They are going to pay more and own less but they are not going away.
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.
Think of the labels as marketing entities. They can help grease your path to success. But do you need them?
Only if you make popular music, i.e. songs that are on the hit parade, i.e. the Hot 100, otherwise they’re not worth their while, it’s better to keep the money while they do a miniscule job of working you to minor formats, like Active Rock or Adult Alternative. Major labels are into money, not art, and if they can’t make any, they don’t want to be involved, and they don’t want to make a little, they want home runs or grand slams, otherwise it’s not worth oiling up the machinery.
Don’t argue against the reality, embrace the new world.
One of the biggest bottlenecks pre-internet was getting your music into a store. And even if you could do this independently, you had trouble getting paid, without a steady stream of product. But now everybody can get their music on streaming services for a small fee, and can get paid direct and regularly, and this is a great boon, because even if you were owed money by the major in the past, they’d account twice a year and hold reserves, but in the non-physical world there are no reserves, so this is a good thing.
The major labels are not into developing talent, but they are into developing careers. They can take you from zero to hero, but they are not interested in a long hard slog where they allow you to experiment and figure out who you are, it’s too expensive and time-consuming. But if you want to go to the moon, quickly, the label can help.
But it’s not the only way there.
At this late date you can use internet tools to establish your own career. Social media is better than any of the old publicity tools. However, you can get lost in the shuffle. But don’t assume the major can help you out, they want you to do the heavy lifting/posting, and they only want to sign you if you’ve made headway, so…
You’re on your own in the beginning, everybody is, and then you either get traction or you don’t. Don’t tell the label how great your music is, SHOW THEM!
But once you’ve established a beachhead you have negotiating power. This is a critical moment, you’re going to have to give to get. Once upon a time recordings generated a ton of cash and the labels were satisfied with that, now they want a piece of everything.
Unless you’re willing to say no.
This is the big change. If you’re looking for big daddy, or a bank, sign a heinous deal with a major. But now contracts are wide open, every one is unique, so…
You can get better terms.
The old days of the label raping and then starving you are done. They’re gonna give up more in fairer deals. They have to. Because there’s now an alternative path, proven by Chance the Rapper, and never underestimate the power of a leading light, this is not Trent Reznor axing his label, going indie and then going back to the major, no, Chance was built from the ground up without a major, knowing that recordings are not everything. Today you have multiple income streams, with touring usually being the largest, why give up any of that action to a passive investor, i.e. the label? The days of solely being a recording act are through. You not only tour, but you get sponsorships, sell not only merch, but clothing lines and perfume and games and so much more. Because you want to be rich. Everybody likes the money, especially after they’ve been exposed to those who have more, which is what success will give you. Think opportunity as opposed to oppression.
So the major is gonna have to pay a higher royalty/split with more frequent payment.
Also, the next big change is the end of ownership. This is heinous. You sign a deal, pay off costs and then the major still owns the copyright. Expect the major to go to a licensing arrangement.
As for exposure, the major’s forte…
If you want major radio, you gotta sign, but radio is fading, it can make something big bigger, but tracks get started online.
But the majors also have an undue impact on playlists. Will Spotify remain independent? After Jimmy Iovine goes, with his fealties to the majors, will Apple still care about the majors? Amazon?
This is unclear, but one thing’s for sure, it’s better than it was. Radio is a closed shop, but streaming is more open. You can leverage relationships and culture to get added and streamed on the service.
As for the majors’ ownership in Spotify…
Expect that to end. The majors are public companies run by contracted employees who are not in it for the long haul. They’re gonna cash out soon after Spotify goes public.
However, never underestimate the majors’ catalogs. It’s their assets that give them power. An indie has trouble because they have no catalog to pay bills when times are fallow. Also, the majors use their catalogs as a big stick, distributors need them to function.
So, the majors are not going to disappear. And the odds of a giant indie replacing them and becoming a new major are low.
But the majors are gonna take less and be more honest, the landscape demands it, they are no longer the only option.
And this is good.