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The Lefsetz Letter

The Future

by Bob Lefsetz

Did you read that article about EMI in "Newsweek"? (http://msnbc.msn.com/id/9378593/site/newsweek/) WHAT A CROCK OF SHIT!

This is what's wrong with America. (Well, this is the International Edition, but who gives a fuck.) There's no such thing as a reporter anymore. There are just writers, who jot down what publicity people tell them. Maybe adding in just a couple of faux insights to show independent thought. Nobody wants to do the hard work anymore. Nobody wants to spend the time to get to KNOW something before they write about it. God, it's like watching curling. The CEO throws a stone and his flacks sweep furiously, landing the stone right in the writer's lap.

The major labels are fucked. It's just that simple. They're suing individuals, P2P sites, yet P2P usage keeps going UP! There's a revolution going on, a veritable WAR, and these fucking assholes can't get out of their own way. BIG THINKERS? Their focus is so small that they couldn't see Apple Computer would dominate the online music world. BECAUSE THEY KNOW NOTHING ABOUT COMPUTERS! They don't know it's about ease of use, seamless solutions, SOFTWARE! In their world you just polish a turd and throw it into a store. Do this in the tech world and it's DEATH! Not that the iTunes Music Store, which these backward-looking execs are fuming about, is even RELEVANT! Selling low quality files for the same price as tracks on CDs, WANTING TO SELL THEM FOR MORE, this is ECONOMIC DEATH! You've got to sell the bundle. It's ALL ABOUT THE ALBUM! People have GOT to buy a BUNCH of tracks. Sell them ones and twos and you're going to go out of business.

Still, the iTunes Music Store is relevant for one reason. The indies and the majors are on the same footing. It's a level playing field. THIS IS NOT TRADITIONAL RETAIL! The indie on iTunes gets paid just as well as the major (finally!) And he knows he WILL get paid! Whereas an indie with a hit in physical retail won't get paid unless he's got ANOTHER hit.

And here we have reality. All those jerks who tell you content is king... DISTRIBUTION IS KING! That's how the majors got their near-monopoly. And that monopoly is now threatened by digital distribution. And they're not addressing this problem AT ALL! Actually, if they know it, and they must, otherwise they wouldn't have been futilely suing P2P services all these years, they CERTAINLY don't want to let writers know about it. Because the jig is up.

In Monday's "New York Times" they published the ratings for the best season of family sitcoms.

Number one, as you might predict, was "All In The Family". Which garnered a rating of 34.0. Essentially the equivalent of thirty four million people watching each episode.

Next came "Laverne & Shirley". Which had a 31.6.

Then came "Roseanne". With a 23.4.

Now you're probably saying "All In The Family" was BETTER! And you might be right. I would advocate strongly, however, that "Roseanne" was superior to "Laverne & Shirley". Actually, "Laverne & Shirley" was SHITTY! So, why did so many people WATCH IT?

Because there was almost nothing else on.

The ratings champ, "All In The Family", its best season was 71-72. When the only people who had cable lived in the HINTERLANDS and employed it not to watch movies on HBO, but to get any reception AT ALL!

By time "Laverne & Shirley" peaked in 77-78, some households now had cable. Maybe they only possessed 20-40 channels, but they had OPTIONS!

And, when "Roseanne" peaked in 89-90...god, cable was EVERYWHERE! Systems had up to seventy channels. Didn't Bruce Springsteen release a song back then that claimed there were 57 channels and there was nothing on?

Well, that was his opinion. But, it turns out that MANY people thought there WAS something on. Because they stopped watching network TV.

But what about today??

Well, for the September 5-11 week, the top rated network program was the football game, the Raiders versus the Patriots. It pulled an 11.7!!!

"CSI", that big hit show? It had an 8.8.

The number 10 network show, a college football game between Miami and Florida State? That pulled a 6.5!

God, if shows pulled these numbers back in the seventies they'd be on the verge of CANCELLATION!

Where did all the viewers go?

CABLE!

Many cable systems now have 300 channels. A rotten one has got 100. Stunningly, the number one cable show beat the number 10 network show. The Colts/Ravens football game on ESPN pulled a 7.4. REAL WORLD, tied for eighth with two other programs, well the same program with two different episodes, "The O'Reilly Report", it pulled a 2.9!

How much do you think it cost to produce the "O'Reilly Report"? Compared to "All In The Family"? Let's see...you pay Bill O'Reilly and then you erect a two-dimensional set you use EVERY NIGHT! Think of the PROFIT!

Now, Fox owns both the Fox Network and Fox News. Give the company credit for moving into cable. Protecting its interests/market share. Hell, at this point all the networks have cable cousins. Sometimes, the cable companies OWN the network...like Viacom with CBS. NOW you know why Universal went into the indie business with Fontana. Why Sony BMG is killing RED I have no idea. Warner is doing SOMETHING, but it seems to be about growing hit acts. THAT'S NOT THE FORMULA! All those cable channels! The other 200+. They're not trying to pull a 20, they're making programming for a market. NARROWCASTING! Making cheap shows for a target audience.

But, there are a limited number of cable channels. The systems can only beam so many channels to customers. But there's no limit to the number of records you can sell at one time. Furthermore, producing music is CHEAP! Oh, it might not be cheap to make and market a record that sells five million copies. But, one can see from the cable example above, THAT'S NOT THE GOAL!

Yes, the major labels are about to be pecked to death by ducks. Once digital distribution is the norm, their market share, like that of the television networks, is going to SHRINK! And, IT'S NEVER GOING TO RECOVER!

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 EVERYBODY who's in the music business. 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.

While Rhino may occasionally disagree with some of Bob's opinions, we certainly agree with his right to state them. At the bottom of each column we give you, the reader, the opportunity to respond and we encourage you to do so. We will post select comments.


LET US KNOW WHAT YOU THINK.

A word about submissions: We post what you give us, so please don't include your email address or any personal info. Your comments reach Rhino, not necessarily the writer, so don't expect a reply from them (or us, see our help section for contact info). We gather and post your submissions in batches, so do expect a short delay. And don't get bent if we edit your comments. We probably won't, but we reserve that right.


Comments:

Great piece and on the nose. It is a level playing field and the labels are still operating using their old retail models. Is it any wonder their sales are down? The Global revolution is the internet and small mom and pop businesses can flourish again. they are eroding the foundations of the mega-corps.

I loved Roseanne and still watch the reruns.I miss seeing her on t.v. I think Roseanne is a remarkable woman and her hit show will be greatly missed by many.I would love to see her and Bret Butler play sisters on a sitcom that would be great!!!I believe they both are still loved by many and have alot to offer.With their witty personallities they could really make another hit show if they teamed up together!!




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