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The Lefsetz Letter

SpiralFrog

by Bob Lefsetz

Ever see a western? With the posse in pursuit of the bad guys? What does the brainiac ALWAYS say? LET'S CUT THEM OFF AT THE PASS!

Maybe record execs didn't watch enough TV, maybe they aren't aware of this most basic concept. You don't succeed by convincing people to play nice, to come back to where they once belonged, but by CORRALLING them at some future point!

Rental, and make no mistake, SpiralFrog is rental, it's just that you pay for it with your eyeballs/time as opposed to cash, has been proven to be a failure. Napster's going out of business, and Rhapsody is a niche product. So, why in HELL should I care, should ANYBODY GIVE A FUCK, about a service that allows you to have the material on the MAN'S terms when you can steal it all and own it with no questions asked? Isn't the solution to monetize the stealing, by charging at the ISP level, as opposed to capitalizing enterprises that nobody wants, trying to convince people to be satisfied with LESS than they're already used to?

How Apple became the villain, I'll never know.

Hell, let's go back to the beginning. The Diamond Rio. The major labels SUED to halt production. Thank god they lost, for if not there'd be no iPod, never mind an iTunes Music Store.

And why was the iPod successful? BECAUSE OF EASE OF USE! Does SpiralFrog sound easy to use to you? Forget the hypothetical interface, you've got to plug in every month to keep your tunes? God, a kid can't locate his house key, but he's going to play by SpiralFrog's RULES?

And then, Apple creates the aforementioned iTunes Music Store. Providing the major labels with revenue and an avenue for future distribution that allows them to mesmerize Wall Street and prevent their stocks from crashing completely. And somehow, Apple is at fault? Apple creates the market, but is a goat because it won't allow the labels to raise the prices? Give me a break.

But the real story, which the labels won't admit, is that the iTunes Music Store sales are de minimis to the ongoing theft. Never mind P2P, but CD and hard drive swapping. But rather than address the stealing, the record companies focus on Apple's near monopoly? Trying to break that? Unbelievable.

And why does Apple have this monopoly? Because of the sheer ineptitude of its competitors. Anybody can make an MP3 player, but people want iPods, because they WORK better.

Let's ask Sony. Which had the name brand advantage. Connect and their devices are a failure. Maybe because, at first, they only sold the music in a proprietary format, THAT NOBODY ELSE USED!

I know that Microsoft pushes WMA. But if you think Microsoft always wins, you've never heard of Google. WMA IS NOT the music standard. Shit, do we have to watch the Betamax movie one more time? Sure, WMA preceded Apple's AAC, but it's been ECLIPSED!

And, everybody savvy knows the real standard is MP3 anyway. And isn't it funny that the labels want to punish Apple by throwing in with MICROSOFT? Isn't that like punishing Righteous Babe by throwing in with UNIVERSAL?

And should we be impressed with any digital moves made by Universal anyway? These are the same guys who came up with Farm Club and PressPlay. Literally the same guys, Doug Morris and Jimmy Iovine. Doug's a sexagenarian song guy. Jimmy? He's an opportunist. Believing these guys have the digital answer is akin to believing the guys who did the Mentos movie are going to eclipse Paramount.

And really, if you're paying attention to digital, isn't Warner the ONLY company taking any risk? (Even though their efforts have been overhyped.)

But back to WMA. In case you didn't know, it's incompatible with iPods. But it's worse, it's MAC-incompatible. How about all those schools who signed up for Mac-incompatible music rental services? They're dropping them like crazy. Because Macs are BIG on campus. And, as stated earlier, people DON'T WANT TO RENT!

But it gets worse. Microsoft has stopped developing Windows Media for the Mac. Prove it to yourself by trying to watch MTV's Overdrive on a Mac. Can't be done. Because the idiots running the labels are afraid of having their content stolen. So now a whole slice of the audience can't sample your wares AT ALL?

And Macs may only have five percent of overall computer sales, but amongst individuals, it's much higher. And these people are zealots. Who do you think broke the iPod? Mac-users and early Windows adopters who told everybody how fucking great they were. Who in the hell is going to tell ANYBODY how fucking great SpiralFrog is?

But Apple's at fault here. Even though THEIR products are 100% Windows-compatible. Make me puke.

Then there's the issue of the copy protection not working ANYWAY!

If copy protection was a good idea, Andy Lack would still have his job. You don't grow a business by making sure fewer people can sample your wares, but by ENCOURAGING sharing/word of mouth. Shit, the labels speak the mantra of street teams, but they want the product locked up. The key is to MONETIZE WHAT'S ALREADY HAPPENING, not to try and bring people back to a past that never existed.

As for the WMA copy protection, it's been broken... Just read this: http://www.macdailynews.com/

God, it's like 2000 all over again. But instead of Napster clones, we've got RIAA-endorsed music sites. Not only Napster and Rhapsody, but the theoretically legal iMesh and Morpheus and KaZaA and... NOBODY WANTS THIS SHIT! Because it doesn't deliver what the consumer wants. Can't we start focusing on usability and consumer experience as opposed to protecting copyrights using the old model? If this goes on much longer, the value of recorded music will be zilch.

Yup, that's where we're headed. When the CD crashes rather imminently and all anybody wants are files. If you think people are going to pay a buck a track for copy-protected files, you're living in a fairyland inhabited by the likes of Mitch Bainwol and Dan Glickman. The reason Bush can keep getting away with saying we're winning in Iraq is because most Americans are not there FIGHTING! But hundreds of millions of people want music, and they're not going to fall for the RIAA doublespeak.

So, CDs will be dead, the iTunes Music Store will represent maybe ten percent of acquisition, and the rest of music will be FREE! Is this the future you want?

Then stop buying into the hype. Ignore ridiculous pronouncements of well-endowed vaporware and get down in the pit with the proletariat. Eighty million people have iPods, not because they're tied to the iTunes Music Store, but because they work best. Most people fill their iPods with music they've acquired anywhere BUT the iTunes Music Store. It's a circle jerk to see the iTunes Music Store as the future of acquisition and it's even more of a circle jerk to believe you can deliver less, for INCOMPATIBLE DEVICES, and people will want these new services more.

A lot of unprotected music for a low price that you own permanently. This is the only solution. To think otherwise is to be ignorant.

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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