The Lefsetz Letter: Apple/Tidal


Yes, Steve Jobs built a behemoth. Yes, Apple has everybody's credit card number. Yes, Jimmy Iovine built a headphone colossus.

BUT THAT DOES NOT MEAN APPLE MUSIC WILL WIN IN THE END!

Let's start with the canard that there will be competition, that multiple services will carve up the streaming marketplace. Why believe this when Google owns seventy percent of search? When Amazon dominates? Facebook too? The story of the internet is community, we all go to one towering trustworthy portal and every other outlet fights for scraps. Gonna happen in streaming music too.


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.

As for the vaunted 15 million subscribers… Ever think that's the ceiling? That Apple marketed to all of its customers and most didn't want it? Which is a fact. Sure, the number of subscribers will increase, but there's no hockey stick in evidence, none.

Because Apple is not cool.

There, I said it. Bands fade, why can't brands?

It's not worth dropping by the Apple Store, there's nothing you haven't seen before. And have you noticed the help there is glum and uninformed? As for Angela Ahrendts, can you tell me where the Buy button is on the Apple website? Where there used to be coherence, now there's chaos, no one's in charge, no one knows what's going on, yet the press keeps giving them a pass.

As for the vocal acolytes… They're working the refs, like the right wingers who'll clamp down on you whenever you posit a left wing position online. Apple dominates almost nowhere. It doesn't own the number one computing platform, nor the number one mobile phone OS… All it's got is a ton of profits and dominance in file sales, yup, at the iTunes Store, an antiquated construct if there ever was one.

Jimmy Iovine failed once before, with the original Beats Music service. Sans a free tier, you're screwed. Why should it be any different at Apple, because of the brand name? That'd be like saying we'll pay for that which is free just because a famous company is involved. Study some economics, that's just plain wrong.

And how and why should a record exec know anything about UIs? It'd be like asking Tim Cook to A&R an LP.

As for mixing files and streams in one interface, did everybody blank on Clayton Christensen? I thought "The Innovator's Dilemma" was the Silicon Valle bible, can't anybody in Cupertino read? Apple was protecting its past, which is anathema in tech.

So, Jimmy makes something out of nothing, the high end headphone business was a sideshow. So, he adds some sizzle and gets heroes to hype it. Well, streaming music was not a sideshow, Spotify already had traction. And so far, no no amount of exclusives seems to move the needle, not in any significant way. Hell, Taylor Swift isn't even on Spotify, and that service is WINNING!

Because Spotify is cool. With lame marketing, it's all about word of mouth. Subscribers double down and testify, they're addicted. And they aren't about to switch loyalties. And their evangelizing gains new adherents. Which is a much stronger bond than someone signing up for Apple Music because they're so damn dumb they don't know what else to do.

Amazon couldn't win in phones, why should Apple win in streaming music?

And Netflix was nobody but so far it remains unchallenged. It's the upstart people love, however much producers might abhor the payments and near-monopoly.

Pay attention to the newbies, who are nimble, who don't have to protect legacy assets. Hell, didn't that help Steve Jobs win? By axing legacy ports thinkers admired his pluck, his move into the future, it turns out those mired in the past lost, Apple triumphed.

I'd bet on Jimmy Iovine if he went back to the music business. He's a charismatic closer. But he's out of his depth here. As for the Beats victory, that'd be like saying a manager is great after only breaking one act, when everybody knows the true greats can do it over and over again.

Apple lost its edge. Its mojo. Bands can sell millions and their next project can completely tank. Because times changed, people have moved on.

And, people have moved on from the Tidal stars. It's a worldwide business, those Tidal owners mean something, but far from everything.

And this is how far Apple has sunk, they can't make it on their bona fides, they need help. It'd be like Shaggy having a singer on his record, like Wiz Khalifa depending upon Charlie Puth.

And now Spotify is running circles around Apple. Turns out algorithmic curation is better than the human kind, that's the essence of Discover Weekly.

Apple Music is a me-too product not much different from the Zune, and the refusal of analysts and fanboys to see this is remarkable.

Apple may not buy Tidal, it might gain more subscribers, but dominance is a desire that will almost definitely go unfulfilled.

I could be wrong.

But if you look at tech track records it's Daniel Ek who's batting a thousand, not Jimmy Iovine. And if Tim Cook knows anything about tech, even marketing, he's yet to demonstrate it. It's as if the band was fronted by Lucien Grainge or some other exec. But no, we want our acts propelled by geniuses who we've become enthralled by.

And there are no geniuses at Apple Music.

As for Beats 1, it's an utter failure. You know how I know why? Because if it was a success THEY'D TELL US!


That's entertainment business 101.

But all we've got is crickets.

There's no catalog business in tech. It's all what have you done for me lately. And what Apple has done is deliver a bunch of bunts with absolutely no scoring. And the last time I checked, you need home runs, otherwise there's no buzz, no future, that's the story in tech, no one starts slowly.

But somehow this gang that can't shoot straight will break all the rules and succeed?

Don't make me laugh.