Update - Feb 4th, 2007 - WMG is now trading at $8.21, up 80% from it's 52-week low, achieved just last month.  (I should have purchased more shares!)

This post was written prior to Facebook becoming a raging fad garnering sky-high valuations...

 
There are many times when a publicly traded company gets kicked in the teeth only to come storming back from the brink of extinction to become the darling of Wall Street.  My money is on Warner Music Group; they can’t be as stupid as the market that’s driving down the price of their stock.  

This is how I started my day…

8:00 - Coffee and toast while reading about the Red Sox and scanning the Journal.

8:30 - Read Digital Music News - Warner Music Shares Slide Into Single-Digits Once Again.

8:33 - Checked Warner’s (WMG) stock price.

8:33 - Observed that WMG’s market cap was at $1.4 Billion US Dollars

8:33 - Recalled that Microsoft was considering an investment in Facebook at a valuation of over $10 Billion US Dollars.

8:34 - Scratched my head and checked Warner’s roster.

8:35 to 8:45 – Invented the TIME TO MONEY CONVERSION MACHINE that will double the market value of Warner Music Group in twelve months.


TIME TO MONEY CONVERSION MACHINE
Music hasn’t been devalued by consumers one bit.  Stop listening to this nonsense.  Have you ever heard the expression – “time is money”?  Consumers are spending more time than ever listening to music.  Record labels need the machine that reconverts time back into green money.

Look at Warner’s roster.  Is the collective magnetism and star power of every Facebook member combined - ten times greater than the collective magnetism and star power of every artist on Warner’s roster?  No freaking way.  Warner’s roster and their fans have twice the gravity of every Facebook member combined.   

The TIME TO MONEY machine is social networking infrastructure for Warner artists, their songs and their fans.

The TIME TO MONEY machine is social networking infrastructure of every unknown artist on earth; where every existing Warner artists and their fans can vouch for any undiscovered artist they encounter.  This part of the machine becomes their moneymaking A&R department (think – data analysis).

The TIME TO MONEY machine looks and works nothing like MySpace; it is clean (example) and it is reliable.

The TIME TO MONEY machine allows artists to pick their sponsors instead of being subjected to cheesy, whirling and misleading banner ads.

The TIME TO MONEY machine puts as much emphasis on songs as people, and every song has a profile like this – but much better.  (Songs are entities.)

The TIME TO MONEY machine has music players and music tools the work every time you press the button.  (The SONGboost examples are just that – examples.  We developed this stuff in days; imagine what money could buy!)

The TIME TO MONEY machine gives songs away to people that SPEND TIME IN THE MACHINE.


TIME TO MONEY MACHINE – THE FUEL
The fuel of Facebook is their ability to deliver a secure, reliable and convenient social proposition to their members; in turn their members evangelize and promote Facebook.

The fuel of Warner’s TIME TO MONEY MACHINE has to be to deliver a revenue-producing proposition to EVERY artist – signed and not.  Right now Facebook members love their platform; right now artists don't love their labels, and this has to change!

If Warner shared 50% of the advertising revenue with artists, and the machine grew to 1/4th the size of Facebook, Warner’s market value would double.


TIME TO MONEY MACHINE – CONSTRUCTION
Ten prolific developers could build V1 in ten months.  The core of the TIME TO MONEY MACHINE would be assembled from bits and parts from around the web.  Everything would be open, and every developer on earth could build toys and businesses on top of it.


SO, WHO’S STUPID?
I think the crowd’s wrong.  Read my analysis of Bronfman’s speech two weeks ago.  I wasn’t trying to be funny.  I am bullish on music and labels that have a clue.  Thinking up the shit above takes ten minutes; building it takes ten guys and ten months; filling it with artists and fans takes another ten to twelve months.  Would you like to double your money in two years?  


WHAT DOES THIS MEAN TO ARTISTS?
It means: stop listing to people that tell you to get out of the music industry because you can’t make any money.  Make great music and the money will eventually follow.  The industry is in a transition period, but everything will be different in two years. 

The economics of digital music (when they build the TIME TO MONEY MACHINE) will enable the labels to be more generous to a lot more artists going forward.  You will have to consider sharing every one of your revenue streams (music sales, merchandise, publishing, sponsorship, etc) with your business partner or label, but you will be doing so in consideration for entering into a genuine partnership. 

Remember, everything happens on a spectrum, so watch out for people still trying to sell you a steak tips deal – these people still exist and your are not “packaged meat”.