Profile/Paul McGuinness:By trying to defend the music business against the threat of illegal music downloaders, the U2 svengali has shown he still has the appetite for a tough fight, writes John Collins
As the fifth member of U2, Paul McGuinness, the band's manager for the past 30 years, doesn't exactly keep a low profile. But following comments he made this week at the Midem music industry event in France about the technology industry, McGuinness has been cast into the spotlight and portrayed as the apologist for a fading business model by the very people he criticised.
Addressing a summit of music managers, McGuinness asked who was making money from the explosion of online music sharing and why they weren't sharing it with his clients. The speech is published in full on U2.com and it doesn't pull any punches. McGuinness said that the legislation governing the internet in Europe and the US is effectively a "thieves' charter" and is suited to a technological age which is now in the distant past.
"If you were publishing a magazine that was advertising stolen cars, processing payments for them and arranging delivery of them, you'd expect to get a visit from the police, wouldn't you?," asked McGuinness. "What's the difference? With a laptop, a broadband account, an MP3 player and a smartphone you can now steal all the content, music, video and literary, in the world without any money going to the content owners."
Sounding more like a "law and order" politician than rock music royalty, he proposed a "three strikes and you're out" model, whereby anyone found illegally downloading content three times would have their internet connection cut off.
Those familiar with his management style say McGuinness is extremely savvy and will have anticipated the reaction to his speech. The language he used - referring to the tech industry's "snouts" feeding for free at "our trough" and suggesting that at the heart of the "entrepreneurial, hippy values" of Silicon Valley is a disregard for the value of music - suggest he was certainly looking to provoke a reaction.
Given the wealth that McGuinness has amassed from the traditional model of the music business, it is little surprise that he chose to defend it against the technological forces threatening it. He is an extremely shrewd businessman - uniquely U2 own the copyright to the vast majority of their back catalogue and license its use to their record company Universal. One of the manager's smartest moves was in 1985, during negotiations with Island Records. In exchange for unpaid royalties, the band took a 10 per cent stake in the label, which returned $30 million four years later when Island was scooped up by Philips.
Both personally and through his firm, Principle Management, McGuinness has made some great investments - from being an early backer of TV3 to his current involvement in former pirate radio station Phantom FM.
While McGuinness may have slammed the technology industry, he's pragmatic enough to try and make some money out of it. He recently emerged as one of the backers of an electronic payment company which secured a deal to sell phone top-up services for China Mobile. He is also a shareholder in Web Reservations International, which operates a number of hugely successful websites for booking hostels and budget accommodation.
Critics also point out that both McGuinness and Bono were happy to do a deal with Apple which saw them include their music on iTunes and release a U2-branded iPod. McGuinness in his Midem speech revealed that deal was done around a table in Steve Jobs's kitchen - a scenario that seems typical of the man's style.
MCGUINNESS WAS BORN near Hanover in Germany in June 1951 to an English father, who was based there as a member of the RAF, and a mother from Cork. In his early years the family moved around the UK and Europe as his father was stationed at various RAF bases. He came to Ireland to attend Clongowes Wood as a boarder when he was just 10 years old.
He went on to Trinity College to study psychology and philosophy, although his early academic promise waned as he became more involved in extracurricular activities. (In 2000 he received an honorary doctorate in law from UCD). At Trinity he was friendly with Michael Deeny, future manager of Horslips; the late Bill Graham, who went on to be a writer with Hot Pressand a U2 biographer; and Senator Shane Ross. He also met Kathy Gilfillan, whom he married in 1977.
After Trinity there were spells doing a variety of jobs, including driving a cab in London and acting as a tour guide in Lourdes. The latter may have proved helpful when managing U2 through their born-again Christian phase.
He returned to Ireland and moved into the film industry - he worked on John Boorman's Zardozwhich was shot in Wicklow's Ardmore Studios. After a spell working on TV commercials, he became manager of a folk group which achieved some success, but McGuinness parted company with them after a year.
