THE LEFSETZ LETTER: Layoffs


What are a label's most important assets, its copyrights or its employees?

Fascinating question.

In Wednesday's "Wall Street Journal" there was an article delineating the fact that those companies which laid off the most people ended up having the worst future. Unless, of course, the basic economics of their sphere changed. In other words, no matter how many people Smith Corona had hired, typewriters wouldn't have triumphed. Then again, someone at the company might have come up with a reasonable computer!

EMI is toast because of the brain drain. I'm not even sure who works there anymore. Almost no one I know. They keep bringing in people from the outside who know the financial bottom line, but nothing about the club that used to exist in the Village. And without knowledge of an industry's history, you're screwed.


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.

So, if you squeeze out the people, you might as well just trade on your copyrights. Hell, you don't possess the relationships to get your music heard. You need bodies who know the gatekeepers, how to navigate the waters. And experienced people only want to sign with experienced people, given the choice. And even if the manager might be a newbie, the lawyer usually is not.


In other words, it's hard to compete with Universal. They've got the best talent. The company was an also-ran until Edgar Bronfman, Jr. brought over Doug Morris, who brought over all his Warner talent, starting with Jimmy and his Interscope team. And I don't want to give these people a free pass, but if you're playing the old game, they're the winners. Then again, the whole industry is not nurturing young 'uns. And it's hard to believe oldsters know everything about what young people are doing. Hell, I was having dinner at a friend's house on Saturday night and his six year old didn't bother watching TV, he surfed the Net watching YouTube videos for hours. I learned more watching him than at any lunch at the Palm.


Warner's got a pretty good team. They know so much of the past is history. But too many Sony employees are gone, the team that remains is Clive and Rob Stringer and..? They're ripe for merger. Or decimation. Sure, Simon Cowell brought them Susan Boyle, but you cannot survive on events alone. And I doubt Ms. Boyle will be moving tonnage in two years, never mind one.


Apple famously doubled down on innovation during the dot com crash. The music industry reacted to Napster by firing people. Keeping its high paid employees, the music at labels had more to do with chairs than what you hear out of speakers. The skill wasn't how to break a record, but how to keep your job!

You can't break an act alone. Cannot be done. You need a team.

And today that team tends to be the manager and the agent. The label is so often an also-ran. Tour support? The label's not even buying tickets to the gig!

All this cost-cutting has killed the labels. They should have been hiring people, not firing them. Presidents should have gone to incentive deals, with minimum salaries. Unity should have been the priority. Lean and mean? We've got scrawny and angry.

Experienced people are your future.

And you've got to develop new business talent. That's what the CBS college rep program was all about. Now you hire interns to do your mailing on the hope they'll get a job. Shit, if they're working for you, they're probably worthless. Anybody who'll make a difference is now working alone. Watch out. The old edifices are vulnerable.

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