Rupa Marya v. Warner Chappell Music Inc

Filing 63

DECLARATION of Betsy C. Manifold in support of plaintiffs' opposition MOTION to Dismiss Second Amended Consolidated Class Action Complaint and/or Motion to Strike Plaintiffs' Proposed Class Definition 52 filed by Plaintiffs Good Morning to You Productions Corp, Rupa Marya, Robert Siegel. (Attachments: # 1 Exhibit 1-3, # 2 Exhibit 4-5, # 3 Exhibit 6)(Manifold, Betsy)

EXHIBIT 1

EX. I
3

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2008

11

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from

to
Commission File Number 001-32502

Warner Music Group Corp.
Delaware

(Exact name of Registrant as specified in its clrter)

13-4271875

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

75 Rockefeller Plaza
New York, NY
(Address of principal executive offices)

10019
(Zip Code)

Registrant’s telephone number, including area code: (212) 275-20
00
Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Name of each exchange on which registered

Common Stock, $.001 par value
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark whether the registrant is a well-known season
ed issuer, as defined in Rule 405 of the Securities
Yes
No
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the
Act. Yes LI No 1
Indicate by check mark whether the registrant (I) has filed all reports
required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 month
s (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes
No
Indicate by check mark if the disclosure of delinquent filers pursua
nt to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of the registrant’s knowledge, in definit
ive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendments to this Form
10-K.
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule
I 2b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Act.

Non-accelerated filer

LI

Smaller reporting company

LI

(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in Rule I 2b-2 of the Exchange
Act.) Yes LI No
As of March 31, 2008, the aggregate market value of the registrant’s
common stock held by non-affiliates was approximately
$224,561,893, based on the closing price of the common stock of
$4.98 per share on that date as reported on the New York Stock
Exchange. Shares of common stock held by the executive officers
and directors and our controlling shareholders have been excluded
from this calculation because such persons may be deemed to be affiliat
es. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
As of November 20, 2008, the number of shares of the Registrant’s commo
n stock, par value $0001 per share, outstanding was
154,012,885.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information required by Part III of this report is incorp
orated by reference from the Registrant’s

stement to be

filed pursuant to Regulation 14A with respect to the Registrant’s fiscal
2008 annual meeting of stockholders.
A

We generate sales from the new releases of curren
t artists and our catalog of recordings. In addition,
we
actively repackage music from our catalog to form
new compilations. Most of our sales are currently
generated
through the CD format, although we also sell our
music through both historical formats, such as
cassettes and
vinyl albums and newer emerging digital formats.
We sell our recorded music products through a variety
of different retail and wholesale outlets including
music specialty stores, general entertainment special
ty stores, supermarkets, mass merchants and discou
nters,
independent retailers and other traditional retailer
s. Although some of our retailers are specialized,
many of our
customers offer a substantial range of products other
than music.
We believe that the online channel has become
an increasingly important sales channel. Online sales
include
sales of traditional physical formats through both
the online distribution arms of traditional retailers
such as
fye.com and walmart.com and traditional online
physical retailers such as Amazon.com, bestbuy.com
and
barnesandnoble.com. In addition, there has been a
proliferation of legitimate online sites, which sell
digital music
on a per-album or per-track basis or offer subscription
and streaming services. Several carriers also offer
their
subscribers the ability to download music on mobile
devices. We currently partner with a broad range
of online
and mobile providers, such as iTunes. Napster, Rhaps
ody, Yahoo. Cingular. Sprint, I-mobile, Verizon
Wireless,
Orange, Vodafone, Virgin Mobile. Motorola, China
Unicom, Vimpelcom, Telenor, YouTube, lala, and
MySpace
Music and are actively seeking to develop and grow
this business. In digital formats, per-unit costs related
directly to physical products such as manufacturing,
distribution, inventory and return costs do not apply.
While
there are some digital-specific variable costs and
infrastructure investments needed to produce, market
and sell
digital products. it is reasonable to expect that we will
generally derive a higher contribution margin from
digital
sales than physical sales.
Our agreements with online and mobile service provid
ers generally last one to two years. We believe
that
the short-term nature of our contracts enables us
to maintain the flexibility that we need given the infancy
of the
digital business models.
We enter into agreements with digital service provid
ers to make our masters available for sale in digital
formats (e.g., mobile ringtones, digital downloads,
etc.). We then provide digital assets for our master
s to digital
service providers in saleable form. Our agreements
with digital service providers establish wholesale
prices or
license fees which vary based on the type of produc
t being sold. We typically receive sales accounting
reports
from digital service providers on a monthly basis,
detailing the sales activity, with payments rendered
on a
monthly or quarterly basis.
Our business has historically been seasonal. In the
recorded music business, purchases have historically
been heavily weighted towards the last three month
s of the calendar year. Since the emergence of digital
sales,
we have noted some shift in seasonality. As digital
revenue increases as a percentage of our total revenu
e, this
may continue to affect the overall seasonality of our
business. For example, sales of MP3 players or
gift cards to
purchase digital music sold in the holiday season
tend to result in sales of digital music in subsequent
periods. However, seasonality with respect to the
sale of music in new formats, such as digital, is
still
developing.

Music Publishing (18%, 17%, and 15% of cons
olidated revenues, before corporate and revenue
eliminations, in fiscal 2008, 2007 and 2006, respec
tively)
Where recorded music is focused on exploiting
a particular recording of a song, music publishing
is an
intellectual property business focused on the exploit
ation of the song itself. In return for promoting,
placing,
marketing and administering the creative output
of a songwriter, or engaging in those activities for
other rights
holders, our music publishing business garners a share
of the revenues generated from use of the song.

