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The Lefsetz Letter

Doug Morris And Zune

by Bob Lefsetz

Who's the pirate here? Is it the public acquiring music in new ways that Universal won't monetize or is it this ancient man running around behind the scenes trying to hold up technologists for cash?

If your future model is based on being paid by the HARDWARE manufacturer, then why don't food companies get a slice of stove sales? Better yet, why don't television producers get a slice of TV sales? Why don't content producers get a slice of every playback device known to man? BECAUSE THAT'S NOT WHERE THE MONEY IS!

This is like some bizarre Mafia movie. Wherein the producer of the product, in this case Microsoft, has to pay to function, even though what they're doing is COMPLETELY LEGAL!

Yes, the Rio case solved this issue. MP3 players are totally legal. You can make them with impunity. The fact that they can contain illegally acquired music IS NOT THE PURVEYOR'S FAULT!

But Microsoft, with ENDLESS cash, pays Universal. Rather than giving them the middle finger, like Apple did.

But Apple is a monopolist too, you say! With their Fairplay DRM!

One, you can buy from others. Two, you can burn to disc and get rid of the DRM. THREE, the reason there's copy protection is because the labels INSISTED! Remove the copy protection and you remove the advantage!

Microsoft wants in. So they pay protection. They could go to the police, say they've got the right to do what they want, but the system is ineffective, and it takes a long time to get results.

But oh, you say, they want to sell Universal's tunes at their store?

Well, Apple faced the same problem in Japan. BMG wouldn't license to their store. So the Cupertino company STARTED WITHOUT THEM! And once BMG saw the juggernaut, they signed on. THAT'S how you do business, not by capitulating to back room bullies who are gonna beat you up.

The key is not to take a sliver from device sales, but to charge for the acquisition of files to FILL that device. By legalizing P2P. By starting stores with cheap prices and NO copy protection. But rather than be innovative, Doug Morris just wants his piece.

A piece he normally doesn't SHARE with the artists.

What about that MP3.com money? What about that SpiralFrog money? What about that YouTube money? Made on the backs of artists, but going straight to the company's bottom line. Giving up fifty per cent of the action to artists on Zune sales is like Pablo Escobar building soccer fields in Medellin.

But it's all academic. Because the Zune is gonna fail. Just read the reviews. As for that 58% who said they were interested? FALSE REPORT! Just check it out here: macdailynews.com

And one more thing. Isn't quoting David Geffen on the music business like asking Michael Fuchs' opinion on pay cable? David Geffen hasn't been in the music business for a very long time, and the last time he was in it, with DreamWorks, he failed. So what we have in this "New York Times" article is stunting. No different from when they feature some old time movie star on TV during sweeps week. He's a name, he'll cough up a quote, WHO THE FUCK CARES?

www.nytimes.com

P.S. The reason that Microsoft is paying Universal is to establish a store that uses a WHOLE BRAND NEW form of copy protection, incompatible with every OTHER previously manufactured device. So, one can argue strongly, Doug Morris is cutting off his nose to spite his face. Yes, after railing about Apple's incompatibility, he's helping to fund another player, who's going to balkanize the online music landscape even further. Forward thinking? Sounds like the same old story to me. Give me the cash today, FUCK TOMORROW!

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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