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THE LEFSETZ LETTER: Gladwell On Spaghetti Sauce

I need you to watch Malcolm Gladwell's TED talk "What We Can Learn From

Spaghetti Sauce". I'll post the link at the bottom. It's an almost

eighteen minute video. You won't understand where he's going until at least

half way through. But, as he reaches his climax, you'll identify with the

ultimate concept, that success comes not from trying to deliver one product

to satisfy all people, but delivering a skein of products, that satisfy a

great swath of the public.

If major labels had their druthers, they'd release only one album a year.

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.

Which they'd labor over incessantly, and then market in every
available medium, beating you over the head until you purchased it.
As it is, their paradigm is not much different.

It started in the eighties, when MTV drew a line between winners and losers.

If you were on MTV, you sold a ton of product. If you were not on

MTV…major labels no longer had an interest in signing you, they weren't

satisfied with the low return.

It got worse in the nineties, with MTV airing even less music and radio

getting ever tighter. There were winners and losers. The middle ground

almost ceased to exist. Either you were pretty, singing songs written by

committee, polished into a product, or the major label couldn't sell you at


Then came 2000 and the Napster era.

The major labels have stated that their decimation has come from theft.

That if only people paid for the music they acquired, their
business model would be hunky-dory. This is patently untrue.
Suddenly, with digital files, people could acquire a wide swath of material,

essentially for nothing. And it turned out that although there was a demand

for major label product, everything from Mariah Carey to Justin Timberlake

to Madonna, that demand was far from the entire spectrum of consumer

interest. It was just a slice. People wanted more.

Used to be you couldn't buy more. First and foremost, you didn't hear it.

Radio didn't play it. And you literally couldn't buy it, the big box didn't

stock it. The old model was based on scarcity. You buy what we anoint in

retail shops we authorize at a price we determine.

But it turns out many people don't like Mariah Carey. Some like banjo

music. Some like emo. There's an infinite variety of musical styles, and

an audience for each. Maybe the audience isn't large, but it exists.

How did the major labels deal with all this?

By cutting rosters and employees. Faced with a financial crisis, they

pulled back, when they should have been expanding!

The major label, to be a dominant force in the future, has to be all things

to all people. It has to release more product… Each album
will sell less, but you've got to fill the demands of everybody.
Instead, they're focusing on fewer acts, marketed by fewer workers.
And those making music outside this purview…want to stay outside!

Why sign with the major label? They're going to tell you what to record,

guide your career, and if you're not an instant success, you're going to end

up in limbo, your career is going to expire.

So now, all those acts that don't fit the major label paradigm…they're

going it alone, and they're happy about it!

They can establish their own Websites. They can get their product in the

iTunes Store. They can be in the retail landscape and be beholden to no

one. They can reach their audience and make money!

When you watch this Malcolm Gladwell speech, you'll find out that Prego

overtook Ragu by offering a multiple of options. Turns out the public

didn't want just a runny spaghetti sauce, but a spicy one, and most

especially, a chunky one. Didn't matter that the runny was the authentic

Italian version. That's about dictation from above. Like in the music

business. Major labels have priorities. But maybe, if the public was

exposed to something different, they'd like it! In enough quantity to make

money! For everybody who likes Mariah Carey, there are tons who are turned

off and hate her. This is the lesson of the twenty first century. Not that

if everybody paid for music Mariah would sell more, but that many people

don't want her music at any price, they want something different! He who

will rule in the future is he who services all these niches, who gives

people something different.

To amass enough power to dominate the market, you must purvey a plethora of

acts, you must cover all desires. It's not about finding the one big hit,

but a bunch of singles and bunts. It's not about giving one person $500,000

to make a record, but enabling people to get their product into the

marketplace for almost nothing. Right now, these people are doing it by

themselves. These people are not wanted by the major labels. The majors'

"indie" operations are all about physical retail and flying up to the major.

Physical retail is dying and the downsides of being on the major

are…major. Artists want to be in business with people who are more

hands-off than hands-on. The exact opposite of today's paradigm, with Clive

and Jimmy making stars.

As Gladwell says, the search for universals is futile. Because they don't

exist. Turns out the public is segmented, horizontally, they want a lot of

different things. It's not about the lowest common denominator, but

servicing each and every one of these niches.

It's interesting to watch the major label movie, but the enterprises have

been so mismanaged as to be marginalized. If they're lucky, major labels

can be the equivalent of BMW in the future. Making highly polished,

exquisite merchandise for a limited market willing to
pay a high price for it. Whereas the true money is in being Toyota.
Purveying everything from the tiny Yaris to the Lexus LS600h. Hitting price

points from $10,000 to $100,000. Sure, the Camry is the best selling car in

America, but if that was all Toyota sold, the company would not be in good

shape. Unless maybe, it focused solely on this product and cut costs and

determined to be nothing more. Then there's GM… Paying lip service to

small cars but focusing on big trucks, because that's where the money was.

But then oil prices spiked and no one wanted the small GM cars, because GM

had not focused on them and made them great, Toyota made better tiny cars.

We're presently in a period of chaos. I believe an aggregator will appear

in the future, someone servicing artists at a low price to the creator, both

artistically and financially. Historically this has not been the major

label and no major label is trying to change this paradigm. No major is

giving more to the artist, the major wants to give less and take more, like

merch and touring revenue. The majors are heading towards marginalization,

they're an ever-decreasing sideshow, to focus on them was to watch IBM to

see where the personal computer revolution was headed, as opposed to

Microsoft and eventually Netscape and Google.

This is important.

And Gladwell's speech has implications for radio too. People don't always

know what they want, and they can't explain what they want, so your call-out

research is actually winnowing out listeners, those interested in a broader

spectrum of music.

But pay attention to the application to major labels. The majors get way

too much press. They are not the future, they are the past.

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