11

EX.1
5

Our music publishing operations include Warner/Chappell,
our global music publishing company
headquartered in Los Angeles with operations in over
50 countries through various subsidiaries, affiliates
and
non-affiliated licensees. We own or control rights to more
than one million musical compositions, including
numerous pop hits, American standards, folk songs
and motion picture and theatrical compositions. Assem
bled
over decades, our award-winning catalog includes over
65,000 songwriters and composers and a diverse range
of
genres including pop, rock, jazz. country, R&B, hip-ho
p, rap, reggae, Latin, folk, blues, symphonic, soul,
Broadway, techno, alternative, gospel and other Christi
an music. Our best-selling songwriter/song owner
and
song accounted for less than 2% and 1% of our music
publishing revenues, respectively, for the fiscal year
ended
September 30. 2008. Moreover, our music publishing
library includes many standard titles that span multip
le
music genres and has demonstrated the ability to genera
te consistent revenues over extended periods of time.
For
example, over the last ten years, our top 10 earning
songs, which include such titles as “Happy Birthday
to You”,
“Let it Snow,” “Star Wars” and “Rhapsody in Blue”
have generally generated annual revenues of betwee
n $1.0
million and $2.0 million per song. Warner/Chappell
also administers the music and soundtracks of several
third
party television and film producers and studios, includ
ing Lucasfilm, Ltd.. Hallmark Entertainment, Disney
Music Publishing, New Line Cinema and Warner Bros.
Studios. In 2007, we entered the production music
library
business with the acquisition of Non-Stop Music. Produc
tion music is a complementary alternative to licensi
ng
standards and contemporary hits for television, film
and advertising producers.

12

EX.1
6

Music Publishing Portfolio

Representative Songwriters
India.Arie
Burt Bacharach
Michelle Branch
Michael Bublé
Eric Clapton
Bryan-Michael Cox
Dido
Dream
George and Ira Gershwin
GreenDay
Michael Jackson
Led Zeppelin
Lii Wayne
Little Big Town

Madonna
Maná
Johnny Mercer
George Michael
Van Morrison
Muse
New York Dolls
Tim Nichols
Nickelback
Harry Nilsson
Katy Perry
Cole Porter
Radiohead
The Ramones

R.E.M.
Damien Rice
Alejandro Sanz
Staind
Ti.
Timbaland
Van Halen
Van Morrison
Kurt Weill
Barry White
John Williams
Lucinda Williams

Representative Songs
1950s and Prior

Summertime
Happy Birthday To You
Night And Day
The Lady Is A Tramp
Too Marvelous For Words
Dancing In The Dark
Winter Wonderland
Ain’t She Sweet
Frosty The Snowman
When I Fall in Love
Misty
The Party’s Over
On The Street Where You Live
Blueberry Hill
Makin’ Whoopee
Dream A Little Dream Of Me
It Had To Be You
You Go To My Head

1960s

People
I Only Want To Be With You
When A Man Loves A Woman
I Got A Woman
People Get Ready
Love Is Blue
For What It’s Worth
This Magic Moment
Save The Last Dance For Me
Viva Las Vegas
Walk On By
Build Me Up Buttercup
Everyday People
Whole Lotta Love

13

1970s

Behind Closed Doors
Ain’t No Stopping Us Now
For The Love Of Money
A Horse With No Name
Moondance
Peaceful Easy Feeling
Layla
Staying Alive
Star Wars Theme
Killing Me Softly
Does Anybody Really Know What
Time It Is?
Saturday In The Park
Stairway To Heaven

EX.1
7

1980s

Eye Of The Tiger
Slow Hand
The Wind Beneath My Wings
Endless Love
Morning Train
Beat It
Jump
We Are the World
Indiana Jones Theme
Celebration
Like A Prayer

1990s

Creep
Macarena
Sunny Came Home
Amazed
This Kiss
Believe
Smooth
Livin’ La Vida Loca
Losing My Religion
Gonna Make You Sweat
All Star

2O( and After

It’s Been Awhile
Photograph
Complicated
U Got It Bad
Crazy In Love
Cry Me A River
White Flag
Dilemma
Work It
Miss You
Burn
American Idiot
The Reason
Save A Horse (Ride A Cowboy)
We Belong Together
Promiscuous
Crazy
Gold Digger
Hey There Delilah
Sexy Back
Whatever You Like
I Kissed a Girl
All Summer Long
Gotta Be Somebody

Music Publishing Royalties
Warner/Chappell. as a copyright owner and/or administrator of copyri
ghted musical compositions, is
entitled to receive royalties for the exploitation of musical compositions
. We continually add new musical
compositions to our catalog, and seek to acquire rights in songs that will
generate substantial revenue over long
periods of time.
Music publishers generally receive royalties pursuant to mechanical,
public performance, synchronization
and other licenses. In the U.S.. music publishers collect and administer
mechanical royalties, and statutory
ceilings are established by the U.S. Copyright Act of 1976, as amend
ed, for the royalty rates applicable to
musical compositions for sales of recordings embodying those musica
l compositions. In the U.S., public
performance royalties are typically administered and collected by perform
ing rights organizations and in most
countries outside the U.S.. collection, administration and allocation
of both mechanical and performance income
are undertaken and regulated by governmental or quasi-governmental
authorities. Throughout the world, each
synchronization license is generally subject to negotiation with a prospe
ctive licensee and, by contract, music
publishers pay a contractually required percentage of synchronizati income
on
to the songwriters or their heirs
and to any co-publishers.

