THE LEFSETZ LETTER: The Jay-Z Deal

This is not the future of the music business, this is old men trying to cash in one more time to

support their egregious, expansive, expensive lifestyles.

How many times has Michael Cohl sold his company? Do you think anything different is going on

here? That he's not gussying up the "assets" to sell to someone more stupid than a beer

company, otherwise known as the PUBLIC?

Don't sit down and analyze the dollars and cents. This is no different from Richard Branson

signing the Rolling Stones so he could sell Virgin Records for a billion dollars. An act with

marquee value but very few record sales. And this was before the days of 360 deals, when it was

only about the record sales…


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.

God, if Live Nation has Madonna and U2 and Jay-Z, the company must be worth a fortune, just like

Warner has Led Zeppelin, CSNY and Neil Young. The only difference being Warner doesn't share in

the touring revenues… Then again, is the catalog of these classic acts a better mover than

Jay-Z's? And what's this you tell me, Live Nation DOESN'T GET THE CATALOG??

Granted, Jay-Z does better live business than most rappers, whose shows are not must see

events… But isn't this tour propped up by Mary J. Blige? And isn't it kind of a post exec

gig victory lap from Jay-Z who has come out of "retirement"? What does the future augur for Mr.

Carter? Looking into my crystal ball, not zillions of dollars. If LL Cool J finally turned to

ice, don't you think Jay-Z will too? Who would you rather be in business with, Michael Jordan

or a twenty one year old NBA star? Live Nation is only interested in young talent to the degree

it looks like it's a full service business so they can lay the company off on the public.

Now maybe Michael Cohl is a good match for Jay-Z. Both hustlers, willing to do almost anything

to make a buck. The public might not know Cohl, but he's the guy dealing with resellers, he's

doing whatever it takes to get his money back. The act gives up so much control for that

guaranteed payment. If this is the music business, it's not the late sixties/early seventies

heyday as much as a bizarre "Jetsons" construction wherein the artists are a pawn in the

businessman's game… Speaking of which, why not a deal with Mr.
Zimmerman himself? He'd like an upfront payment!

Where is the benefit to the public? These guarantees result in sky high prices. Breaking a

track on the road? I think Jay-Z's been too far from the street. Not enough people are in

attendance and people pay a fortune to hear the HITS! They don't want new stuff, which is hard

to decipher in the cavernous halls these acts play in anyway…

Sure, there's no real money in records right now, touring is where it's at. But that doesn't

mean in the twenty first century it will just be gallivanting dinosaurs and no one else. There

will be new acts. They will have a following. Building them won't be easy, but will be helped

with Internet word of mouth. You'll have to invest in their success. Maybe with sweat equity

more than dollars. And maybe arenas will be a long shot for most. But that's the future.

Theatre acts with rabid followings. The meanderings of these lumbering old acts is just the

final breath of an industry that's run on fumes for far too long.

Invest in Live Nation? Yup, that's who I want to be in business with, concert promoters. Known

for their honesty, and upfront business practices. Then again, look at Bear Stearns and its

rescue by the government. The tiny music business is just a reflection of our country at large.

Run by thieving men playing with funny money believing they have a right to power and a right

to lifestyle. And it's always the public that bails them out, always the public that loses.

This is a Hail Mary pass to save Live Nation's stock. To freeze AEG out of the game. To make

investors think Live Nation is the only team in town. It would be like the Yankees guaranteeing

they're going to win the World Series EVERY year and saying it's not worth it to invest in any

other team. Then again, it's worse. You can't get a new Major League Baseball franchise. You

can't buy in. But anybody can buy into the record business. Hell, a lot of the venues are open

to anybody willing to pay. A new model with new acts will emerge. These old players will be

gone. And it won't be soon enough for me.

Hell, one more analogy and then I'm going to go…

To build his eponymous record label, David Geffen signed three of the biggest stars in the

universe, Donna Summer, Elton John and John Lennon. The first two acts' albums stiffed

outright. Lennon's was headed for the dumper, but he was unfortunately killed. It wasn't until

the label signed NEW acts that it truly became successful. Guns N' Roses built Geffen Records,

that's what got Mr. Geffen his half a billion dollar check. If you want to get rich in the

music business, you've got to invest in the NEW!

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