Major Warner Reshuffling Actually Makes Sense

It was reported last week that Warner Music Group was restructuring following the departure of their former music chief Lyor Cohen. Usually these types of reorganizations are more about consolidating power into new fiefdoms for the remaining or incoming executives, but this one actually seems to make sense.

According to an article in CMU:

Under the new structure, Warner in the US will have three divisions, frontline recorded music, publishing and catalogue, and label and artist services. The first division will consist of Warner’s record labels, principally Atlantic, Warner Bros and Warner Nashville, and will handle current talent and new releases. The second division will replace the Warner/Chappell publishing company, and also include catalogue marketing and the major’s catalogue label Rhino. The third division will bring together distribution operations and those Warner units working outside records and publishing. 

The second of the new divisions is the most interesting, with the major allying the marketing of its sound recording catalogue with its music publishing operations. 

A couple of things here are interesting. First is that Warner/Chappell is being replaced, which is hard to believe, since it's such a powerhouse brand. OK, brand aside, the fact that they're now combining publishing with catalog is huge, since they're now thinking more in terms of licensing, rather than sales. Licensing can be a much more profitable way to do business, since the overhead is far lower and manufacturing costs are essentially nil because the licensor does it all.

Many have predicted that this would be the business model for the next generation major label. Now it seems that we'll get to see the prototype in action and can evaluate whether those predictions are really valid.

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