14

EX.1
8

Warner/Chappell acquires copyrights or portions of copyrights and/or administration rights
from
songwriters or other third-party holders of rights in compositions. Typically, in either case,
the grantor of rights
retains a right to receive a percentage of revenues collected by Warner/Chappell. As an owner
and/or
administrator of compositions. we promote the use of those compositions by others. For
example, we encourage
recording artists to record and include our songs on their albums, offer opportunities to
include our compositions
in filmed entertainment, advertisements and digital media and advocate for the use of our
compositions in live
stage productions. Examples of music uses that generate publishing revenues include:
Mechanical: sale of recorded music in various formats
•

Physical recordings (e.g., CDs and DVDs)

Performance: performance of the song to the general public
•

Broadcast of music on television, radio, cable and satellite

•

Live performance at a concert or other venue (e.g., arena concerts, nightclubs)

•

Broadcast of music at sporting events, restaurants or bars

•

Performance of music in staged theatrical productions

Synchronization: use of the song in combination with visual images
•

Films or television programs

•

Television commercials

•

Videogames

•

Merchandising, toys or novelty items

Digital:
•

Internet and mobile downloads

•

Mobile ringtones

•

Online and mobile streaming

Other:
•

Licensing of copyrights for use in sheet music

Composers’ and Lyricists c’on tracts
Warner/Chappell derives its rights through contracts with composers and lyricists (songwriters)
or their
heirs, and with third-party music publishers. In some instances, those contracts grant
either 100% or some lesser
percentage of copyright ownership in musical compositions and/or administration rights.
In other instances, those
contracts only convey to Warner/Chappell rights to administer musical compositions for
a period of time without
conveying a copyright ownership interest. Our contracts grant us exclusive exploitation
rights in the territories
concerned excepting any pre-existing arrangements. Many of our contracts grant us rights
on a worldwide basis.
Contracts typically cover the entire work product of the writer or composer for the duration
of the contract. As a
result, Warner/Chappell customarily possesses administration rights for every musical composition
created by
the writer or composer during the duration of the contract.
While the duration of the contract may vary, many of our contracts grant us ownership and/or
administration
rights for the duration of copyright. See “Intellectual Property-Copyrights”. U.S. copyright law
permits authors
or their estates to terminate an assignment or license of copyright (for the U.S. only) after
a set period of time.
15

EX.1
9

Marketing and Promotion
We actively seek, develop and maintain relationships with songwriters. We actively
market our copyrights
to licensees such as recorded music companies (including our Recorded Music business),
filmed entertainment,
television and other media companies, advertising and media agencies, event planners
and organizers, computer
and video game companies and other multimedia producers. We also market our
musical compositions for use in
live stage productions and merchandising. In addition, we actively seek new and
emerging outlets for the
exploitation of songs such as ringtones for mobile phones, new wireless and online uses
and webcasting.

Competition
In both recorded music and music publishing we compete based on price (to retailers
in recorded music and
to various end users in music publishing), on marketing and promotion (including both
how we allocate our
marketing and promotion resources as well as how much we spend on a dollar basis)
and on artist signings. We
believe we currently compete favorably in these areas.
Our Recorded Music business is also dependent on technological development, includ
ing access to,
selection and viability of new technologies, and is subject to potential pressure from compe
titors as a result of
their technological developments. In recent years, due to the growth in piracy, we
have been forced to compete
with illegal channels such as unauthorized, online, peer-to-peer file-sharing and downl
oading and industrial
duplication. See “Industry Overview—Piracy.” Additionally, we compete. to lesser
a
extent, with alternative
forms of entertainment such as motion pictures on home devices (e.g.. VHS and DVD)
or at the box office and
with videogames for disposable consumer income.
The recorded music industry is highly competitive based on consumer prefere
nces, and is rapidly changing.
At its core, the recorded music business relies on the exploitation of artistic talent. As
such, competitive strength
is predicated upon the ability to continually develop and market new artists whose work
gains commercial
acceptance. According to Music and Copyright, in 2007, the four largest major record
companies were Universal,
Sony BMG Music Entertainment (“Sony BMG”), EM! Recorded Music (“EMI”) and
WMG. which collectively
accounted for approximately 74% of worldwide recorded music sales. There are many
mid-sized and smaller
players in the industry that accounted for the remaining 26%, including indepe
ndent music companies. Universal
was the market leader with a 29% global market share in 2007, followed by Sony
BMG with a 20% share. WMG
and EMI held a 14% and 11% share of global recorded music sales, respectively. While
market shares change
moderately year-to-year, none of these players have gained or lost more than 3 percen
tage points of share in the
last 5 years (taking into account combined shares of Sony and BMG for years prior
to the formation of Sony
BMG in 2004). On July 13, 2006, the European Court of First Instance annulled
the European Commission’s
decision approving the formation of Sony BMG. Sony and Bertelsmann re-app
lied to the European Commission
and the formation of Sony BMG was re-approved in October 2007. On Octobe
r 1, 2008, Sony Corporation
completed its acquisition of Bertelsmann’s interest in the Sony BMG venture, which
is now called Sony Music
Entertainment Inc.
The music publishing business is also highly competitive. The top four music publish
ers collectively
account for approximately 65% of the market. Based on Music & Copyright’s most
recent estimates in April
2008, Universal Music Publishing Group, having acquired BMG Music Publishing
Group in 2007, was the
market leader in music publishing in 2007, holding a 22% global share. EMI Music
Publishing was the second
largest music publisher with a 20% share, followed by WMG (Warner/Chappell)
at 15% and Sony/ATV Music
Publishing LLC (“Sony/ATV”) at 7%. Independent music publishers represent
the balance of the market, as well
as many individual songwriters who published their own works.

