It's time to stop suing traders (stop the Pirate Bay proceedings post-
haste) and recognize that the labels will be saved by the future, which is imminent.
I used to comb Limewire and Rapidshare, adding to my collection of often unlistened to MP3s. But I've just about given up. It's just not worth the time. Not when I've got Spotify.
Once again, everything the pundits said was going to be true is. You don't fight piracy via lawsuits, you just develop a more enticing business proposition. ISP fees? Charging for downloading? Who is going to bother to take the time to steal when you can listen to whatever you want, instantly?
The biggest mistake the major labels ever made was their refusal to license Napster. Suing the company was okay, after all, the trading company insisted its service did not infringe copyrights. Once the
court decreed that they did, the labels needed to license Napster.
Exact terms of the deal were irrelevant. Because Napster had a defined lifespan. Like a Nintendo Game Cube or a PlayStation 2. In tech world, there are product cycles. Presently, Apple is on the upswing in the notebook/laptop world. Will this maintain?
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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.
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Maybe not if Windows 7 is as good as reviewers say it is. I'm skeptical, since the operating system is based on the same spaghetti code that was boiled so long ago. But will Apple continue to rule in the music world? Questionable!
Let me clarify. There's a good chance the iTunes Store could be toast, a veritable sideshow. Because soon, the majority of people will not own their music, they'll rent. And they'll be happy to do so. True cheapos will pay in advertising, those with more sense than time will pay. But nobody will bother paying by track to own in an evanescent format, they'll just want to stream.
Used to be I lost my connection. On a regular basis. That's a rare event these days. So, if all my music is dependent on my Internet connection, that's just about okay with me. And with Sonos, you get your music straight from the pipe, no computer is necessary. The songs go straight from your router to your speakers. Radio and Rhapsody stream this way.
But what truly made Sonos workable was the iPhone/iPod Touch interface. And what truly makes an ad-supported streaming service viable is the interface of Spotify. It's iTunes. Not on steroids, but just as clean and just about as easy to use.
They tell me you can stream everything on MySpace. But I can't find the tracks on MySpace. The company's roots, which are based in raping and pillaging for profit, have hindered the enterprise's development. There were MP3 players before the iPod, but the iPod got the interface right and killed not only all its predecessors, but all its successors. Furthermore, Spotify is a separate app, just like the iTunes Store. So you're not dependent on a slow-loading, sluggish Web browser. Functionality is excellent.
So what does all this mean?
Rather than worrying about growing margins at the iTunes Store, blow out all your product for bupkes. Are you aware of the Creedence Clearwater Revival story? Greatest hits package selling 75 copies a week moves 20,000 units when the price drops by half. Price does matter. To argue about raising prices at the iTunes Store is futile. I'd say lower them far below 69 cents a track. Because soon, you'll barely be able to sell them at all! Selling MP3s/AACs is like selling cassettes. The lifespan is limited. I'm giving you a heads-up! To fret about raising prices and lifting margins is akin to investing in Blockbuster, when what movie rental exists is controlled by Netflix, which delivers the DVD straight to your home or streams the movie to you via your computer. You don't want to try and drag people into the past, you want to be one step ahead of them, greeting them in the future!
Load up everyone with files. Be my guest. Own the history of recorded music on the equivalent of a wax cylinder. Because we're going to sell you everything once again in a better format, the same way the business blew up by getting people to replace LPs with "perfect", indestructible CDs. CDs still work, but who wants them?
I thought I didn't need Spotify, I believed I had enough access to music. But the interface was so good, the availability so perfect, that it's all I use to listen to music on my computer. I haven't stolen a single track since I've installed Spotify. It's just not worth it!
If you license at the ISP level, are you going to have everyone pay or is it going to be opt-in? If people pay for music, what about the
now-impacted movie business and the publishing business thereafter?
How is the money going to be divvied up? I'm not against ISP licensing, I just think Spotify is a better way.
Apple will have to immediately compete or soon be marginalized.
You'll have to be able to stream everything in the iTunes Store.
Apple's only advantage being portable streaming on the iPhone.
That's the one missing element, portability. But the solution is in the offing.
You can't depend on Universal to come up with a solution. Nokia Comes With Music? People pay and they don't even know the music is included! Technologists deliver the solutions. And they only work if licensed by the rights holders. Swedish techies put up their own millions for Spotify, basing it upon proven P2P technology, and now they're so far beyond MySpace and iMeem and everybody other than Apple that the labels will soon fear them, just like they've made Apple/iTunes their whipping boy.
But the rights holders have the surfboards. The platforms are just the waves. Some of them very big, but eventually they crash on shore and dissipate. Rather than worrying about giving up the gold, just license everybody, because lifespans of platforms are barely 
longer than those of cell phones. I mean would you be caught dead using a StarTac today? Even a Treo? Two years tops and you're out, you've got to have the new thing, not only for hipness, but because of the new features! Motorola tanked by depending on the RAZR. The present iTunes is the RAZR, have no doubt. As for CDs? They're the telegraph.
Don't debate rental versus ownership. Just like people rented videotapes back in the eighties, they'll rent music. It's not about philosophy so much as convenience. DVDs became an ownership item because they were so cheap. Still, regular viewers consider Netflix a better business proposition. Then there are others, who don't pay at all, and just use Hulu.
People want what's easiest. They knew that files/online/computer music was much easier than buying and listening to CDs when label majordomos were still having their e-mail printed out by their assistants. People want all the music all the time for a very low price. They just haven't been offered it in a palatable, ubiquitous way prior to now. When Spotify launches in America word will spread faster than news of Facebook's heinous licensing practices. Do you want to foresee what's coming or be caught like a deer in the headlights, like ignorant Mark Zuckerberg?
I'm telling you now. Streaming on demand is much closer than you think. Selling digital files, never mind physical media, is on its way out. Clear out your inventory and get ready for the new world!
