I am Hollywood

[T/N: We're celebrating one of our biggest festivals currently, and our extended family has come to visit. I'll be busy until next Sunday, so my updates may be sporadic until then.]

[Chapter 1128: Is it Cold?]

Early the next morning, the weather in London remained gloomy.

Without any appointments in the morning, after breakfast with Merissa Mayer, Eric was in his villa on Garden Street, flipping through financial reports from the two major record companies, EMI and BMG, when he received a phone call.

Not long after, Merissa came in with a shy girl, who turned out to be Poppy Delevingne, the same girl he had met during the Victoria's Secret Fashion Show in London.

The girl wore a pink hoodie, her slender legs in plain flats, looking like the quintessential neighborhood girl, all charm and grace.

Noticing her visibly nervous demeanor, Eric smiled and said, "Isn't it cold?"

Feeling the warmth of Eric's friendly smile, Poppy relaxed immediately, walked over, and sat next to him, responding, "A little, but it's okay."

Eric poured her a cup of coffee from the pot on the coffee table, handed it over, and commented, "Beauty is what matters most."

Poppy politely thanked him as she took small sips of her coffee, her lively eyes scanning the room.

Merissa had to head to the headquarters of the group's UK division to fetch Poppy, and after changing into another outfit, she said goodbye to Eric and left.

Once Merissa left, Poppy seemed to relax a bit more and even shifted to a more casual position next to Eric, peering at the documents in his hand. "Eric, what's this?"

"Financial reports. I don't think you'd be interested," Eric showed her briefly before asking, "Don't you have class today?"

"It's Saturday."

"Oh, I completely forgot," Eric said, flipping a page of EMI's 1998 report and casually added, "How have your parents been lately?"

"They're great. But Dad is off in Asia, and Mom isn't in London either."

Eric recalled his previous impression of Poppy's somewhat odd parents and asked, "So who's taking care of you?"

"Who needs to be taken care of? I'm already an adult. My sister has a nanny watching her."

Looking at his watch, it was still not yet eight-thirty. "Then you definitely haven't had breakfast, right?"

"I rarely eat breakfast," the girl acknowledged with a nod, adding, "I called you after I got up, worried you wouldn't want to talk to me anymore."

"It's not good for a little girl to skip breakfast," Eric remarked, reaching for his phone. Yet, after thinking for a moment, he realized he wouldn't know whom to call for such a thing. He sighed, then stood up, "Let's go get you something to eat."

Poppy nodded with a smile. "Okay."

...

Even though it was April, the morning temperature in London was still around ten degrees Celsius, carrying a heavy damp chill.

As they stepped out of the villa, Eric wore a trench coat, hardly feeling the cold. But the girl beside him visibly shivered, her petite frame seeming to shrink a bit.

Finding it somewhat amusing, Eric asked, "Do you need to wear my coat?"

Poppy looked at the trench coat Eric wore. Although it wasn't long, it could wrap around her completely. However, noticing the smile on Eric's lips, she teasingly responded, "Eric, that question is usually not supposed to be asked."

"Oh, I guess I was in the wrong."

Saying this, Eric indeed took off his coat and wrapped it around her.

The chill was instantly blocked out, providing warmth along with the lingering scent of the man beside her. Poppy felt her cheeks warm and, peeking from the wide sleeves, linked her arm with Eric's, hesitated for a moment before daringly saying, "Eric, you remind me of my boyfriend."

"I know about that line; it's usually what boys use to flirt with girls at clubs."

"I'm not joking," Poppy replied, her expression showing slight displeasure, before curiously asking, "Have you ever tried picking up girls at a club?"

"Me? I'm too old; I don't go out to clubs anymore."

"Ha ha."

The Royal Garden Hotel was just at the street corner, and Eric led the girl into the hotel restaurant.

Once inside, Poppy handed her coat to the waiter and settled into their seats.

"I'd like a fruit salad -- apples, strawberries, bananas, and pineapple -- don't put too much dressing on it. Also, a glass of milk. That's it."