16

EX.1
10

EXHIBIT 2

EX.2
Ii

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2009
OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from

to
Commission File Number 001-32502

Warner Music Group Corp.
(Exact name of Registrant as specified in its clrter)

Delaware

13-4271875

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

75 Rockefeller Plaza
New York, NY

10019

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: [phone]
Securities registered pursuant to Section 12(b) of the Act:
Title of each class

Name of each exchange on which registered

Common Stock, $.001 par value
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Yes
No LJ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes fl No j
Indicate by check mark whether the registrant (I) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
No
Indicate by check mark if the disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendments to this Form 10-K.
Indicate by check mark whether the registrant has submitted electronically and posted on its Corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (232.405 of this chapter) during
the preceding 12 months (or for shorter period that the registrant was required to submit and post such files). Yes
No D
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule
1 2b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act.) Yes D No
As of March 31, 2009, the aggregate market value of the registrant’s common stock held by non-affiliates was approximately
$108,455,771, based on the closing price of the common stock of $2.35 per share on that date as reported on the New York Stock
Exchange. Shares of common stock held by the executive officers and directors and our controlling shareholders have been excluded
from this calculation because such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
As of November 20, 2009, the number of shares of the Registrant’s common stock, par value $0001 per share, outstanding was
154,590,926.
Act.

DOCUMENTS INCORPORATED BY REFERENCE
Certain information required by Part III of this report is incorporated by reference from the Registrant’s proxy statement to be
filed pursuant to Regulation l4A with respect to the Registrant’s fiscal 2009 annual meeting of stockholders.

EX.2
12

Music Publishing (18%, 18%, and 17% of consolidated revenues, before intersegment eliminations, in
fiscal 2009, 2008 and 2007, respectively)
Where recorded music is focused on exploiting a particular recording of a song. music publishing is an
intellectual property business focused on the exploitation of the song itself. In return for promoting. placing,
marketing and administering the creative output of a songwriter, or engaging in those activities for other
rightsholders. our music publishing business garners a share of the revenues generated from use of the song.
Our music publishing operations include Warner/Chappell, our global music publishing company
headquartered in Los Angeles with operations in over 50 countries through various subsidiaries, affiliates and
non-affiliated licensees. We own or control rights to more than one million musical compositions, including
numerous pop hits. American standards, folk songs and motion picture and theatrical compositions. Assembled
over decades, our award-winning catalog includes over 65,000 songwriters and composers and a diverse range of
genres including pop. rock, jazz, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul,
Broadway, techno, alternative, gospel and other Christian music. Our best-selling songwriter/song owner and
song accounted for less than 2% and 1% of our music publishing revenues, respectively, for the fiscal year ended
September 30, 2009. Moreover, our music publishing library includes many standard titles that span multiple
music genres and has demonstrated the ability to generate consistent revenues over extended periods of time, For
example, over the last ten years. our top 10 earning songs. which include such titles as “Happy Birthday To
You”, “Let it Snow, Let it Snow. Let It Snow,” “Star Wars” and “Rhapsody In Blue” have generally generated
annual revenues of between $1 million and $2 million per song. Warner/Chappell also administers the music and
soundtracks of several third-party television and film producers and studios, including Lucasfilm. Ltd.. Hallmark
Entertainment. Disney Music Publishing and HBO. In 2007. we entered the production music library business
with the acquisition of Non-Stop usic. Production music is a complementary alternative to licensing standards
and contemporary hits for television, film and advertising producers.

11

EX.2
13

Music Publishing Portfolio
Representative Songwriters
IndiaArie
Burt Bacharach
Michelle Branch
Michael Bublé
Eric Clapton
Bryan-Michael Cox
Dido
Dream
Kenneth Gamble and Leon Huff
George and Ira Gershwin
Green Day
Don Henley
Michael Jackson
Claude Kelly
Led Zeppelin
Lil Wayne

Little Big Town
Madonna
Maná
Johnny Mercer
George Michael
Van Morrison
Muse
Tim Nichols
Nickelback
Harry Nilsson
Paramore
Katy Perry
Plain White T’s
Cole Porter
Radiohead
The Ramones

REM.
Damien Rice
Kevin Rudolf
Alejandro Sanz
Stephen Sondheim
Staind
TI.
Timbaland
Van Halen
Van Morrison
Kurt Weill
Barry White
John Williams
Lucinda Williams
Rob Zombie

Representative Songs
1950s and Prior

Summertime
Happy Birthday To You
Night And Day
The Lady Is A Tramp
Too Marvelous For Words
Dancing In The Dark
Winter Wonderland
Ain’t She Sweet
Frosty The Snowman
When I Fall In Love
Misty
The Party’s Over
On The Street Where You Live
Blueberry Hill
Makin’ Whoopee
Dream A Little Dream Of Me
It Had To Be You
You Go To My Head
As Times Go By
Rhapsody In Blue
Jingle Bell Rock

