Fred Goodman, Author of 'Fortune's Fool,' Definitely Isn't One. Now, About That Shirt...

First rule of being a guest on Imus in the Morning: Don’t ask the I-Man “How ya doing?” as Fred Goodman, author of Fortune’s Fool, did today.

“I have cancer, Fred,” Imus said, of course. “But I’m alright. I’m treating it holistically, do you want to talk a little bit more about that?”

Knowing a rhetorical question when he hears one, Goodman, a former editor at Rolling Stone magazine, laughed and told Imus that his book is about the state of the record business over the last decade, and how the industry has been the first in the media to be challenged by the Internet.

Fortune’s Fool focuses on Edgar Bronfman, Jr., the heir to the Seagram liquor fortune, who decided to refocus Seagram as an entertainment company when he came to the helm in 1994. He sold the company’s 25 percent stake in Dupont, a decision that split his family, and began buying record companies like MCA, Polygram, and Interscope.

“They were doing pretty well, but they were sort of nervous about what was going on with the Internet,” said Goodman. “They felt that they needed to have a big tie up.”

So Bronfman hooked Seagram up with Vivendi, a French water company-turned-media conglomerate. Not long after, the company collapsed and the Bronfman family lost around $3 billion.

To repair his soiled reputation, Bronfman bought Warner Music. “I think he’s proven himself very well,” said Goodman. Given the terrible state of the music industry, which has shrunk about a third over the last four years because of the Internet, Warner’s performance has been surprisingly stable.

Rather than blame the music industry’s woes on Internet downloads, Goodman said illegal downloading is what precipitated the problems. “You might argue what ruined the record business was their inability to deal with the Internet,” he said.

Though downloads destroyed the CD business by making music essentially free, CDs themselves were never prized products in the first place. “People loved LPs more,” said Goodman. “The book business obviously has problems too, but I don’t think books will be decimated the same way compact discs were because people like the experience of reading a book.”

The music industry’s greatest mistake, in Goodman’s view, was its inability to give people a reason to buy something rather than just take it.

The business will survive, he believes, because it still does something no one else can: create careers. “Even with record sales plummeting, it’s the fastest, most effective way to get known,” said Goodman, who Imus will try to make better known by getting him on Cavuto’s show.

He had, however, one bit of advice for Mr Goodman: “Maybe you can put on a tie, and not wear your Don Ho shirt,” Imus suggested. Just an idea.

-Julie Kanfer