THE LEFSETZ LETTER: Snocap / MySpace

If this were the future of music retailing, Wal-Mart would get out of the CD business because CDBaby eviscerated its revenue.

Please, please, please, let us state now and for all time, the hardest thing to do in the music sphere is find good talent. Just about all bands suck. Ask the major labels, what’s their hit ratio, a zillion to one? AND, with their deep pockets, they get to take the cream off the top.

But the reason they’ve been able to cull the cream is because of distribution. The majors controlled distribution. What if they didn’t?

THAT’S what the Snocap/MySpace announcement signals. The death of the major label monopoly over distribution. And without control of distribution, you’re just another


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.

player in the marketplace, with much less leverage. This is the labels’ greatest fear, and now it’s come to fruition. THIS is why they’ve been fighting P2P all these years, not because they hate people stealing their wares, but they’re fearful of independents stealing their BUSINESS!

If anybody can get distributed and get paid, what do you need the major label for?

To run your record up the chart. But the techniques the major employ to do this inevitably diminish your credibility and shorten your career. Do you want to do this?

The VMAs proved that there’s no center anymore. If there was, people would have tuned in. But who WERE these acts? Certainly not the ones most people are listening to. Otherwise, they would have been glued to their sets, watching unique live performances.

MTV is no longer the driver of acts. Nor is terrestrial radio. Most people have tuned out. You won’t read about this in the major media, because it’s fearful the same damn thing is happening to them. It’s not only the Republicans who’ve taken a bite out of the "New York Times’" reputation, hard news can be found instantly via the AP and Reuters, and you can get spin via blogs. Why should you be beholden to smug players throwing "wisdom" down from the mountaintop when you can get your information from bloggers on the Web, who you can interact with, who you believe are much less beholden to the powers that be.

THIS is the biggest story of the year. Not newfangled distribution models, but the death of the usual marketing outlets. And this death leaves incredible opportunity for innovative players. And these players are not the major labels.

Oh, don’t tell me about Panic! At The Disco. If you think anybody’s going to go see them in twenty years, TWENTY MONTHS, I’ll eat my Allman Brothers t-shirt. They’ve got no credibility, and a great percentage of Americans HAVE NEVER HEARD THEIR RECORD! The LEMON PIPERS and 1910 FRUITGUM COMPANY had greater impact.

It’s no longer top down, but bottom up. Yes, you water the grass, grow the roots, you don’t create a hurricane or tornado and try to get everybody to take notice. People forget the one time event, but if you nurture them every day, feeding them music/information relevant to them, a strong bond is created, which can last for DECADES!

But how are you going to get the message out?

Via word of mouth. NOT controlled by the major labels. Fans out street teams on the Web as often as perezhilton.com reveals the antics of celebrities. No, you’ve got to be purveying something real, and then your flock will grow.

Mmm… But where can people be EXPOSED TO YOUR MUSIC??

Via MySpace. MySpace provides free hosting of bands’ music. That’s all the site is truly good for in the music sphere. Oh, of course, you can grow your cult, but the site running so slowly, a great percentage of growth takes place off-site, whether it be in IM, e-mail, text or the band’s own Website. Yes, there is a component of social networking taking place at bands’ pages on MySpace, it’s just that, as stated above, most bands suck.

The majors know this. But what if somebody GOOD doesn’t play by their rules?

So, you put your music up on MySpace. You create a buzz. You’ve got fans. They go to see you live. WHAT DO YOU NEED THE MAJOR LABEL FOR??

So where is the revenue for this new act? Door receipts/guarantees and merchandise. Let’s face it. The best way to BREAK your band is to give the music away for FREE! Just ask Metallica. So do you really think these unknowns, trying to get traction, are eager to CHARGE for their tunes? You charge after you’ve made it. When, you’ve got the money to host the music on YOUR OWN SITE!

But really, that’s not the way it happens. People buy the DISC at your gig. Not to play, but to evidence their devotion. They rip the disc immediately and then display it in their rooms where others can see it. Digital downloads don’t deliver the same punch.

MySpace is a social networking site whose revenue comes from advertising. If you think selling music is going to be big business for them, you’ve never seen BigChampagne statistics.

But what about those P2P trades?

THAT’S what Snocap was formed to do. Major labels made deals with the service as part of a strategy to erect legal P2P services. What a laugh. I want to pay 99 cents for a traded copy-protected WMA file when I can just get one from the source, i.e. Apple?

But what if the BigChampagne monitored trades, the millions going on as I write this, could be tracked, and each trader was charged a monthly fee and the revenue was divvied up a la BMI and ASCAP. THEN you’d be talking. But the reason the majors haven’t signed on for this is not because of the lack of copy protection, but because the indie would be able to get traction, play on the same field as they do.

MySpace gets some ink. Snocap avoids bankruptcy. That’s what this announcement means. Come on, tens of millions of people are eager to pay in excess of forty five cents (cost to the act) per song for the music of NOBODIES??

There’s no real business here, not a significant one. Just like the iTunes Music Store isn’t so significant.

No, the big kahuna is monetizing all the illegal acquisition. Which the Snocap/MySpace deal doesn’t speak to.

But, this deal DOES speak to the fact that the old model is crumbling. If you happen to be good, if people like your music, you may not need a major label. Sure, you might forgo the advance, the hype, but your career will last longer, and you’ll be able to keep THE LION’S SHARE OF THE MONEY!

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