1960s

People
I Only Want To Be With You
When A Man Loves A Woman
I Got A Woman
People Get Ready
Love Is Blue
For What It’s Worth
This Magic Moment
Save The Last Dance For Me
Viva Las Vegas
Walk On By
Build Me Up Buttercup
Everyday People
Whole Lotta Love

1970s

Behind Closed Doors
Ain’t No Stopping Us Now
For The Love Of Money
A Horse With No Name
Moondance
Peaceful Easy Feeling
Layla
Staying Alive
Star Wars Theme
Killing Me Softly
Does Anybody Really Know What
Time It Is?
Saturday In The Park
Stairway To Heaven
Hot Stuff

12

EX.2
14

1980s

Eye Of The Tiger
Slow Hand
The Wind Beneath My Wings
Endless Love
Morning Train
Beat It
Jump
We Are the World
Indiana Jones Theme
Celebration
Like A Prayer
Flashdance

1990s

Creep
Macarena
Sunny Came Home
Amazed
This Kiss
Believe
Smooth
Livin’ La Vida Loca
Losing My Religion
Gonna Make You Sweat
All Star

2000 and After

It’s Been Awhile
Photograph
Complicated
U Got It Bad
Crazy In Love
Cry Me A River
White Flag
Dilemma
Work It
Miss You
Burn
American Idiot
Save A Horse (Ride A Cowboy)
We Belong Together
Promiscuous
Crazy
Gold Digger
Hey There Delilah
Sexy Back
Whatever You Like
I Kissed A Girl
All Summer Long
Gotta Be Somebody
Single Ladies
Blame It
Touch My Body
Rockstar
Misery Business
4 Minutes
Home
Let It Rock
Circus
Take Me There

Music Publishing Royalties
Warner/Chappell, as a copyright owner and/or administrator of copyrighted musical compositions, is
entitled to receive royalties for the exploitation of musical compositions. We continually add new musical
compositions to our catalog, and seek to acquire rights in songs that will generate substantial revenue over long
periods of time.
Music publishers generally receive royalties pursuant to mechanical, public performance, synchronization
and other licenses. In the U.S., music publishers collect and administer mechanical royalties, and statutory rates
are established by the U.S. Copyright Act of 1976, as amended, for the royalty rates applicable to musical
compositions for sales of recordings embodying those musical compositions. In the U.S., public performance
royalties are typically administered and collected by performing rights organizations and in most countries
outside the U.S.. collection, administration and allocation of both mechanical and performance income are
undertaken and regulated by governmental or quasi-governmental authorities. Throughout the world, each
synchronization license is generally subject to negotiation with a prospective licensee and, by contract, music
publishers pay a contractually required percentage of synchronization income to the songwriters or their heirs
and to any co-publishers.
13

EX.2
15

Warner/Chappell acquires copyrights or portions of copyrights and/or administration rights from
songwriters or other third-party holders of rights in compositions. Typically, in either case, the grantor of rights
retains a right to receive a percentage of revenues collected by Wamer/Chappell. As an owner and/or
administrator of compositions, we promote the use of those compositions by others. For example, we encourage
recording artists to record and include our songs on their albums, offer opportunities to include our compositions
in filmed entertainment, advertisements and digital media and advocate for the use of our compositions in live
stage productions. Examples of music uses that generate publishing revenues include:
Mechanical: sale of recorded music in various formats
•

Physical recordings (e.g., CDs and DVD5)

Performance: performance of the song to the general public
•

Broadcast of music on television, radio, cable and satellite

•

Live performance at a concert or other venue (e.g., arena concerts, nightclubs)

•

Broadcast of music at sporting events, restaurants or bars

•

Performance of music in staged theatrical productions

Synchronization: use of the song in combination with visual images
•

Films or television programs

•

Television commercials

•

Videogames

•

Merchandising, toys or novelty items

Digital:
•

Internet and mobile downloads

•

Mobile ringtones

•

Online and mobile streaming

Other:
•

Licensing of copyrights for use in sheet music

C’oinposers’ and Lyricists’ Contracts
Warner/Chappell derives its rights through contracts with composers and lyricists (songwriters) or their
heirs, and with third-party music publishers. In some instances, those contracts grant either 100% or some lesser
percentage of copyright ownership in musical compositions and/or administration rights. In other instances, those
contracts only convey to Warner/Chappell rights to administer musical compositions for a period of time without
conveying a copyright ownership interest. Our contracts grant us exclusive exploitation rights in the territories
concerned excepting any pre-existing arrangements. Many of our contracts grant us rights on a worldwide basis.
Contracts typically cover the entire work product of the writer or composer for the duration of the contract. As a
result, Wamer/Chappell customarily possesses administration rights for every musical composition created by
the writer or composer during the duration of the contract.
While the duration of the contract may vary, many of our contracts grant us ownership and/or administration
rights for the duration of copyright. See “Intellectual Property-Copyrights”. U.S. copyright law permits authors
or their estates to terminate an assignment or license of copyright (for the U.S. only) after a set period of time.

