Will there be a green day for the company behind Green Day? Warner Music has filed to go public in a bold move that will clearly test the resolve of the IPO market. See, it was just last year that Time Warner (NYSE:TWX) wanted out of the music business so badly that it sold the division for $2.6 billion. A year earlier, it was General Electric (NYSE:GE) that said "thanks, but no thanks" when it went after Vivendi's (NYSE:V) Universal assets but left Universal Music Group untouched.

With file-sharing running rampant and CD sales stalling, one has to wonder who would want in on the Warner Music offering. It's a prospect made even more unappealing by the fact that some insiders are using the IPO as an exit strategy. Another unsavory nugget is that last week's filing indicates that the company paid out $350 million to its shareholders back in September, with the audacity to claim that the distributions were "funded out of our cash balance and not from the incurrence of additional debt." The only problem here is that three months later, the company took out $700 million in new debt to dish out another $681 million to its buyout investors. What's the point in fighting digital piracy when you're willing to set your own ship ablaze?

Along with an earlier $202 million distribution, the company's investors have essentially gotten back nearly half of their $2.6 billion investment and left Warner saddled with $2.5 billion in debt as of December. Talk about bringing new meaning to the "rip, mix, burn" credo. Is it too late for Green Day to rename itself Red Day?

Although Apple Computer (NASDAQ:AAPL) has come to the music industry's rescue by selling digital downloads successfully, Warner Music's revenue still dipped during the critical holiday quarter. With the company looking to sell $750 million worth of stock through the new offering after so much of the company has been squeezed dry, this one is likely to hit a sour note with the investing community. New buyers will be getting into a company with negative book value before their greenbacks have even been counted.

Yet no matter what anyone may be telling you, music is not dead. If anything, it's more popular now than ever. The ability of Internet broadcasters and satellite radio to cater to specific genres around the clock has only whetted aural appetites. Hit shows like American Idol have created new recording stars. Yet deep in all that expansion lies what is troublesome to the four remaining major record labels. Because music is being disseminated in so many ways, it's not like the old days, when traditional radio stations and the labels worked together to drive sales. The new music gatekeepers are television producers and freethinking techies broadcasting virtually out of their basements. The indie music scene -- the scaled-down niche players who can turn a profit on shoestring budgets -- are where the real future growth rests.

In Warner's defense, it is coming to market leaner than it was when it was taken private. Unfortunately, it may not be lean enough.

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Longtime Fool contributor Rick Aristotle Munarriz can set this Take to a song if you would like. His band, Paris By Air, was once signed to Columbia Records. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.