The Lefsetz Letter: Podcasting

The major labels are in the process of blowing it in podcasting the same way they blew it in P2P

Holy CRAP! Did you watch Steve Jobs' presentation at the Worldwide Developer's Conference??

It's 1981 all over again. MTV was seen as a sideshow. A marginal effort reaching few homes that wouldn't impact the mainstream music business. But that thesis was WRONG! MTV REVOLUTIONIZED the music business. But in order to play, you had to have one thing…a video.

The U.K. acts had videos. They used them as promotional tools. For markets where it was hard to get on the radio. The result?? U.K. acts not only dominated the early days of MTV, they went on to dominate the U.S RECORD CHARTS! A Flock Of Seagulls. Culture Club. DURAN DURAN! The only radio station playing this stuff in the U.S. was MAYBE KROQ. Radio programmers thought they were in control. Major labels thought that radio was their marketplace. When it turned out that MTV was the driver. These new acts were in HEAVY rotation on MTV and they started to sell like GANGBUSTERS! To the point where radio started playing the MTV ACTS! Oh, in the early days it was Human League and Soft Cell, but then as time went on, as MTV entered TENS OF MILLIONS OF HOMES, the aforementioned Duran Duran became SUPERSTARS!


Oh, history is being rewritten now. But, let us not forget, the American labels were slow to the game. Are they going to be slow to the game in PODCASTING??

If you watch Mr. Jobs demonstrate the new version of iTunes incorporating podcasting, your jaw will drop. It's like the iTunes Music Store, but everything is FREE! Why pay ninety nine cents for a copy protected track when you can get ENDLESS entertainment FOR FREE!

Oh, it's even better than that. It's what the labels have dreamed of forever…well, those who know the label business better than the labels themselves. You see you can SUBSCRIBE to a podcast. Yes, AUTOMATICALLY, every time there's a new podcast, it will be downloaded into your iTunes library. AND, when you plug in your iPod, it will be seamlessly transferred to the device, where you can listen to it ANYWHERE!

I mean have you used the iTunes Music Store? It's seamless, and FAST! And now, there's going to be all of this free entertainment.

But what to listen to you ask?

How long do you think it's going to take until there's a chart. And you know how charts work, those at the top end up getting MORE hits, becoming MORE popular, to the point where complete unknowns, just like MTV, are going to become STARS!

I mean why listen to the commercials on terrestrial radio when you can just plug your iPod into your car radio and listen to what YOU want to WHEN you want to!!! Terrestrial radio…your model is DEAD!

And this is the major labels' worst nightmare. This is why they've been suing to halt P2P, not because of piracy, but because they're fearful of LOSING CONTROL!

And that they're going to do. Not only are they not going to be able to control these new podcasters with their strong-arm tactics, using their twentieth century model, they're not even going to PROVIDE THEIR WARES TO THESE PEOPLE! FORCING THEM TO USE INDIE PRODUCT, DISTRIBUTED BY LABELS THAT KNOW ALL EXPOSURE IS GOOD!!! THAT IT'S ABOUT BREAKING ACTS, NOT PRESERVING AN OLD BUSINESS MODEL!!!


The major labels are in the process of blowing it in podcasting the same way they blew it in P2P. The major labels should IMMEDIATELY license podcasters. Charge them a fee to air their wares. Oh, it's complicated, but to do otherwise is to not only leave a ton of money on the table, but to insure your extinction!!! The key, just like with P2P, is to get as many people as possible to be exposed to your wares and to CHARGE FOR IT!

Satellite radio??? Why does Steve Jobs need Sirius in iPods if he's got PODCASTING???

Think about it. For all of last week's scuttlebutt of low iPod demand, which was untrue, in fact, Mr. Jobs is now ENSURING that the iPod will DOMINATE! I mean buy a competing product and be left out of the podcasting REVOLUTION??? Oh, you can download podcasts elsewhere, and transfer them to another MP3 device, like you can do with music today, but it's not seamless, like it is with iTunes and the iPod. EASE OF USE BABY!!! THAT'S what Apple is delivering. As the major labels try to cripple discs, Apple is developing NEW ways for the public to be exposed to MORE creative work EASIER than ever before!

And isn't it funny that it's called podcasting anyway. Really, it's just MP3s. But, hit products have momentum, just like hit records. Adam Curry called it podcasting to piggyback on the iPod. And it WORKED!

Commercial radio podcasting…that's like HBO with commercials, that is, of course, if HBO had the programming of second-rate networks like UPN.

Satellite radio?? You can't have commercials. You've got to be available easily. That's what factory installation of radios is all about. Sirius is taking the tack of broadcasting the work of experts unavailable elsewhere. Could work. XM has taken the tack of being the best music filter out there. Hell, there's always room at the top. People will pay for a premium product. That's what Apple has proven. Just as long as Zellner and the new crew don't screw it up, misunderstanding satellite's mission. That it can't be narrow and predictable like terrestrial radio, but must be wide and renegade, like podcasts, but BETTER!

It's just astounding to watch. The major labels think they're in control, but they're not. They're locking up the product, suing customers, all the while MISSING the future, which, stunningly, is right in front of them.

The future is about niche. And getting more people into more music. You can think otherwise, actually try to legislate, bully and sue. But you're not going to win. Because kids half your age, if not younger, are constantly developing new paradigms. The key is to MONETIZE these paradigms, not try to eviscerate them.

Get on the podcast bandwagon. Issue compulsory licenses to podcasters. Sue anybody who uses your material WITHOUT a license. But don't try to impede progress, don't try to stop the future. It's happening. It's here. Join in. Have fun. And make money.

(Go to: Steve Jobs on Quicktime to see the Jobs speech. He starts talking about podcasting at approximately 6:50 in. You can drag the cursor to this point to start there. Be sure to watch the video in QuickTime 7. You can enlarge the image without losing definition. Yesterday, a Windows prerelease version of the software was posted on Apple's Website, you can get it at: http://www.apple.com/quicktime.)

Contact Bob Lefsetz | View Lefsetz Letter Archives

NOTE: The views expressed in this editorial do not necessarily reflect the opinion of CelebrityAccess, Encore or its employees.

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