revived His Company, and Took Over the Music Business

Beating Up on Peer-to-Peer Services Like Kazaa and Grokster Fails to Save the Industry, Sales Plunge, and Tommy Mottola Abandons Ship

How Can the Record Labels Return to the Boom Times? Hint: Not by Stonewalling New High-tech Models and Locking Up the Content

Appetite for self-destruction the spectacular crash of the record industry in the digital age - image 1

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FREE PRESS
A Division of Simon & Schuster, Inc.
1230 Avenue of the Americas
New York, NY 10020

Copyright 2009 by Steve Knopper

All rights reserved, including the right to reproduce this book or portions thereof in any form whatsoever. For information address Free Press Subsidiary Rights Department, 1230 Avenue of the Americas, New York, NY 10020

FREE PRESS and colophon are trademarks of Simon & Schuster, Inc.

Library of Congress Cataloging-in-Publication Data

Knopper, Steve.
Appetite for self-destruction: the spectacular crash of the record industry in the digital age / Steve Knopper.
p. cm.

Includes bibliographical references.
1. Music tradeHistory. 2. Sound recording industryHistory. 3. Compact disc industryHistory. I. Title.
ML3790.K57 2009

384dc22 2008038739

ISBN-13: 978-1-4165-9455-0
ISBN-10: 1-4165-9455-8

Visit us on the World Wide Web:
http://www.SimonSays.com

For Melissa and Rose

A strategic inflection point is a time in the life of a business when its fundamentals are about to change. Strategic inflection points can be caused by technological change but they are more than technological changeA strategic inflection point can be deadly when unattended to. Companies that begin a decline as a result of its changes rarely recover their previous greatness. But strategic inflection points do not always lead to disaster. When the way business is being conducted changes, it creates opportunities for players who are adept at operating in the new way.

Andrew S. Grove, Only the Paranoid Survive

Look out, honey, 'cause Im using technology
Aint got time to make no apology.

Iggy Pop and James Williamson, Search and Destroy

Cast of Characters

CBS Records

Walter Yetnikoff , president, 19751987

Tommy Mottola , president, 1988

William Paley , CBS Inc., CEO, 19861995; died 2003

Laurence Tisch , CBS Inc., president, director, chairman of the board, 19881990; died 2003

Dick Asher , deputy president, 19791983

Frank Dileo , promotion director, Epic Records, 19791984; manager, Michael Jackson, 19841990

George Vradenburg , senior VP, general counsel, 19801991

Jerry Shulman , market researcher, VP of marketing, Legacy founder, general manager, 19731999

Bob Sherwood , Columbia Records president, 19881990

Sony Music Entertainment, purchased CBS Records, 1988

Walter Yetnikoff , chairman, 19871990

Michael Mickey Schulhof , chairman, 19911995

Tommy Mottola , president, 19891998; chairman and CEO, 19952003

Don Ienner , president, Columbia Records, 19892003; president, US division, 20032006; chairman, 2006

Michele Anthony , senior vice president, executive vice president, chief operating officer, 19902004; president and chief operating officer, 20042006

Al Smith , senior vice president, 19922004

Fred Ehrlich , Columbia Records, vice president, general manager, 19881994; VP, general manager, president, new technology and business development, 19942003

David W. Stebbings , technology director, also for CBS Records, mid1980s1995

Jeff Ayeroff , copresident, WORK Group, 19941998

Jordan Harris , copresident, WORK Group, 19941999

John Grady , Sony Music Nashville, president, 20022006

Phil Wiser , chief technology officer, 20012005

Mark Ghuneim , Columbia Records, VP, 19932003; senior VP of online and emerging technologies, 20032004

Sony Corp.

Akio Morita , cofounder, as Tokyo Telecommunications Engineering Corporation, 1946; died 1999

Norio Ohga , various positions, including president, chairman, CEO, 19582003; served as chairman, Sony Music Entertainment, 19901991

Michael Mickey Schulhof , joined mid-1970s; president, CEO, 19931996

Toshitada Doi , headed digital team, beginning in 1980; later executive VP

Marc Finer , director of product communications, late 1970s1988

John Briesch , VP audio marketing, 1981present

Nobuyuki Idei , CEO, 19992005; chairman, 20032005

Sir Howard Stringer , chairman and CEO, American division, 1998present; overall CEO, 2005present

Phil Wiser , chief technology officer, 20052006

Sony BMG

Rob Stringer , UK division, chairman, CEO, 20042006; president, Sony Music, 2006present

Michael Smellie , BMG, chief operating officer, 20012004; chief operating officer, 20042005

Andrew Lack , chairman and CEO, Sony Music, 20032004; chief executive officer, 20042005; nonexecutive chairman, 2005present

Rolf Schmidt-Holz , nonexecutive chairman, 20042005; chief executive officer, 2005present

Thomas Hesse , BMG, chief strategic officer, 20022004; president, global digital business, 2004present

Steve Greenberg , president, Columbia Records, 20052006

Joe DiMuro , BMG and RCA Records, senior VP, 19982004; executive VP of strategic marketing, 20042006

Warner Music/Warner Communications

Steve Ross , Warner Communications, CEO, president, chairman, 19721990; Time Warner, CEO, 19901992; died 1992

Mo Ostin , president, Reprise, then Warner Music, 19671995

Joe Smith , Warner, president, 19721975; Elektra Records, chairman, 19751983

Doug Morris , Atlantic Records, president, 19801990; cochairman and co-chief executive officer, 19901994; Warner Music, president, chairman, 19941995

Ahmet Ertegun , Atlantic Records, founder, 1947; died 2006

Jac Holzman , Elektra Records, founder, 1950; Warner Bros. Records, senior VP, chief technologist, 19731982; Warner Music, consultant, Cordless Records creator, 2005present

Elliot Goldman , Warner Communications, senior VP, 19821985

Bob Krasnow , Elektra Records, president, 19831994

Howie Klein , Reprise Records, president, 19962001

Stan Cornyn , various positions, including senior vice president and founder/CEO of new media, 19581990

Bob Merlis , publicist, senior VP of worldwide communications, early 1970s2001

Jeff Gold , executive VP, general manager, 19901998

Robert Morgado , chairman and CEO, 19851995

Michael Fuchs , chairman and CEO, 1995

Danny Goldberg , chairman, 1995; Atlantic Records, president, 19941995, senior vice president, 19921994

Roger Ames , chairman and CEO, 19992004

Paul Vidich , vice president, strategy, business development, and technology, 19872004

Kevin Gage , vice president, strategic technology and new media, 20002005

Edgar Bronfman Jr. , chairman, chief executive officer, 2004present

AOL Time Warner

Gerald Levin , Time Warner, chairman and CEO, 19932001; AOL Time Warner, CEO, 20012002

Bob Pittman , chief operating officer, 20012002

Barry Schuler , AOL, chairman and CEO, 20002003

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