THE LEFSETZ LETTER: Entercom

Anyone else having a sense of deja vu? Like this is the end of the Mafia?

I don't know about you, but where I grew up there was a strong organized crime presence. My father used to alert me to it as we drove through the streets of Bridgeport, Connecticut. He'd tell me about the hits, the people to be avoided. I had a healthy respect for the Mafia.

Maybe that's why I believe "Godfather II" is the best movie ever made.

But the reality, despite the "Godfather" trilogy and "The Sopranos" never mind "The Valachi Papers" and numerous other Mob flicks,


Bob Lefsetz, Santa Monica-based industry legend, is the author of the e-mail newsletter, "The Lefsetz Letter". Famous for being beholden to no one, and speaking the truth, Lefsetz addresses the issues that are at the core of the music business: downloading, copy protection, pricing and the music itself.

His intense brilliance captivates readers from Steven Tyler to Rick Nielsen to Bryan Adams to Quincy Jones to music business honchos like Michael Rapino, Randy Phillips, Don Ienner, Cliff Burnstein, Irving Azoff and Tom Freston.

Never boring, always entertaining, Mr. Lefsetz's insights are fueled by his stint as an entertainment business attorney, majordomo of Sanctuary Music's American division and consultancies to major labels.

Bob has been a weekly contributor to CelebrityAccess and Encore since 2001, and we plan many more years of partnership with him. While we here at CelebrityAccess and Encore do not necessarily agree with all of Bob's opinions, we are proud to help share them with you.

is that the Cosa Nostra lost the war. With RICO and stronger law enforcement, the Mafia's back was broken. It's a shadow of its former self.

At first I didn't give a crap about the Entercom suit. I mean who listens to terrestrial radio. Doesn't EVERYBODY know the songs are bought and paid for? But then I thought about that exact fact. That listenership is declining, and the major labels are losing mindshare. And what if there truly was equitable access. God, the influence and airplay of the majors can only go down.

But that's not the only front they're being hit on.

There's P2P piracy. There's IM'ing and hard drive swapping. Internet and satellite radio. Alternative forms of exhibition and
distribution.

Make no mistake, in front of your very own eyes, the power of the major label cartel is being broken. It was developed for a different era. When there was no sun shining on its inner workings. When threats kept outsiders from asking questions. When you could get away with questionable accounting.

iTunes is the labels' worst nightmare not because of the lack of variable pricing, but because of the accurate ACCOUNTING! With nothing to press, nothing to ship, an accurate count of what is sold can be easily ascertained. So now, it's CLEAR that the labels are screwing the artists. With their pittance of the sixty-odd cents of wholesale. With their ultimate royalty still decreased by packaging deductions.

What do you need a major label for? To spend a fortune to burn you out instantly?

What if you can get exposed without the major label?

You can get on MySpace no problem. You can get on Internet radio no problem. Satellite too. And soon, TERRESTRIAL! Oh, the majors will still have their relationships with TV, but is TV really the answer for anybody other than the vapid superstar?

The game is changing IRREVOCABLY! If there's any value in the major labels, it's purely in their catalogs. It's too expensive for them to do business in the new artist world. There's too high an overhead. All those expenses for recording and marketing. For a very brief career that fewer people care about.

It's just amazing. The major labels are collapsing under the weight of their own tired, fixed systems. They're embattled on all fronts. Made to compete on an even playing field, they can't.

The advantages of the major are disappearing every day. No credible act wants to sign with them. Can you imagine the Arcade Fire continuing to fly solo fifteen years ago? But they're AFRAID to go with the major, for their credibility will take a hit. Sell out to the man and you've got to play by his rules.

Nobody seems to get it. Not Dennis and Lenny over at "Hits" or their mocked "Billboard". Not SoundScan counting CDs or BDS. They're all built for an old system. An old boy network of insiders. That everybody has hated for years and doesn't have to play by the rules of anymore.

Distribution is king. Not content. Major labels controlled not only retail distribution, but distribution/exhibition on radio. Now there are more venues, over which they have no control, and they're losing power over the remaining domains, other than classic physical retail, which is gonna die. Then again, by selling out to the big box retailers did they seal their fate ANYWAY?

This is not hysteria. The majors won by fixing the game. By playing with their own marked deck. All their advantages are evaporating. They will dominate no more.

Related Post