The Lefsetz Letter


By Bob Lefsetz


It's a no-win situation with terrestrial radio. Because major chains own multiple stations in markets, which is a DISINCENTIVE for new/different/provocative programming. The music industry should write over the air radio off.

Oh, OF COURSE terrestrial radio has tens of millions of listeners. But the radio industry is hurting the major labels MUCH more than P2P piracy. So, it's time for the MUSIC industry to look to alternative sources of exposure.

Every CD should come with a coupon for satellite radio.

Satellite radio is the majors' BEST way out of this quagmire. The problem with P2P and the iPod is one can only search for and listen to what one ALREADY KNOWS! When radio is done right, it turns you on to NEW STUFF! Forget the FBI warning on CDs, include a coupon for a free radio with six months' service on either XM or Sirius. A deal can be brokered where Sirius and XM give up stock in exchange, but really, the labels should do it out of the goodness of their hearts, because it's an INVESTMENT IN THEIR FUTURE! Whereas spending all that effort and dollars at terrestrial radio is an investment in the PAST! Just ask teenagers. All statistics say they're tuning out music radio. Forget the circle jerk. With everybody in the music industry paying lip service to terrestrial radio. Why doesn't the industry get hip and wake UP! And admit what the listener already knows, TERRESTRIAL RADIO SUCKS!

As for terrestrial radio retaliating... Give me a break. Like suddenly they're going to go DARK? Not play music AT ALL??

And, while we're at it, it's time to break the radio station concert scam. They USED to be free. They USED to do capacity. Now they COST and most don't sell out. They're NOT an investment in an act's future, they're part of the DEATH MARCH! Any act worth its salt knows a true fan wants to hear their ACT and their act only. To play for a casual fan in the hope they'll buy an album is BACKWARDS! Grow from the bottom, from the base on up, not from the TOP DOWN! Just ask Hoobastank. See where THEY'RE at when this year is done. Their hit will have KILLED THEM!

2. CDs

Forget copy protection. Give up. It's a NON-ISSUE! It's akin to improving the quality of prerecorded cassettes. Hate to tell you this, but the CD is a DEAD FORMAT! The only people who don't know this are the old line fat cat boomers running the record companies. To copy protect CDs is akin to switching everybody to shorter, more expensive typewriter ribbons.

Sell CDs as long as you can. But why piss people off with copy protection? When the format's lifespan is so limited.

3. P2P

All the lawsuits have done is to scare away the CASUAL music fan. In order for online music to be profitable, EVERYBODY has to partake. The whole COUNTRY must be music crazy. Suing people for file-trading is akin to tobacco companies including a nicotine patch with every pack of cigarettes. The key is to HOOK people, not to WEAN them!!! The higher the price for tracks at online shops, the fewer people who partake. This is the OPPOSITE of coherent business philosophy.

P2P should be monetized. Because its future lifespan is BRIEF!

P2P has been flourishing for five years. It won't be a significant factor five years from now. Just go to Europe and the U.K. to be edified. The key is the MOBILE DEVICE! The key is INSTANT DELIVERY! No one's going to bother to take minutes to download a track when you can have it broadcasted INSTANTLY!

The major labels have it ALL WRONG! They think the future will be on RECORD BUSINESS TIME! With twenty odd years a format. To get it straight, look at the COMPUTER INDUSTRY! Better yet, the MOBILE PHONE INDUSTRY! You wouldn't THINK of communicating with a TWO year old mobile phone, never mind a TWENTY year old one. Who would have even THOUGHT of camera phones two years ago? Two years FROM now, actually SOONER, mobile phones will have the resolution of Canons. Yup, three megapixels. As for the computer industry, have you used an 8 1/2" floppy recently? How about a 5 1/2" one? Or a 3 1/2" one? Or a 3 1/2" one that stores data on BOTH SIDES! Or, how about a BERNOULLI disk? Or a SYQUEST REMOVABLE HARD DRIVE? Or a 100 MB Zip? Or even a Jaz? Hell, today there are portable flash memory drives. And portable FireWire drives. And, the aforementioned formats of the previous twenty years are GRAVEYARD ITEMS! THAT'S how fast technology moves. The key isn't to get wedded to a format, the key is the MUSIC! Sell it HOWEVER people want it. Knowing that they'll want it in a DIFFERENT format/way TOMORROW! Oh, don't talk to me about the cost of players. Mobile phones are essentially free, subsidized with service contracts. Nobody computes on a ten year old machine. Nobody will be using KAZAA in ten years. Just make your money NOW and move ON!!


