Late last week, Warner Music Group fired nearly 40 people at Rhino Records, signaling it has all but given up on producing CDs. The flacks blathered and the stock analysts swooned, yet nobody mentioned that the company pretty much ceased to exist.
Rhino was the place where the music catalog of past greats (and not-so greats) was mined and packaged for reissue, usually in those boxed sets that included extra content and imagery that made them seem more like curated displays than sales wrappers. And it wasn't just music: I own the definitive "Tip of the Freberg: The Stan Freberg Collection, 1951-1998" that includes a video of the ad legend's commercials, a rich booklet on his work, and four CDs of his comedy and ads (his Green Chri$tma$ is a classic). A Doors re-issue from a few years ago offered previously unheard alternate versions of famous (and some obscure) songs.
The whole point of these reissues was to add value to the music by adding value to the experience; you didn't just buy the tracks, but rather the tangible substance of the box and what came inside. It was classic marketing, and it supported sales that held up somewhat better than the industry average for physical distribution. I have to imagine that the profit margin on the boxed sets was immense, and the costs of working with either deceased or chronically ignored old rockers were less than those incurred when contending with the newest darlings.
Enter the numbnuts.
There's been a "fundamental transformation of the physical new release and catalog business," according to the company statement, requiring Rhino to focus on handling "WMG's global digital catalog initiatives." You can just imagine the consultants who produced or blessed that gibberish: the market values songs at just below cost, if not entirely free, and today's kids want to hear it on their cellphones, so the "space" has changed, requiring new "paradigms" that will "enable synergies" that consumers will dutifully follow just as they've been rendered as solid lines on expensive Powerpoint slides.
One stock analyst quickly reiterated a "buy" on WMG, praising its cost-cutting brilliance while "inching closer to the point where digital will finally become the majority of their sales." Such clarity of vision is refreshing, even if it's made possible only because it's based on absolutely no understanding of how or why people buy things in the real world (see Powerpoint slides for the proof instead). Stripping away the humans who created the value of Rhino's offering leaves the company with digital assets and a commodity distribution channel. There's no way it can sell enough Robert Smith ringtones to make up for what it has lost.
It's too bad, too, because there's vast potential for exploiting the physical and mult-media dimensions of WMG's music catalog, whether through boxed CD sets, live events, streamed over the Internet, or dropped from dirigibles floating above major cities. Rhino was the place this invention happened, and could have happened some more.
It is shocking to me that the presumed experts can't see the myriad ways people want to buy and experience music, and have instead opted to buy into a narrow, easy, and ultimately self-defeating definition of music as a commodity to be distributed digitally.
The company was all but shut down last week, only the numbnuts behind it didn't have the foresight or honesty to admit it.