Warner Bros. Records rock act Linkin Park is demanding its release from Warner Music Group in the wake of a dispute over a renegotiation of the band's contract.
NEW YORK -- Warner Bros. Records rock act Linkin Park is demanding its release from Warner Music Group in the wake of a dispute over a renegotiation of the band's contract.
Linkin Park, managed by The Firm, has put the brakes on plans to start work on its next album, slated for a spring 2006 release, citing concerns about the competitive impact of the company's aggressive cost cutting strategy and WMG's planned use of proceeds from its upcoming $750 million initial public offering.
Representatives for the band said in a May 2 press release it is concerned that WMG will be unable to live up to its "fiduciary responsibility" to market and promote Linkin Park.
"The new owners of the Warner Music Group will be reaping a windfall of $1.4 billion from their $2.6 billion purchase a mere 18 months ago if their planned IPO moves forward. Linkin Park, their biggest act, will get nothing," the press release states. "Of the planned $750 million raised by an IPO, only about $7 million will be put toward the company's own operations, with no money going to WMG artists."
The band says in a statement: "We feel a responsibility to get great music to our fans. Unfortunately, we believe that we can't accomplish that effectively with the current Warner Music."
The two sides are believed to be far apart in talks concerning a new deal for the band. Linkin Park's camp is said to be seeking a new contract worth $60 million; WMG is offering a 5-album deal at $3 million per album, sources say.
Linkin Park still owes four albums on its existing contact.
Linkin Park has sold over 35 million records worldwide in just 5 years. Its last full-length release, 2003's Meteora, sold over 10 million copies worldwide.
Warner Bros. Records says in a statement: "We value our relationship with Linkin Park, and we are proud of our work together since signing the band as a developing artist in 1999. While Linkin Park's talent is without question, the band's management is using fictitious numbers and making baseless charges and inflammatory threats in what is clearly a negotiating tactic. Warner Bros. Records has made significant investments in Linkin Park, and they have always been compensated generously for their outstanding worldwide success."
The band says it is weighing all options on how to best get new music to their fans. It is considering relying more on touring, merchandising and endorsements.
"It's basically like a labor strike," says one source familiar with the situation. "They [Linkin Park] don't feel [WMG] is capable of competing in the market place."
Warner Music Group finished third among the major labels in total and current market share last year with 14.7% and 13%, respectively. The company saw its total U.S. market share slip to 14.9% from 15.4% in the first quarter of 2004, according to Nielsen SoundScan.
The company currently has three of the top 10 albums in The Billboard 200, and four of the top 10 albums on the Billboard Eurochart. Two of the lead investors in Warner Music Group, Thomas H. Lee and Bain Capital Partners, also are minority investors in The Firm.