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The Lefsetz Letter

Copy Protected CDs

by Bob Lefsetz

It's this kind of stuff that got the labels in trouble in the FIRST PLACE!

Why do these companies feel that their actions have no consequences? It's not only record labels, it's the radio industry too. They cut the playlists, added a ton of commercials and what happened?? PEOPLE STOPPED LISTENING! Yup, they keep making new people every day, the population is increasing, but radio listenership is down.

In the nineties the labels released shittier and shittier acts with only one good track on their CDs that kept going up in price. The companies believed they had all the power, that they could DICTATE to the marketplace.

Wrong. The customer ALWAYS has the power. To see P2P services purely in the context of free is to miss the point. From the very BEGINNING of Napster, when fewer people were trading files than today, however much publicity the practice was receiving, college students were TESTIFYING! Albums sucked and were overpriced to boot! And that they wanted to acquire music in a new way.

The battle is over. Apple's already sold 22 million iPods. Don't expect a fall-off for Christmas. The iPod Nano will be hotter than any album released by the Big Four. iPod users want the file, the CD is irrelevant, unless it's used as a ripping device. WHICH IT CAN NO LONGER BE!

Instead of looking towards the future, getting AHEAD of the marketplace and corralling the public in a profit-making venture, the labels want to keep everybody in the past. They want to focus on CD sales. Oh, Edgar Bronfman, Jr. and the other powers say they BELIEVE in the digital sphere. But the iTunes Music Store and Rhapsody and Yahoo Music are INHERENTLY crippled services that the public is not interested in. Only a tiny FRACTION of the public utilizes these services. Because they don't deliver what people want, which is much more USABLE music at a LOW PRICE! But, these services do one thing the labels LOVE! They make the CD look like a good alternative. This is like selling Hyundais with three wheels and saying horse and buggies look good in comparison! Or, as the Firesign Theatre once said, "How can you be in two places at once when you're not anywhere at all?"

TODAY the CD is the main revenue generator. I have no problem with labels selling CDs. To switch to files only would decimate their bottom lines. But, by not preparing for the future adequately, they're INSURING their marginality in the era to come. They somehow believe their big budget productions sold solely in the way they want will rule in the future. I don't think so. I think independent acts are going to eat their lunch. After EMI gets burned by giving all that money to Korn they won't be ponying up that kind of dough in the future. Which will INSURE that the artists of the future, or at least SOME OF THEM, those who treasure artistry over greed, will do it all themselves. Invest little in dollars but a lot in sweat and get a lot back. NOTHING is being done by the majors to combat this paradigm. This paradigm is what they fear. Then again, maybe I can't berate them for defending a dying business model. But do they have to do it via a disinformation campaign and the suit of music LOVERS? I mean they can live in the past, but must we ALL?

But what's bad about copy protected CDs is they're insulting the people who are PLAYING ALONG with the majors' game. The people willing to plunk down ten to fifteen bucks for a disc. They can't duplicate the CD for use in their car, and they CAN'T RIP THE FILES FOR USE ON AN iPOD!

What I hate about fat cats is they're so technologically stupid. You insert one of these CDs into your computer and it adds all this software, just to PLAY the disc! Windows XP is rickety enough. You're going to add an untested program which might interfere with not only other programs but your whole SYSTEM just to hear a fucking CD?? Talk to computer users. They see that warning that they're about to install software on their PC and they FREAK OUT! In an era where viruses and spyware make your machine almost unusable you DO NOT want to add anything unnecessary to the mix.

But, you can rip copy protected WMAs.

I've got to ask you, when you think of digital music do you think of MICROSOFT?? Is that the big name in digital music? No, you think of APPLE! And, Apple's iPods won't play copy protected WMAs. Why should they? Apple should give Microsoft an in after the company monopolized the market for desktop software? (Yup, Microsoft was ADJUDGED a monopolist by the government.) It would be one thing if the Microsoft solution was better. But it's not. There ain't a player on the market as good as the iPod. There's not JUKEBOX software as good as iTunes made by Microsoft or any other third party. Microsoft's tethered download software Janus??? It's so defective that Yahoo won't even charge for its use. And APPLE is supposed to capitulate?

But, you say, Apple has DRM, known as FairPlay.

But I'm gonna let you in on a little secret. Just about every file on the iPods in this world have no copy protection. Because they were ripped from CD or acquired P2P. As far as this copy protection battle goes, the public thinks it's a joke.

So, what we need are unprotected files that everybody can acquire and pay for. We've got every element except the last. We've had P2P for five plus years. But the labels refuse to charge for it. We have the SOLUTION, but they'd rather spend money suing than collecting.

The labels are clueless here. They think the fact that copy protected CDs are selling today means nobody cares. The backlash is BREWING! There are entries on Weblogs. People are PISSED! The majors are just further breaking the trust with their customers. Insuring division. PROMPTING file-trading.

Really, you label heads, the people making this inane decision to copy protect CDs. I'm telling you now. You're wreaking havoc on your bottom line that you can't foresee.

Then again, maybe you don't foresee further employment. Maybe you don't plan on sticking around that long.