14

EX.2
16

Marketing and Promotion

We actively seek, develop and maintain relationships with songwriters. We actively market our copyrights
to licensees such as recorded music companies (including our Recorded Music business), filmed entertainment,
television and other media companies, advertising and media agencies, event planners and organizers, computer
and video game companies and other multimedia producers. We also market our musical compositions for use in
live stage productions and merchandising. In addition, we actively seek new and emerging outlets for the
exploitation of songs such as ringtones for mobile phones, new wireless and online uses and webcasting.
Competition
In both recorded music and music publishing we compete based on price (to retailers in recorded music and
to various end users in music publishing), on marketing and promotion (including both how we allocate our
marketing and promotion resources as well as how much we spend on a dollar basis) and on artist signings. We
believe we currently compete favorably in these areas.
Our Recorded Music business is also dependent on technological development, including access to,
selection and viability of new technologies, and is subject to potential pressure from competitors as a result of
their technological developments. In recent years, due to the growth in piracy, we have been forced to compete
with illegal channels such as unauthorized, online, peer-to-peer file-sharing and CD-R activity. See “Industry
Overview—Piracy.” Additionally, we compete, to a lesser extent, with alternative forms of entertainment and
leisure activities, such as cable and satellite television, pre-recorded films on videocassettes and DVD, the
Internet, computers and videogames for disposable consumer income.
The recorded music industry is highly competitive based on consumer preferences, and is rapidly changing.
At its core, the recorded music business relies on the exploitation of artistic talent. As such, competitive strength
is predicated upon the ability to continually develop and market new artists whose work gains commercial
acceptance. According to Music and Copyright, in 2008, the four largest major record companies were Universal,
Sony Music Entertainment (“Sony”), EMI Music (“EMI”) and WMG, which collectively accounted for
approximately 74% of worldwide recorded music sales. There are many mid-sized and smaller players in the
industry that accounted for the remaining 26%, including independent music companies. Universal was the
market leader with a 29% worldwide market share in 2008, followed by Sony with a 21% share. WMG and EMI
held a 15% and 10% share of worldwide recorded music sales, respectively. While market shares change
moderately year-to-year, market shares have not historically changed significantly from year-to-year.
The music publishing business is also highly competitive. The top four music publishers collectively
account for approximately 68% of the market. Based on Music & Copyright’s most recent estimates in May
2009, Universal Music Publishing Group, having acquired BMG Music Publishing Group in 2007, was the
market leader in music publishing in 2008, holding a 23% global share. EMI Music Publishing was the second
largest music publisher with an 18% share, followed by WMG (Wamer/Chappell) at 15% and Sony/ATV Music
Publishing LLC (“SonyIATV”) at 12%. Independent music publishers represent the balance of the market, as
well as many individual songwriters who publish their own works.
Intellectual Property

copyrights
Our business, like that of other companies involved in music publishing and recorded music, rests on our
ability to maintain rights in musical works and recordings through copyright protection. In the U.S., copyright
protection for works created as “works made for hire” (e.g., works of employees or specially commissioned
works) after January 1, 1978 lasts for 95 years from first publication or 120 years from creation, whichever
expires first. The period of copyright protection for musical compositions and sound recordings that are not
“works made for hire” lasts for the life of the author plus 70 years for works created on or after January 1, 1978.
15

EX.2
17

EXHIBIT 3

EX.3
18

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 30,2010
OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from

to
Commission File Number 001-32502

Warner Music Group Corp.
(Exact name of Registrant as specified in its clrter)

Delaware

13-4271875

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

75 Rockefeller Plaza

New York, NY

10019

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: [phone]
Securities registered pursuant to Section 12(b) of the Act:
Title of each class

Name of each exchange on which registered

New York Stock Exchange
Common Stock, $.001 par value
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant is a well-known seasoned issuer, as detIned in Rule 405 of the Securities
Yes Li No 1
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes LI No II
Indicate by check mark whether the registrant (I) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file
No Li
such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
Indicate by check mark whether the registrant has submitted electronically and posted on its Corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (232.405 of this chapter) during
No
the preceding 12 months (or for shorter period that the registrant was required to submit and post such files). Yes
Indicate by check mark if the disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter)
is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule
1 2b-2 of the Exchange Act.
Large accelerated filer Li
Accelerated filer
Non-accelerated filer fl
Smaller reporting company Li
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule I 2b-2 of the Exchange
Act.) Yes LI No
As of March 31, 2010, the aggregate market value of the registrant’s common stock held by non-affiliates was approximately
$323,191,037, based on the closing price of the common stock of $6.91 per share on that date as reported on the New York Stock
Exchange. Shares of common stock held by the executive officers and directors and our controlling shareholders have been excluded
from this calculation because such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
As of November 15, 2010, the number of shares of the Registrant’s common stock, par value $0.00 I per share, outstanding was
154,950,776.
Act.

DOCUMENTS INCORPORATED BY REFERENCE
Certain information required by Part III of this report is incorporated by reference from the Registrant’s proxy statement to be
filed pursuant to Regulation 14A with respect to the Registrant’s fiscal 2010 annual meeting of stockholders.
EX.