The waiter took her order and turned to Eric. "Mr. Williams?"

"Just a cup of coffee and a copy of The Times, please."

The waiter nodded and walked away.

Poppy leaned on the table and asked, "Eric, aren't you going to eat?"

"I had already eaten before you got up," he answered.

"So you specially brought me here for breakfast?"

"Isn't that touching?"

Poppy nodded earnestly, "Dad never asks if I had breakfast."

"Then I can't help explaining that to your dad."

"He always looks busy, so does Mom. I bet they're not as busy as you, though."

"I happened to have some free time this morning; otherwise, I wouldn't have the time to check on you."

"You definitely would," the girl confidently asserted for some reason, adding, "Eric, I saw the trailer for Iron Man; it looks really cool. Can I go to the premiere the day after tomorrow?"

"Sure, I'll have Mary bring a few invites for you. If your parents come back the day after tomorrow, they can come too."

"They won't be back, but can I bring my friends? It would be a big deal."

"For your sake, I have to help. Would five tickets be enough?"

Poppy eagerly nodded and giggled, "Yes, that's plenty."

...

After breakfast, the two returned to Eric's mansion.

Poppy clearly enjoyed the time spent with Eric. Even though the villa was full of entertainment facilities, she spent the entire morning curled up with Eric like a kitten, chatting about all sorts of topics.

At noon, Eric was scheduled to meet Colin Southgate, the president of EMI. As noon approached, he led the tailing Poppy back to the street corner's Royal Garden Hotel, where they had lunch.

...

At twelve o'clock, Colin Southgate arrived promptly. He was a middle-aged man with graying hair and looked to be in his forties or fifties, dressed in a dark red suit, tall and showing signs of a life of comfort.

Seeing Eric with a young girl, Colin felt a bit displeased. After exchanging a few pleasantries, they took their seats, and Colin bluntly stated, "Eric, regarding the collaboration with Firefly Electronics, the board believes it could further hurt the already declining album sales. Moreover, the measures Fireflyer players take against piracy are quite inadequate, so we cannot agree."

Poppy, sitting quietly next to Eric, was surprised by the gentlemanly man's bluntness; her brow furrowed slightly, and she looked at Eric, hoping he would respond immediately.

"Speaking of piracy, I remember, due to the promotion of personal computer CD burners, last year in North America alone, the sales of blank CDs reached 130 million units. Considering the album price of 20 dollars per disc, that equates to a loss of 2.6 billion dollars in sales for record companies."

Eric signaled the waiter to serve the dessert to Poppy before continuing smoothly, "As for the global market, I haven't seen statistical data, but it should be at least doubled. This is the fundamental reason for the decline of the music industry. Just like Hollywood once adapted to the video tape market, embracing digital music players is the best solution to prevent the music industry from completely collapsing."

Colin Southgate clearly had not kept up with this kind of information, frowning slightly but still replied, "Eric, you're being alarmist."

"I've reviewed EMI's financial reports for the last five years. Compared to last year, looking back to 1997, 1996, 1995, and 1994, although EMI's annual net profit has fluctuated, it has mostly stayed around 400 million pounds. However, last year, excluding the non-operational income from selling Virgin Records, EMI's annual net profit was just 310 million pounds, a drop of 25% compared to previous years. If you don't take action, the next few years will be even more difficult."

"Do you think partnering with Firefly Group will save album sales?" Colin clearly struck a nerve, saying, "The sales model of Firefly Electronics is completely undermining the foundation of the music industry. Besides, even though physical album sales have plummeted, Yahoo Music's global sales last year were only about 300 million dollars, which is still insignificant compared to the entire music industry."

"Colin, you've chosen the wrong comparison. Yahoo Music's sales in 1997 were just 50 million dollars, and by 1998 it was close to 300 million, a growth rate of 600%. We don't expect this year to achieve a 600% growth again, but even if it just doubles, annual sales could reach 600 million. With this sustained growth rate, within five years, Yahoo Music's revenue could far exceed any of the five major record companies, even surpassing the total album sales of all your companies combined."