Completely free until a certain number of listeners is reached. The major labels have succeeded in STIFLING this format, while investing HUNDREDS OF MILLIONS of dollars in indie promotion to get their wares on terrestrial radio stations. That's MESSED UP! Go where the LISTENERS ARE! On the Net! Nurture this industry, so some powerhouse stations emerge, and niche stations can SURVIVE! It's all about turning MORE people on to MORE stuff.


Forget it. Abandon this concept. Along with educating the consumer. The consumer thinks music is overpriced. FURTHERMORE, there's a price at which EVERYTHING blows out. Every other item is sold on VOLUME! Even CARS! Yup, with their INCENTIVES! But, in the music business, we want to convince people to pay MORE! As a result, most people don't partake. Hurting not only record companies, but the live business. You can't build careers if most people can't hear your wares and think that said wares are too expensive ANYWAY!

Make it up on volume.

You will eventually. Start now. EVERYBODY should have a music collection.


Starting 1/1/05 every show should have a final price. No price plus add-ons. Just a FINAL PRICE! Including facility fee, TicketMaster fee, surcharges, parking, WHATEVER else you want to add in. The CUSTOMER knows it's all just profit, they're not believing the subterfuge. Make it like buying a SATURN instead of a Chevrolet. Saturns are TERRIBLE cars. Just read the reviews. But people buy them because they like the SALES experience. The no-haggle price. Buying a concert ticket today IS like buying a car. You don't know exactly what it costs until you're DONE! THAT is the beauty of the iTunes Music Store, where every track is 99 cents. It makes it SIMPLE! And ENTICING for the consumer. Do the same thing for the concert industry. And, if Clear Channel is REALLY brave, they'll have a fifty dollar summer. NO ACT'S TICKETS WILL COST MORE THAN FIFTY DOLLARS! Acts can take it or leave it. Yup, it's a two way street. Acts have to stop holding up promoters too. Everybody's got to do their job. And, if your act can't sell for under fifty bucks, you should leave the circuit. This will AVOID all giveaways. Yup, with the fifty dollar ticket price will come an asterisk stating there will be NO free tickets ALL summer. The value of a concert is not ZERO!


NOBODY lined up to buy "The Eminem Show" upon release because it contained a bonus DVD. MUSIC ONLY please! And, barely better than generic covers. Just because EXECS can remember vinyl LPs doesn't mean a kid CARES about the tiny artwork in a CD. The art form is dead. STOP spending money. We're selling MUSIC! If you don't want the music, you shouldn't be buying the PACKAGE! Hell, I don't see people complaining that their iPods don't have any artwork or liner notes.


Look to the U.K. The shed is dead, festivals are where it's at. As proven by the success of Bonnaroo. There should be a festival CIRCUIT! With each festival playing in no more than two venues in the country. If you want to go, you TRAVEL! Like with Bonnaroo. Like with Coachella. Festivals are SPECIAL! The shed experience feels like a RIP-OFF! You'll stand in the mud at the festival and won't complain, whereas any mud at the shed is seen as the promoter saving money on landscaping. Furthermore, festivals are GREAT for word of mouth on developing acts.


Every act should have their own Website, that THEY own. (Ever notice how the label Websites are not UPDATED? Go twice and you never go back again.) And they should have video of live shows and giveaways of live MP3s. Hell, the label's never going to sell them ANYWAY! And the Dave Matthews Band has proven that people will pay for the authorized live release ANYWAY!


The marketing mechanisms should not dictate release schedules, the AUDIENCE should! Fans want MORE MUSIC! The fact that radio is still working the OLD single should be IRRELEVANT! Play to the FAN! There should be a release EVERY YEAR! With teaser singles in between major releases. Oh, fans want albums if they're ALBUMS! Not just PASTICHES! Albums are STATEMENTS, with MOODS! Fans don't just want the single, only CASUAL USERS do. But, if the above rules are followed, EVERYBODY will become a fan.


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.


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