If you believe CD burning is the culprit, the reason sales are down, then you probably believe landlines are hurting the cell phone business. You probably believe that cheap typewriters at flea markets are hurting the computer business. You probably believe copy machines are challenging e-mail. You probably believe the floppy is hurting hard disk sales. You probably believe the cassette Walkman is challenging the iPod. You probably believe radio is hurting album sales. You probably believed home taping killed the music business.

But it did not.

It's not free to burn a CD. You've got to BUY the CD. You've got to take the time to burn it. You've got to give it to a friend. It's absent artwork. And it's not what you want ANYWAY, you just want the FILES!

Why can't the labels just cut to the chase. Why can't they make files available cheaply and easily. We're living in the future. No, we're living in the PRESENT! This is the system that exists TODAY! Can't anybody acknowledge it? Do we have to wait until EVERYBODY trades P2P and sales are dismal? This is not unlike what happened in New Orleans. Everybody knew the levees were weak, that there was an accident waiting to happen. They just figured if they ignored it, maybe it wouldn't happen on their watch. Then, disaster hit and the public saw how incompetent those in charge were.

The public already knows how incompetent the record labels are. The only people who DON'T know are the labels themselves.

But every fucking week sales get worse. You'd think they'd address the underlying problems. Lousy overhyped acts selling overpriced CDs. But rather than deal with the CORE they'd rather deal with the penumbra. It's not THEIR fault but the customers'. If we just make it a little harder to steal, everything will be all right.

But it's not.

And you can still steal anyway. By burning the files to disk and then re-ripping them.

But why do that? When from the moment you purchase the CD the unprotected MP3s of the music contained therein ARE ALREADY AVAILABLE ON THE INTERNET FOR FREE! Only the record labels would INCENTIVIZE their customers to steal.

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:

Damn fucking straight! CDs are WAY overpriced - yes, Rhino is a MAJOR culprit. I have thousands of LPs and CDs and when I can get a copy from a friend or just MP3s for the iPod, I'll take 'em. Fuck copy protection - it rips files anyway! Fuck DualDisc - it blows 'cuz the CD side sucks. I want the music, not the DVD. I can't listen to that in the car. Instead of alienating consumers with higher CD prices and prosecution threats, lower your fucking prices and I might buy new over used. RIGHT FUCKING ARM!

AND QUIT REISSUING CDS 20 TIMES OVER, TELLING US THE NEW REBASTARD VERSION IS SUPERIOR! WHAT A WASTE OF MONEY! I'LL STICK WITH ANALOG - AND LOWER YOUR FUCKING PRICES ON THOSE, TOO!

100% correct. People who share music generally buy more music than anyone else. They're music fans and want others to share in that new song/album/group that rocks their world. If the record companies would spend more time and effort on discovering and promoting good acts, then they would make more money. Instead they all chase each other trying to sign the next Britney/Mariah/Backstreet/nSync/whatever.

i agree radio sucks, there were a time when you could listen to the radio and every song was your song, those days are gone. as for things like the ipods can't say much about that, i want more than just the hit off of a CD,and i like knowing who played on the tracks(musicians)if i can get that with a ipod you can put me down as a new customer.

I agree with what's being said, but can't people voice their opinions with explicitives?

HOw bout it Rhino-are you against people not wanbting to drop a $18.98 CD on the floor mats of there car and step on them?IT's just like the Macrovision fucks who didn't care that deaf children couldn't use the device that allowed them to read movies because they thought 'Will stop 'em".But as Bob points out it ain't gonna be stoipped.Eeven the Movie industry who is much more agressive in "protetcing themselves" can't stop the free floating softare out there to make DVD copies.Price th products fairly and there are always some that want whatever they can get for free and rip themoff.But all music amd Movie \manufacturers should stop gorgoing themselves,overpaying a tiny minority of acts and price there products toi a point where there not worth it.I buy LPs and like the sound better in many cases than CD's and am glad to be able to do it and thank Rhino and a few companies who produce them.But when it comesto soem of the root causes of the P2P problem Rhino's pricing is just as bad as the majors.I think a reply would have bneen in order to where you stand since you stated that you didn't always agree with with Mrt.Lefsetz and see whre yopu stand on the issues.In my mind anybody who buysa CD or DVD fromn the contemptible greedheads Metallica.They who make kings ransoms of concerts alone are on par with Steve Forbes arguing for a flat tax.But what else would you expect froma guy who inherited an empire ,never created anything himslef and says the local cop or school teacher should pay taxes at the same rate he does.Man the gall!!!I digress I know but it wopuld have been nice(r) sui\ince you did publishn this article to give a corprate response.
Sincerely
Charles Katz

Yes i had to pay $20 for a cd after i heard the artist at a JETRO TULL CONCERT.She was just touring with his band but very good.Not again.$20 your ass.Rhino needs to come off there prices too.