3

19

overall seasonality of our business. For example, sales of MP3 players or gift cards to purchase digital music sold
in the holiday season tend to result in sales of digital music in subsequent periods. However, seasonality with
respect to the sale of music in new formats, such as digital, is still developing.
Music Publishing (18% of consolidated revenues, before intersegment eliminations, in each of fiscal 2010,
2009 and 2008)
Where recorded music is focused on exploiting a particular recording of a song, music publishing is an
intellectual property business focused on the exploitation of the song itself. In return for promoting, placing,
marketing and administering the creative output of a songwriter, or engaging in those activities for other
rightsholders, our music publishing business garners a share of the revenues generated from use of the song.
Our music publishing operations include Warner/Chappell, our global music publishing company
headquartered in Los Angeles with operations in over 50 countries through various subsidiaries, affiliates and
non-affiliated licensees. We own or control rights to more than one million musical compositions, including
numerous pop hits, American standards, folk songs and motion picture and theatrical compositions. Assembled
over decades, our award-winning catalog includes over 65,000 songwriters and composers and a diverse range of
genres including pop, rock, jazz, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul,
Broadway, techno, alternative, gospel and other Christian music. Wamer/Chappell also administers the music
and soundtracks of several third-party television and film producers and studios, including Lucasfilm, Ltd.,
Hallmark Entertainment, Disney Music Publishing and Turner Music Publishing. In 2007, we entered the
production music library business with the acquisition of Non-Stop Music. We have subsequently continued to
expand our production music operations with the acquisitions of Groove Addicts Production Music Library and
Carlin Recorded Music Library in 2010. These acquisitions doubled the size of our production music library,
which now consists of more than 16 catalogs containing about 74,000 cues/songs.

11

EX.3
20

Music Publishing Portfolio
Representative Songwriters
Burt Bacharach
Michelle Branch
Michael Bublé
Eric Clapton
Bryan-Michael Cox
David Grohi
Dido
Dream
Kenneth Gamble and Leon Huff
George and Ira Gershwin
Green Day
Dave Grohi
Don Henley
Michael Jackson
Claude Kelly
Lady Antebellum
Led Zeppelin
Lil Wayne
Little Big Town

Madonna
Maná
James Otto
Johnny Mercer
George Michael
Van Morrison
Muse
Tim Nichols
Nickelback
Harry Nilsson
Paramore
Katy Perry
Plain White T’ s
Cole Porter
Radiohead
The Ramones
R.E.M.
Damien Rice
Alejandro Sanz

Stephen Sondheim
Staind
TJ.
Timbaland
Van Halen
Van Morrison
Kurt Weill
Barry White
John Williams
Lucinda Williams
Rob Zombie

Representative Songs
1950s and Prior

Summertime
Happy Birthday To You
Night And Day
The Lady Is A Tramp
Too Marvelous For Words
Dancing In The Dark
Winter Wonderland
Ain’t She Sweet
Frosty The Snowman
When I Fall In Love
Misty
The Party’s Over
On The Street Where You Live
Blueberry Hill
Makin’ Whoopee
Dream A Little Dream Of Me
It Had To Be You
You Go To My Head
As Times Go By
Rhapsody In Blue
Jingle Bell Rock

1960s

People
I Only Want To Be With You
When A Man Loves A Woman
I Got A Woman
People Get Ready
Love Is Blue
For What It’s Worth
This Magic Moment
Save The Last Dance For Me
Viva Las Vegas
Walk On By
Build Me Up Buttercup
Everyday People
Whole Lotta Love

1970s

Behind Closed Doors
Ain’t No Stopping Us Now
For The Love Of Money
A Horse With No Name
Moondance
Peaceful Easy Feeling
Layla
Staying Alive
Star Wars Theme
Killing Me Softly
Stairway To Heaven
Hot Stuff
Superfly
Listen to the Music

12

EX.3
21

1980s

Eye Of The Tiger
Slow Hand
The Wind Beneath My Wings
Endless Love
Morning Train
Beat It
Jump
We Are the World
Indiana Jones Theme
Celebration
Like A Prayer
Flashdance

1990s

Creep
Macarena
Sunny Came Home
Amazed
This Kiss
Believe
Smooth
Livin’ La Vida Loca
Losing My Religion
Gonna Make You Sweat
All Star

2000 and After

It’s Been Awhile
Photograph
Complicated
U Got It Bad
Crazy In Love
Cry Me A River
White Flag
Dilemma
Work It
Miss You
Burn
American Idiot
Save A Horse (Ride A Cowboy)
We Belong Together
Promiscuous
Crazy
Gold Digger
Hey There Delilah
Sexy Back
Whatever You Like
I Kissed A Girl
All Summer Long
Gotta Be Somebody
Single Ladies
Blame It
Touch My Body
Rockstar
Misery Business
4 Minutes
Home
Let It Rock
Circus
Take Me There

Music Publishing Royalties
Wamer/Chappell, as a copyright owner and/or administrator of copyrighted musical compositions, is
entitled to receive royalties for the exploitation of musical compositions. We continually add new musical
compositions to our catalog, and seek to acquire rights in songs that will generate substantial revenue over long
periods of time.
Music publishers generally receive royalties pursuant to mechanical, public performance, synchronization
and other licenses. In the U.S., music publishers collect and administer mechanical royalties, and statutory rates
are established by the U.S. Copyright Act of 1976, as amended, for the royalty rates applicable to musical
compositions for sales of recordings embodying those musical compositions. In the U.S., public performance
royalties are typically administered and collected by performing rights organizations and in most countries
outside the U.S., collection, administration and allocation of both mechanical and performance income are
undertaken and regulated by governmental or quasi-governmental authorities. Throughout the world, each
synchronization license is generally subject to negotiation with a prospective licensee and, by contract, music
publishers pay a contractually required percentage of synchronization income to the songwriters or their heirs
and to any co-publishers.
13