Colin Southgate shook his head, "Eric, that's impossible; you don't have enough content."

Eric shrugged, "So that's what we're discussing today. A partnership would give EMI a new revenue stream, and we would also gain sufficient content; it's a win-win."

"Eric, this sounds more like a one-sided win for Firefly Group. Not only do you take all the profits from digital music players, but you also want to split 30% of the revenue from our record companies. More importantly, the control of the platform is entirely in Firefly's hands. Do you think we would agree to such an obviously one-sided deal?"

Although Colin spoke plainly, his tone softened a bit.

Eric did not respond directly to Colin Southgate's inquiries but said, "In fact, Firefly Electronics has already started discussing a spin-off plan. We plan to separate Fireflyer as an individual entity. I'm sure you've heard news about this?"

"Aren't you planning to spin off the Fireflyer business for an IPO?" Colin blurted out his assumption, but then paused, his gaze fixed intently on Eric, "Are you suggesting that Firefly Electronics is willing to accept investments from other shareholders?"

Eric shook his head, correcting, "To be precise, it's Fireflyer Corporation."

Colin Southgate remained silent for a moment before saying, "Eric, I need to see your spin-off plan first."

"The specific plan hasn't been fully developed yet, but I can have my assistant send you a draft this afternoon," Eric explained further, "And I can assure you that after the spin-off, Fireflyer's profit margins will significantly improve, as it will no longer need to bear R&D costs for other departments of its parent company."

"Then, Eric, let's be frank; how much equity could Firefly Electronics, or rather, Fireflyer Corporation, transfer to EMI?"

"Eight percent."

"That's too little, Eric; it should be at least twenty percent."

"Colin, if all five record companies each took twenty percent, what would be left for me?"

Sitting quietly beside Eric, Poppy found humor in Eric's remark and let out a small giggle. Realizing her lapse, she quickly apologized by sticking out her tongue at the two men.

Poppy's interruption didn't affect Colin Southgate's train of thought, as he continued, "Eric, we all know that you don't need to win over all five major record companies. Just one large record group joining would be sufficient for Yahoo Music at this stage. Moreover, as long as Yahoo Music proves its potential, all the other companies would have to join in, whether voluntarily or out of necessity."

"You're right," Eric nodded, "However, the eight percent equity transfer rate is also something we've thought through carefully. I'm not intentionally offering a low number to drag out negotiations for months; everyone's time is precious, and I don't want to delay this further. We can calculate that the trend of digital music players replacing traditional portable players is already set in stone. Given their superior portability compared to cassette players, the market capacity for digital music players is likely to reach at least one hundred million units in the future. If Fireflyer retains just 70% market share at that time, that would mean 70 million units sold yearly, with an average selling price of 350 dollars and a 15% net profit margin -- resulting in an annual net profit of 3.675 billion dollars. After the IPO, based on a 30 times price-earnings ratio, Fireflyer's market cap could easily exceed 100 billion dollars. An 8% stake for EMI would be worth 8 billion, without considering annual profit dividends, which already matches EMI's current market value."

Colin Southgate's expression wavered, yet he did not easily concede. "Eric, this is merely your ideal numerical model; who knows how the real situation will unfold? Many electronic manufacturers are also working on digital music players. It is difficult to determine whether Fireflyer will decline in the coming years. Even if it does not, with increasing competition, you can't possibly maintain such high profit margins. Also, it's impossible for a company that only sells a simple digital music player to have a valuation of 100 billion dollars."

"Colin, if you only view the Fireflyer player as a standalone product, that would be too dismissive. The Firefly Group is building a complete digital music ecosystem; Fireflyer is just one component. It might provide significant profit for the entire ecosystem, but if other manufacturers only see this, they will never surpass us. Even if they understand the complete layout of the Firefly ecosystem, they still would not catch up because Firefly Group has already distanced itself from them considerably."

*****

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