Free speech is way cool...but does every other word have to be cursing...think about everyone who visits your site...not just way cool people who can't seem to talk without explitives

You are exactly right. I have been enjoying the end of the music industry as a hollow corporate shell. Underground and independent will the breadwinners soon. ;)

I need to move from one country to another every couple of years. This is not such easy when you love music (very different stiles, in addition) and you do not enjoy to download music because you like to have the physical format and the booklet (if coming with useful info and relevant pictures...). This is the reason because I buy mainly CDs and not LPs. A large collection of CDs can be easier fixed and will suffer less in a few removal boxes. NOW... people sometimes think that because of buying so many CDs I am against the idea of burning them from other people or downloading music from internet. NOT AT ALL! In fact, I approve it! And even more since they started to manipulate the CDs so you cannot burn them and you must even install some type of software to listen at them in the computer. I buy a CD, I know that I am paying more than I should and even they do not let me to make a copy of that CD for the car... Ladies and gentlemen from miserable companies responsible of those decisions... burn in hell! Hope that the end of your empire will come earlier than expected (because it will come, you can count with it). In the meanwhile I will be sure of distributing my security copie (I have the right for) of each one of your older editions between my friends. Do not worry... sometimes they behave nice.

"The public already knows how incompetent the record labels are. The only people who DON'T know are the labels themselves."

I couldn't agree more. What moron in any business would think it would be ok to sue your potential customers? The reality is that every time they sue someone for peer-to-peer file sharing, they are suing a potential customer. Surely, suing your customers is one great way I can think of to scare them away and reduce sales. But the geniuses at the record labels think it's a good idea! It just goes to show their incompetence and stupidity.

A recent investigation of Sonys copy protection scheme on a recent van zant brothers cd showed that they were installing 'rootkit' type software, which in the past has allways been associated with malware, viruses etc. It hacked windows to hide itself in a clumsy way that leaves your machine open to attack by others. The best part is, it made no mention in the EULA that it was doing this and it had no way for it to be uninstalled! And if you were savvy enough to detect it with anti-rootkit type software and tried to remove it it kills your CD drive. And their response to this being discovered? Change the EULA posthumously and offer to tell you how to remove their rootkit if you ask them to personally.

I buy a lot of music, I have thousands of cds and a lot of vynal. I will never buy ANYTHING with DRM built into it, I will download it without a thought knowing that to buy it would make these a-holes happy.

I have never been a 'all music wants to be free' kid but the dumbshits in suits have gone too far.

Check digg.com for a link to the weblog

Does the left know whut the right is doing? Sony, puts out CD's, and says DON"T BURN ME. Yet, Sony as well puts out CDRW's, that state they are the best CD's for burning music to. the highest quality, the most length. Someone somehwere knows not whut they are doing. It is proven that the people who get a CD online, tend to buy more music. Lower the prices, stop pushing shitty music, life is all good. Death to clear channel. As well, i'm more likely to buy a CD of an artist who doesn't blow live, than i am to buy one who doesn't. The second part to your sales, has to be that live factor.

couldnt said it better myself

It's frustrating...why are these labels STILL so damn clueless? Music fans are the number one 'medium' that creates new music fans, and always have been.
It's called word of mouth, idiots.
Labels are signing total crap, losing money...and alienating their customers on top of it all. They need to go away and let us rock.
I spent six hours the other night trying to "fix" some copy-protected
files that I had already BOUGHT and PAID FOR, so I could listen on my road trip via MP3 player, and play these songs for my family and friends. It didn't work, and I am pissed!
I figure the artists might actually earn a cent or two from iTunes... so I have bought lots of songs there. But when I tried to load them to my new MP3 player, the files were all "protected" to play only on iTunes software. So yes, eventually I will get around to "stealing" these files I already bought, by converting the files so they will work. It's a huge hassle!
In the meantime, the artists have lost a bunch of potential fans because I couldn't play these great songs for anyone. When I buy something I expect it to work.. so I am no longer a regular customer of iTunes.
Remember when 8-tracks and cassettes, and then CDs came out? It was so exciting, because music was finally PORTABLE. You didn't need a turntable to rock out with your friends. Why should you need to be near a computer to listen to your music? I already own thousands of CDs and LPs. I am a music buyer, and also what the marketing guys call an "influencer".
I would love any label or service who put plain-old, fair-use files up at .99 each. No monthly subscription nonsense, no 5 play limit, no proprietary software. How perfect would that be? Put out good music, and make it easy for people to hear it. What a concept.
Just think of all the new fans that could be made! Making lots of fans will ultimately benefit the artist's career, and then they won't need some label dweeb's expense account and accompanying attitude just to get around.
Hmmm...maybe "copy-protection" should be called "promo-dork expense-account- protection".

What I don't understand, is how recrd companies come up with their pricing structure for CD's. Just like they are trying to make Apple do, cd's seem to have a broad price range, when in fact you are getting a simular product. It's always my luck that the cd I want is $21.99, but they have $9.99 ones beside it. Is the one I want that much better that it should be twice the price? Some are 20 years old, and the labels made their money back ages ago. I like the Apple "one price for all" system, and I hope the labels get a clue.

I've NEVER bought music, and own over 274.3Gigs of it!! In South Africa we pay up to R350 (50$) a CD!! Pathetic, Fuck people who think piracy is harming the music industry, software should be FREE!!!




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