At this stage in 1978, Bill Graham had already discovered U2 and encouraged McGuinness to attend a gig at Dublin's Project Arts Centre. The rest, as they say, is history.
"It may be a cliche, but more so than any other modern manager Paul is very much the fifth member of the band in the mould of Brian Epstein and The Beatles," says Stuart Clark, assistant editor of Hot Press.
McGuinness is extremely well regarded by his peers in the music industry. One industry insider describes him as affable, good company, fond of anecdotes and extremely capable of working the room at an industry event. Bill Graham used to say McGuinness was extremely tuned in to what was going on in the industry but also knew his wine and food.
Clark says that in his experience McGuinness is the one manager that others in the industry look up to. He also says that McGuinness has been extremely generous with his time in providing advice to upcoming acts and managers.
The 2006 High Court action taken by the band against its former stylist, Lola Cashman, in order to return photos and other items including a Stetson hat worn by Bono, was not because McGuinness and co felt the items held much inherent value.
As Clark puts it, the U2 organisation is extremely loyal but it also expects fierce loyalty in return from those who are admitted to the inner circle. While Cashman was pursued through the courts, it was far from a vendetta - the band did not seek any order against her for their considerable costs.
MCGUINNESS SINGLE-HANDEDLY invented the blueprint for the current generation of rock manager, who is less likely to be procuring illicit drugs for his charges than advising them on how to invest their earnings.
If McGuinness has an Achilles heel, it's that he has yet to identify another artist with the same potential as U2. While Principle Management has signed up reasonably successful artists such as PJ Harvey, Paddy Casey and The Rapture, none of them threaten to repeat U2's achievements.
Those who follow the music industry closely praise McGuinness for hiring and retaining female executives in a business that is still largely male-dominated. They also say it is remarkable that in the rock world, where the manager is basically an employee who can be fired by the band, McGuinness is celebrating his 30th year with the U2.
Employee he might be, but McGuinness is well rewarded for his toils. Accounts filed last year for U2 Ltd show it paid almost €18 million in wages to five employees in 2006. It is believed these are the four band members and McGuinness, although representatives of the band's management company would not confirm this.
It could be condemned as good old-fashioned Irish begrudgery raising its head, but in recent years there has been a definite backlash against McGuinness and his charges, who, according to the most recent Sunday TimesRich List, have a combined worth of almost €700 million. With Bono berating world leaders for their efforts on third-world aid, many found it galling that in 2006 companies managing the band's affairs were moved to Holland to avail of a more favourable tax regime. In an interview with Hot Press, the manager defended that decision robustly.
"It's (Ireland) where we live and where we work and where we employ a lot of people," he said. "But we pay taxes all over the world - of many different kinds. And like any other business, we're perfectly entitled to minimise the tax we pay."
In the past McGuinness has said "the poet's job is not to fix the problem; it's just to point it out", advice that Bono seems to have studiously ignored with his attendance at events such as the recent World Economic Forum in Davos, Switzerland.
The timing of his comments this week will not have been arbitrary. 2008 is a crucial year for both U2 and the music industry at large. The last two U2 albums didn't exactly get rave reviews and fans will be expecting something special from the long player due this year. The music industry will hope that it will pull the punters back into the shops and shore up falling sales, which were down 10 per cent last year as digital downloads failed to offset plummeting CD sales. From the tone of this week's speech, McGuinness and co will certainly fight hard to deliver.
The McGuinness File
Who is he?U2's manager, or fifth member, who is widely regarded as one of the best businessmen in the music industry.
Why is he in the news?He slammed telecoms and technology companies this week for building billion-dollar industries on the back of musicians while giving nothing back.
Most appealing characteristics:Loyal, generous with his time and good company.
Least appealing characteristics:Demands unflinching loyalty and, in the manner of all rock managers, is not afraid to throw a good old-fashioned fit.
Most likely to say:That deal really wouldn't be in the best interest of my clients.
Least likely to say:Why don't you come back to my house and we can download some MP3s from the net?