THE LEFSETZ LETTER: Opportunity

You've got to own the future.


It's great to ride the crest of today, but those who survive anticipate the future and their place therein. That's the flaw of the music business, from top to bottom.


What is "Billboard"'s plan? Now that record sales mean almost nothing and information is free online, where does it go?


Or "Rolling Stone". It's anything but cutting edge and its power in music is nearly nonexistent. Did the Sheepdogs get any traction?


And then there are the major labels.


They cobbled together the late twentieth century paradigm and stopped. It was about getting good-looking people to make Top Forty music. It was a producer's medium. You sold it via media exposure.


But now traditional media is fighting for its life. MTV has moved on from videos and late night talk shows are faltering. The new major label paradigm is?


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.


But what's most fascinating is the lack of mentoring/grooming/development in the executive suite of record companies. Used to be they promoted from within, gave a successful promotion person their own label. Now the gears are gummed up. You think P2P killed the major labels? No, it's the lack of talent development, on the executive side, that will sign their death warrant. The game changes, in music there are no rules. He who believes the game is set is headed for death.


Everyone who talks about radio and record sales is heading for extinction. They're laboring under an old model. And they don't want young 'uns coming in and ruining their game.


Sure, Doug Morris knows how to create radio hits.


But that's all he knows.


And the rest of the corporate titans are not much better.


This is why "American Idol" and its two Simons could turn the music industry on its head. They didn't do it the usual way. The old guard laughed. Then the Idols became guaranteed sellers.


But that game is done, do you even know who won the ratings-challenged "X Factor"?


What's next?


It won't come from the usual suspects.


It'll come from someone not given opportunity in the game, who develops it himself.


Kind of like electronic music. Sure, the majors got out their checkbooks, but that's all they can offer, money. And most deejays know that's no longer where the big money is. It's at the gig. And why should they give up the percentage?


Like a superstar rock act which has seen better days, the establishment music business is fading away, playing to fewer and fewer patrons, as the game is being reinvented without them.


I cannot applaud Live Nation enough for their digital hires. From Nathan Hubbard to Eric Garland, the Ticketmaster side is peopled with music lovers who grew up in a different generation, who know that data oftentimes trumps intuition, and it's a way to further riches. Whereas the old guard just wants to keep on doing it the same way it's always been done.


Say goodbye to Doug.


Laugh at the overspending L.A. Reid.


Lucian, we hardly knew you.


Ever notice that all of Jimmy Iovine's recent triumphs have been outside the recording studio? Beats headphones and computer sound. You've got to say that Jimmy gets it. But he should not be running a recording company, he's most interested in himself. Whereas future enterprises must be run as a team, all for one and one for all.


Isn't that a laugh in this superstar exec era.


There's an illusion that all roads lead through the usual suspects. That the only money available comes from record labels.


But that's b.s.


You can fund your record with Kickstarter, get paid by YouTube, even promote your own shows. You're forced to do this, because the big boys don't want to invest at this level. They think they can swoop down later and cherry-pick what they want.


But that won't be.


You need the rights to create an online music streaming company.


You need no publisher/label approval to gain traction as an act. There's no monopoly on distribution.


Which is why as the years go by you're going to see a completely different music business. The labels will be marginalized. A niche of rights. The Sean Parkers and Daniel Eks of the future will be managers with teams that nurture and develop acts. Very profitable ones. Music will come first.


And the old guard will be retired.


If you're not listening to everybody, if you're not surfing the Web constantly, if you don't think there's plenty you don't know, you're toast.


We're reinventing the music business right now. Everything's up for grabs. If you're looking for approval from the old guard you probably want to live in your parents' basement until you're forty.


Music has always been an entrepreneurial business. Now more than ever.


Doesn't matter where you got your degree, if you got one at all. Who you know always counts. But he with vision who takes risks will win.


And this leaves out the old players.

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