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THE LEFSETZ LETTER: Not Selling On iTunes

Isn’t this how the labels got in trouble to begin with? By making customers buy an entire, overpriced CD to get the single, the only track they wanted, oftentimes the only good track on the album?

Pulling acts from iTunes is akin to winning the pennant but refusing to play in the World Series because the TV network and its advertisers would be unjustly enriched. Like being the world champion but not going to the Olympics because these same entities would profit and China’s image would be burnished at the athlete’s expense. Is that what we’re going to see next? Michael Phelps suing China for a percentage of its gross national product? Since he focused the world’s eyes upon the country?

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.

iTunes was not launched as the definitive future of music acquisition but as an alternative to theft. Pulling music from iTunes just incentivizes people to steal, to learn new techniques for stealing. At the height of the original Napster grandmothers were downloading. The key is to develop a reasonable alternative that makes stealing not worth it. Raising the price is not a solution.

That’s what labels want to do, raise prices at the iTunes Store. Why not tell that to GM! Ford and Chrysler too! Why don’t we raise the price for SUVs! Make more on each one! Eureka, that’s the solution! But at least most drivers only need and purchase one automobile. Whereas we’re now in the golden age of music acquisition. Kids who might not have owned any music in decades past now possess thousands of cuts. And believe me, they didn’t pay a buck for each. And this is good, the more people music own, the more enriched their lives are. Furthermore, the greater benefit to the acts’ whose tracks have been stolen. File-trading kept Led Zeppelin, Pink Floyd and AC/DC alive. How else would kids have heard this music? And now AC/DC are going to go on the road and sell every single ticket. This wouldn’t have happened without the easy, in this case free, acquisition of music online.

And unlike the Eagles, AC/DC is not a geriatric act. Kids like AC/DC. To keep them off the iTunes Store is an insult to the band’s fanbase. Like forcing you to go to a liquor store to buy Coke, refusing to sell it in the supermarket. The Eagles may have sold millions of albums, but in the consciousness of America, their latest double album, "Long Road Out Of Eden", is an incredible stiff. It had zero cultural impact. Are you only interested in short term money? Not the act’s good will, career and legacy? Then make a deal with one retailer with a guaranteed payment. You’re on a direct train to the graveyard.

The Eagles are unique. No one expected a new album and the band didn’t need it, they’re coasting on their hits, they can tour until they die. But what if you still have an active career? What if you need your music in the public consciousness? What if you are still building? To keep your music off the Internet is like writing a novel and refusing to publish it. Believe me, kids barely know what a CD is, and they don’t want to go to a store to purchase it. Shit, I do my best to never go into a retail store, it’s easier to shop online, where inventory is plentiful and one can easily find the lowest price and delivery is straight to your door.

As for delivering CDs via the Internet… That’s like selling typewriter ribbons via the Net. Like delivering dot matrix printer ribbons. Why online would we want anything but files?

As for making users buy the complete album, a la Amazon… This just ends up frustrating the user base, causing revolt. The RIAA/major labels are hated by the average consumer, kids know artists get shitty royalty rates, and this is because of the backlash against overpriced CDs with only one good track and the useless anti-piracy scheme known as suing file traders.

Kid Rock is a career artist who is seen as an album artist. He happens to have the single of the summer. This is driving CD sales. How often is this formula replicable? If we’re lucky, we’ve got one single of the summer, and it usually can’t be predicted in advance. And oftentimes, it’s by a one hit wonder. And, outside of the U.S., Kid Rock’s music is available on iTunes…

And then we’ve got the strange case of the Rolling Stones. They sold essentially double the online singles of Pink Floyd and the Eagles, but only half the albums. Could it be that the consumer is smart? And knows that whereas Pink Floyd is the quintessential album act, with the Stones it’s now about the singles? Maybe you’ve got to buy "Beggars Banquet", then again, when was the last time the Stones played "Parachute Woman" in concert? In other words, if you want the customer to buy complete albums, you’ve got to make better albums!

I’d say it’s best if music labels stopped trying to scam their way to profits. Yes, it’s not the consumer who’s underhanded so much as the sellers. They’re looking for endless ways to rip off their customers instead of producing music so desirable that it sells itself.