THE LEFSETZ LETTER: The King Must Die

"And sooner or later
Everybody's kingdom must end"

"The King Must Die"
Elton John

I'm not sure I need a landline anymore.

Oh, when I was with AT&T/Cingular Wireless, it didn't even cross my mind. Cell phones were unreliable. And expensive. But, since I switched to Verizon my perception has changed. I can drive from point A to point B and actually have a conversation, the signal doesn't drop out. And, at home, I get four bars. Why pay for long distance on my landline when I'm paying close to a hundred bucks for all these minutes I'm never going to use on my mobile? And now I find myself using my cell for casual calls, since all my CONTACTS/NUMBERS


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.

are stored in it and easily accessible. It's not that I'm a complete Luddite when it comes to new technology. It's just that phone service is a basic. One needs reliability. Now my cell is just about that reliable. What do I need a landline for. What do I need a major record label for?

We've been listening for the better part of a decade now how the renegades are devastating the major labels' business. By illegally stealing the music. This has taken the spotlight off the real issue. The major label paradigm is dying. It's losing its usefulness, its effectiveness, year by year. Used to be if you wanted your music distributed, exhibited, paid for, you had to be on the major label. This is no longer true. Major labels only sell RECORDED MUSIC. They're not interested in the development of bands, their careers. That's just lip service. Hell, the same guys aren't even going to be in charge ten years down the line, the parent company will be different, why SHOULD they care?

You used to need the label for the money. Not only to live, but to make the record. And the video. To pay the independent promotion fees. Now you can make the record at home, on your computer. Video is irrelevant, and if you need footage you can fire up your DV camera and shoot some scenes of your band performing for free and put them up on your Website. As for getting on terrestrial radio… Nothing other than mainstream crap has appeared on terrestrial radio FOR YEARS, to the point where not even the AUDIENCE goes there to find out about music.

The whole music discovery process has become democratized. People are no longer at the mercy of the major label/terrestrial radio game. An indie band's site has the same real estate on the Web as the major's act. As for the major label sites… NOBODY goes there. Because the majors were blind to the power of the Net and made them generic and didn't update them. Now you go to a filter like pitchforkmedia.com and then go DIRECTLY to the site of the band you want to check out, via Google. The major label plays no part.

But what's even weirder is the carping no longer has any traction. The public doesn't care, more people are trading P2P than ever before. The acts being purveyed by the majors burnish their images not a whit. Mariah Carey may have come back, but I've got to tell you, most of those millions who bought her latest album DIDN'T BUY ANOTHER CD ALL YEAR! Or maybe one more, or two. They're CASUAL fans. And the casual fan never supported this business, the hard core fan did. Who needs a TON of music. This person, the heart and soul of the business, has moved on. Which is why all those indie stores are closing. The new generation doesn't need to go to the shop to pay for overpriced CDs, he sits in front of his computer all day, DISCOVERING STUFF! While the casual buyer picks up a CD at Best Buy along with a new computer printer and the major labels scratch their heads and wonder where their business went.

There's no center anymore. Not the major label, not terrestrial radio, not MTV. We live in a niche world. Sure, if you want to be ubiquitous you've got to throw in with this system, ALL OF IT, using saturation marketing to beat every last person in America over the head multiple times. But that results in you becoming an Internet joke. Criticized on awfulplasticsurgery.com, made fun of on a plethora of celebrity sites. The more you push, the greater the backlash.

Where is it written that physical product is the key to a music career?

NOWHERE!

Now it truly IS about your career. First and foremost, you must have diehard fans. Who will not only support you, but tell others about you. Who will believe only if you're GOOD, only if you RESONATE with them, not because some third party paid for filter TELLS THEM! Your fan base gives you money. To support you. Because they want MORE! They buy concert tickets. They buy merchandise. And they want the music too. And, if the RIAA prevents equitable authorized distribution on the Web, like legalized P2P, the act will give that music away simultaneous with selling it. Since the act knows it's about eyeballs. That you don't want to PREVENT people from hearing your music, that this is COUNTERPRODUCTIVE! AND, that even if you give away the music for free, you can make up the revenue elsewhere. In live receipts. In merchandise. Areas of income the major label
doesn't participate in. Oh, they WANT to participate in this revenue, they just don't want to do the things to grow this revenue in an appropriate fashion over time. They just want to jam and make and take all the money NOW!

Right now, as we sit here, there are entrepreneurs revolutionizing the business. Managers who are fronting bands flying low level aircraft collecting from ALL revenue streams. Some of these acts are going to graduate, into 747s. Yup, you're just going to be sitting at home, and one day you're going to hear this ROAR! When you turn on your computer. And find out an act you've never heard of RULES!

This is the way it used to be. Cottage industries infiltrating the mainstream from the fringe.

But only a couple of acts will do this. Most acts will be niche. But making a very good living, because of all the revenue streams.

Maybe there's a new David Geffen out there. Who will do a bit of consolidation. Whatever, we know the person who's ruling tomorrow won't be the same one ruling today. The same way we know that landline usage is never going back up. Hell, how long until no one has a fax machine anymore? Hell, I finally disconnected mine. It was like burning half a yard every month for no good reason.

"No man's a jester playing Shakespeare
Round your throne room floor
While the juggler's act is danced upon
The crown that you once wore"

The juggler is already dancing on the major label crown. Only those old kings who've been in power forever don't realize it. Or, like the corrupt despots of old, they're planning to rape and pillage through the rest of their last reign, decrying the acts of the unwashed, before the upstarts take over.

We're not going to see a righting of the ship. The old powers will not be the ones ruling in the future. I can't tell you how long it will take to happen, just that it will. As sure as Nikon announcing yesterday that it's giving up making film cameras.

It's the end of an era. Nothing can be done to stop it. The major label model doesn't fit the new world. To try and fix it would be like putting an Accord body on a Chevy Vega, or a Yugo. It might look right from the outside, but it will never run right.

People have stopped laughing at the inanities spewed by the major companies. They've moved on. And despite what the old powers say, this is GREAT for artists, this is GREAT for music. And the public too.

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