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The Lefsetz Letter

Apple/EMI/DRM

by Bob Lefsetz

Why the fuck should they cost more?

One small step for mankind, and one half-step back. It would be like Neil Armstrong getting to the moon and not getting out. I mean if you're going to go all that way...

This is the kind of bullshit pussyfooting that got the labels into hot water to begin with. If anything, tracks should cost LESS!

Oh, if you buy the complete album, you get the old price. But who the fuck wants a complete album of dreck by lame acts like the Good, the Bad & the Ugly that played this press conference?

You want to sell more tracks at the iTunes Store? Make them a quarter. Or fifteen cents or a dime. Then watch sales go through the roof.

Do you see cell phone prices rising? Do you see T-Mobile canceling family plans or making you include every last living relative to get them?

You don't make half steps. You go all the way, or not at all. If you're not willing to bet the company, then you're not willing to win.

Take the case of Compaq. State of the art computers, using the highest quality many times tested parts, for a high price. Good plan for a while. But then Dell sold hardly tested parts in machines at a low price. So did Compaq lower their prices A LITTLE? No, they changed their business plan, and sold what Dell did at similar prices. And the company ultimately merged with HP to survive. And HP was doing badly against Dell until computers became commodity items and people preferred to buy them at their local retailer rather than call Dell and wait for a shipment. In other words, business conditions change, and you have to adjust.

This is not a new movie. It started unspooling in 1999. People can download music from the Internet. And then they started owning hand-held players en masse. Where's the mystery? CD sales have dropped since the turn of the decade. Now they're in free-fall and you RAISE THE PRICE??? Shit, if you're gonna buy the whole album you might as well purchase the CD, you can rip it at ANY BIT RATE YOU WANT, and there's NO copy protection!

Unbelievable bullshit. EMI deserves to go out of business. As for its lame competitors, they're so paralyzed that they won't even make a move. Edgar Bronfman, Jr. wants higher prices WITH the DRM. And Sony BMG is just trying to stay afloat, with an internal war aflame, with the Sony half fighting for its life. And Universal is so arrogant, it somehow believes since it's got the largest market share with the biggest selling acts, it's somehow immune. RIDICULOUS!

Start with the publishers. They've got to go to a percentage rate.

Go to the deals. Give the artists a fair shake, or soon none except for the most vapid no-talents will sign with major labels.

Then rejigger the economics so you can sell tracks at a cheap price.

Or, wake up to the future and realize more people want more music at a cheaper price and sell it to them this way. In quantity. Probably as licensed P2P. But not track by track, even album by album, this is even LESS than the labels had before.

Record labels? Your business model has changed forever. Why don't you wake up and acknowledge this. If you don't give the people what they want at what THEY feel is a fair price, they're just gonna continue to steal. And there's nothing you can do about it.

Like the iTunes Store is working. When Steve Jobs HIMSELF says that less than three percent of songs on iPods are purchased at the iTunes Store. I would have at least said this was a step in the right direction if the price had stayed the same. But really, this is no different from these lame-ass labels adding a track or two to a CD a fan already bought to entice some casual buyer to purchase it months down the line. The labels have fucked their customers for years, and they're now paying the price. Half-measures like this will not solve their problems.

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.


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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.





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