EX.3
22

Warner/Chappell acquires copyrights or portions of copyrights and/or administration rights from
songwriters or other third-party holders of rights in compositions. Typically, in either case, the grantor of rights
retains a right to receive a percentage of revenues collected by Warner/Chappell. As an owner and/or
administrator of compositions, we promote the use of those compositions by others. For example, we encourage
recording artists to record and include our songs on their albums, offer opportunities to include our compositions
in filmed entertainment, advertisements and digital media and advocate for the use of our compositions in live
stage productions. Examples of music uses that generate publishing revenues include:
Mechanical: sale of recorded music in various physical formats
•

Physical recordings (e.g., CDs and DVD5)

Performance: performance of the song to the general public
•

Broadcast of music on television, radio, cable and satellite

•

Live performance at a concert or other venue (e.g., arena concerts, nightclubs)

•

Broadcast of music at sporting events, restaurants or bars

•

Performance of music in staged theatrical productions

Synchronization: use of the song in combination with visual images
•

Films or television programs

•

Television commercials

•

Videogames

•

Merchandising, toys or novelty items

Digital:
•

Internet and mobile downloads

•

Mobile ringtones

•

Online and mobile streaming

Other:
•

Licensing of copyrights for use in sheet music

Composers’ and Lyricists’ Contracts
Warner/Chappell derives its rights through contracts with composers and lyricists (songwriters) or their
heirs, and with third-party music publishers. In some instances, those contracts grant either 100% or some lesser
percentage of copyright ownership in musical compositions and/or administration rights. In other instances, those
contracts only convey to Warner/Chappell rights to administer musical compositions for a period of time without
conveying a copyright ownership interest. Our contracts grant us exclusive exploitation rights in the territories
concerned excepting any pre-existing arrangements. Many of our contracts grant us rights on a worldwide basis.
Contracts typically cover the entire work product of the writer or composer for the duration of the contract. As a
result, Warner/Chappell customarily possesses administration rights for every musical composition created by
the writer or composer during the duration of the contract.
While the duration of the contract may vary, many of our contracts grant us ownership and/or administration
rights for the duration of copyright. See “Intellectual Property-Copyrights”. U.S. copyright law permits authors
or their estates to terminate an assignment or license of copyright (for the U.S. only) after a set period of time.
14

EX.3
23

Marketing and Promotion
We actively seek, develop and maintain relationships with songwriters. We actively market our copyrights
to licensees such as recorded music companies (including our Recorded Music business), filmed entertainment,
television and other media companies, advertising and media agencies, event planners and organizers, computer
and video game companies and other multimedia producers. We also market our musical compositions for use in
live stage productions and merchandising. In addition, we actively seek new and emerging outlets for the
exploitation of songs such as ringtones for mobile phones, new wireless and online uses and webcasting.
Competition
In both recorded music and music publishing we compete based on price (to retailers in recorded music and
to various end users in music publishing), on marketing and promotion (including both how we allocate our
marketing and promotion resources as well as how much we spend on a dollar basis) and on artist signings. We
believe we currently compete favorably in these areas.
Our Recorded Music business is also dependent on technological development, including access to,
selection and viability of new technologies, and is subject to potential pressure from competitors as a result of
their technological developments. In recent years, due to the growth in piracy, we have been forced to compete
with illegal channels such as unauthorized, online, peer-to-peer file-sharing and CD-R activity. See “Industry
Overview—Piracy.” Additionally, we compete, to a lesser extent, for disposable consumer income with
alternative forms of entertainment, content and leisure activities, such as cable and satellite television,
pre-recorded films on videocassettes and DVD, the Internet, computers, mobile applications and videogames.
The recorded music industry is highly competitive based on consumer preferences, and is rapidly changing.
At its core, the recorded music business relies on the exploitation of artistic talent. As such, competitive strength
is predicated upon the ability to continually develop and market new artists whose work gains commercial
acceptance. According to Music and Copyright, in 2009, the four largest major record companies were Universal,
Sony Music Entertainment (“Sony”), WMG and EMI Music (“EMI”), which collectively accounted for
approximately 76% of worldwide recorded music sales. There are many mid-sized and smaller players in the
industry that accounted for the remaining 24%, including independent music companies. Universal was the
market leader with a 28% worldwide market share in 2009, followed by Sony with a 23% share. WMG and EMI
held a 15% and 10% share of worldwide recorded music sales, respectively. While market shares change
moderately year to year, market shares have not historically changed significantly from year-to-year.
The music publishing business is also highly competitive. The top four music publishers collectively
account for approximately 69% of the market. Based on Music & Copyright’s most recent estimates in April
2010, Universal Music Publishing Group, having acquired BMG Music Publishing Group in 2007, was the
market leader in music publishing in 2009, holding a 23% global share. EMI Music Publishing was the second
largest music publisher with a 19% share, followed by WMG (Warner/Chappell) at 14% and Sony/ATV Music
Publishing LLC (“SonyIATV”) at 12%. Independent music publishers represent the balance of the market, as
well as many individual songwriters who publish their own works.
Intellectual Property
Copyrights
Our business, like that of other companies involved in music publishing and recorded music, rests on our
ability to maintain rights in musical works and recordings through copyright protection. In the U.S., copyright
protection for works created as “works made for hire” (e.g., works of employees or specially commissioned
works) after January 1, 1978 lasts for 95 years from first publication or 120 years from creation, whichever
expires first. The period of copyright protection for works created on or after January 1, 1978 that are not “works
made for hire” lasts for the life of the author plus 70 years. Works created and published or registered in the U.S.
prior to January 1, 1978 generally enjoy a total copyright life of 95 years, subject to compliance with certain
15

EX.3
24