THE LEFSETZ LETTER: It's The Money

Once upon a time you couldn't get rich in the music business, not really rich, not Lloyd Blankfein rich, not corporate America rich, not screw you rich.

Music was a developing business. Akin to snowboarding and computers and so many other enterprises that started out as hobbies but eventually generated boatloads of cash.

Sure, there were always tunes. But what broke music big was the Beatles, the album and baby boomers.

Suddenly, you had a ready market willing to go in for an advanced price and money was generated.

But it still wasn't that much. Because in the sixties and early seventies tax rates were high, corporate titans weren't overpaid and we were all in it together. We envied the rock stars' lifestyles more than their bank accounts. The women, the travel, the fun… Hell, most of the acts were broke or close to it, how much money could you make on three dollars a show and a draconian record deal?


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.

Still, when revenues shot up, the originators sold out. Most famously Ahmet Ertegun at Atlantic and Jac Holzman at Elektra. Sure, Ahmet came from money. And Atlantic wasn't known for paying prodigious royalties. But with Ahmet it was about the music.

It's not about the music anymore.

Think about this. The labels and the concert behemoths are not in the same business as you. They only care about the money, art is secondary.

When they decry P2P theft they don't do it on behalf of the artists, but themselves. After agitating on behalf of the artists, saying theft is going to kill creativity, they keep all awards to themselves and ask for more rights for artists and pay less money to them.

But now it's even worse. Because music executives want to make as much money as the corporate titans. That's the game they're in. They're no longer midwives to art, but adherents of Ayn Rand, looking to increase their personal bank accounts, becoming worldbeaters unto themselves.

It's kind of like finding out the manager makes more than the players and doesn't care if you win or lose, as long as he gets paid.

I don't think the public knows all this. Because the public has never been party to the vast sums being traded in the music world. Then again, many people would rather steal than buy, because they don't think the artist sees any of the cash, and in most instances, they're right. Sure, as long as the company stays in business it pays some advances and royalties, but the vast majority of the revenue is never distributed to those who make the music. As for those shepherding the tunes through the system, is there anyone who believes we're in a golden age of hit music? That the labels are doing a good job?

1. You just can't make that much money playing music. You'll never ever make what a Wall Street banker does. So give up that dream.


2. Be suspicious of anyone in music making that kind of bank.

a. The executives. If the label heads pay themselves, there's less for the artists, it's just that simple. If a concert executive is making double digit millions while profits are in the dumper it's about rape and pillage, not the building of a new paradigm. There are no miracles.

b. The acts. If you trumpet the fact that you've got the biggest grossing tour then you're probably overcharging. An act should not be proud of the gross. That's like trying to convince a woman she should marry a man who's had sex with thousands of women, or vice versa. You want someone you can connect with, not someone who uses you as a plaything, who doesn't believe in mutuality and will kick you to the curb willy-nilly when times get tough or he perceives something better in the offing. U2 are tax exiles who like money. Notice they didn't rescue "Spider-Man" with their own cash. Edge needs to build in Malibu because..? And Jon Bon Jovi is a narcissist who needs the adoration of fortysomething moms again and again, overcharging so he can appear to be king of the world, even though he's closer to a blowhard on Fox News. What about the little people Jon? What about smaller shows with lower ticket prices and taking time off to make some memorable music? And then there are the acts that scalp their own tickets or make deals with brokers.

3. Which side are you on?

This is complicated. Because people have a hard time journeying into the wilderness, not taking the easy money, denying conventional wisdom.

The news media is as troubled as the music business. Don't believe a thing print or TV has to say about stardom. They like it the way it used to be. They hate the Internet. They don't want to give up power. They're fighting to protect their jobs. Ignore them.


Ignore critics. Because they just want to drag you down to the miserable place they are. Poor and unhappy.

Make it about the music. Know there are no guarantees. Know that you may never get rich. Know that the person who must be most happy is you. Then your fans.

4. Music's power trumps money.

This is what those with money don't want to admit. They want you to believe that only with their money can you make it. That money changes everything. It does not, music changes everything.

a. Retail is dead. The only reason CDs haven't gone the way of the floppy disk is because the labels make the most money selling them. As for the public demanding them, the public never would have given up floppies if Steve Jobs didn't kill them.

b. Radio is about advertising. FM was an anomaly. Stations could no longer simulcast their AM programming on the FM band and gave free reign to the lunatics and the innovators. Once they started making money, the death warrant was signed. If you're counting on radio to break you, you're not good enough to break yourself. You're looking for the imprimatur of the man in order to succeed. You only need the imprimatur of the fan. You can get a direct connection online. What's stopping you?

c. Labels. They call it the music BUSINESS! If you can't generate cash quick, they're not interested. And if you can generate cash this quick, you probably don't need them. But chances are, you're gonna need time to grow. They don't want to hear this. Unless time is twelve months instead of twelve years.

d. Concert promoters. Thieves. The agents and managers have turned them into such. Used to be the promoter was an impresario, bringing great art to the public. Now he's a bank, guaranteeing a ton of money for the chance to make a little profit or take a huge loss. If you won't let the promoter make money, you won't have a good show.

5. We're rebuilding from the ground up.

It starts with the acts. Are you part of the problem or part of the solution? Are you going to slave on the plantation or like Curt Flood say you're mad as hell and just can't take it anymore? As long as you're willing to get raped, there'll be no change. He who makes the music should make the most money. If you think this is now true, you probably believe auto-tune is a fiction.

You've got to retain creative control and your rights. Make a deal with the man and you're just a cog in his plan to get richer and hobnob with the rest of the elite in their private jet lifestyles. If you can't say no, you don't deserve to say yes.

Play wherever and whenever your fans will have you. Charge little. Record plenty of new music. Money will come if you're good and you've got fans, don't focus on your business plan up front, focus on your MUSIC!

Related Post