THE LEFSETZ LETTER: Azoff's Deal

Irving told me he had something really big coming. But I didn't expect it to be THIS big.

In a world where David Geffen was left out of the negotiations of MCA's sale to Matsushita, because he notoriously couldn't keep his mouth shut and meddles, one has to say no single individual has ever had this much power in the music industry. Clive Davis may publicize the fiction that he's the man with the golden ears, but he got fired by his bosses at Arista, and even though he crawled back, he was neutralized/marginalized in Sony's recent acquisition of BMG. And Doug Morris… That's one powerful dude. But he's not positioned well for the future. Sales dropped 17.6% year to year last week, and Kenny Chesney's album debuted with 176,000 sold, a fraction of last year's total of 387,000, for "Just Who I Am: Poets & Pirates".


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.

Doug's presiding over a declining business. Whereas Irving truly controls the talent. The creme de la creme, over 100 acts. And with the talent comes the true power.

And TicketMaster has been spun off from IAC… So, unlike Doug, Irving's not really reporting to anybody. It's his fief. To do what he wants.

And despite allegations of untrustworthiness, Irving's got Warner on his side, and Dolan… They may have cashed out, but this is a business of loyalty, the money comes second at this high level. Because what goes around comes around, the same players always meet in the corral. You thought Edgar Bronfman, Jr. was done? Now he runs Warner…

And Michael Rapino… Smart dude. But from a new era. He grew up working for a beer company, Irving Azoff managed Dan Fogelberg and the Eagles. Talk about experience… He wasn't there at the birth of Christ, but he knows everybody who was. Intimately.

But what is the plan?

I'm not exactly sure. Irving specializes in playing people off against each other, neutralizing them. When he's the man… It doesn't work so well. Irving rebuilt MCA, but it never became number one. And when he left in '89 to make some real money, with Giant… He did well in merchandising, but his record company operated in fits and starts. A movie soundtrack, Big Head Todd, eventually Disturbed… One doesn't see the company as a paragon of excellence.


In other words, I'd rather have Irving cocking up the works rather than running the works.

But it is a changed marketplace. The money is in live. And monetizing all other aspects of an act's career. New products. New kinds of promotions. Rapino realizes this, but he's saddled with the low margin concert promotion business. And he controls very few acts. With very rich contracts. Whereas Irving/Front Line is the MANAGER! They split the revenue that comes in. If nothing comes in, there's no obligation to the act. If the act's new album stiffs, it doesn't get paid. Whereas Jay-Z gets his money, no matter what happens in the marketplace. That's a big bet, the river of nickels flowing from the concert promotion business covering that overhead. Such a big bet that Rapino battled with Michael Cohl over doubling down, and won, and slowed the process.

But how is Rapino going to get acts to exploit his new products on favorable terms if Irving controls all the acts? Sure, Irving will do a deal. But the terms won't be good!

It's uphill for Rapino and Live Nation.

Suddenly, TicketMaster is no longer dependent on ticket fees to make its numbers.

And we're sitting here wondering what this does with regard to developing acts and ticket prices.

Well historically, and history is very brief in this case, the modern Front Line is not interested in developing acts. Maybe that will continue to be the case. Maybe this is about maximizing revenue as opposed to new business concepts.

But this is all very new. Irving wanted to cash out. One didn't foresee him both cashing out and ending up with MORE power. Does he have a plan? You betcha! What it is? I'm still thinking about that…

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