Down on the farm......
Off the Record: Universal's Day in the Internet Sun
By Alex Berenson
Senior Writer
11/9/99 9:16 PM ET
At first glance, Seagram's (VO:NYSE) promise that it would announce "a major Internet music venture" Tuesday looked like just more record industry hype.
The press conference to unveil the deal, held at a midtown Manhattan music studio, started late, with a crackly blast of bass from amplifiers cranked to the point of distortion. Dozens of marketing types from Universal, Seagram's music division, filled the room, offering free T-shirts and hats to any reporters foolish enough to come near them. And Universal's top execs, Doug Morris and Jimmy Iovine, did their best to live up to the cartoonish stereotype of the music biz, with Morris resplendent in a dark suit and black shirt and Iovine wearing a half-zipped sweatshirt over a white T-shirt.
But when the bass died down and Seagram Chairman Edgar Bronfman stood up to talk, it turned out the hype wasn't just hype after all. Because the plan Bronfman spun at the conference represents nothing less than the first real effort by a traditional media company to make the Internet work for it rather than against it -- as well as a full-on assault on new media competitors like MP3.com (MPPP:Nasdaq), which on the heels of the announcement saw its stock drop 12%.
Down on the Farm
Universal's new venture, Jimmy and Doug's Farm Club, is nothing more, and nothing less, than an Internet record label. Bands will be able to send Farm Club demos and albums that will be posted on the Net at farmclub.com for fans to hear and discuss. In that sense, Farm Club is no different than other Web sites, notably MP3.com, which also offer bands the chance to put their music online.
But Farm Club offers bands advantages that MP3 doesn't match. The label will have its own A&R professionals, or talent scouts, to review music. Bands that prove popular will be offered the chance to play on a weekly show on USA Network (which not coincidentally is owned by USA Networks (USAI:Nasdaq), a Seagram partner). Finally, there's the biggest carrot of all -- a record deal from Farm Club and Universal, the world's biggest record company. The Farm Club slogan is as simple as it is alluring: "Someone's gonna get a record deal." One can almost hear the response of would-be divas from Buenos Aires to Boston: Why not me?
"I think it has the potential to really be big, and the main reason is for the first time you have some major media outlets that can put some major eyeballs and earballs in front of the bands, and that's what's really been missing from this equation," says Steve Wonsiewicz, music editor at R&R Online, which covers the record industry.
(more on the street.com)
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