Monday, May 02, 2005

Economically Literate Rock Band?--Sex, Drugs, and IPOs

Sex, drugs, and IPOs is the way the linked story begins. I don't know about the sex and drugs, but the initial public offering (IPO) of Warner Music stock is expected to enrich the company to the tune of $600 million. Sweet music to anyone's ears. Nonetheless, the IPO has struck a sour note with Linkin Park, one of Warner's top recording artists.

The band is protesting the Warner IPO by asking to be released from its contract. Why involve yourself in the company's financial matters when you're paid to perform? Linkin Park is concerned that the funds raised through the stock offering will be used to pay off the debts of the investors who purchased the company with borrowed money. At least that's the stated reason.

Observers of the rock scene note that the band is negotiating a new contract with Warner. Could the protest be a negotiating ploy? That thought has occurred to some. Warner's reaction?

"They have always been compensated generously for their outstanding worldwide success," spokesman Will Tanous said in an e-mailed comment.

I checked the official Linkin Park web site for a comment by the band, but found none. Undaunted, I wanted to see if Linkin Park's fans had an interest in commenting on the situation. Again, nothing. It looks like the band has made its stand, but the fans are more interested in the music. We'll have to wait and see if the band and its record company get back in tune. True economic literacy might include a recognition that a successful business partnership benefits both parties.

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