From: Bob Lefsetz <bob@lefsetz.com>
Date: May 1, 2014 at 7:14:04 PM EDT
To: yes@therainbow.com
Subject: The Music Business Today
Reply-To: Bob Lefsetz <bob@lefsetz.com>

THE TRANSITION

We're in the midst of the greatest transition in the music business since the Beatles, and I'm not talking about files to streaming, ownership to rental, but the transition from baby boomers to the younger generation.

Malcolm Young's illness is evidence.

Voices change. Arthritis sets in. In other words, no one lives forever, and no one can do it forever. Sure, you might see ancient warriors still treading the boards, but so many of your favorite classic acts are not only over sixty, they're seventy. In other words, if you want to see the Stones, go now, this is truly the last time.

And what this means is the legacy of the business is being wiped out, everything boomers were married to will be gone. Traditional radio, physical product, getting a good seat at a fair price, the music and everything attendant to it will be wiped out and we'll end up with a clean slate.

So, if you're waiting for the past to come back, sayonara!

The younger generation grew up in a pop world. Will there be a revolt against said pop music, will its "Sgt. Pepper" follow its "I Want To Hold Your Hand," otherwise known as "My Humps"? Possibly, we'll have to wait and see, but the people making the music will find the path themselves, they will not see themselves as part of a legacy business, but a whole new thing.

BLOCKBUSTERS AND MONEY

It only gets better from here, if you're a winner. Income is only going up. Musicians have always had cultural power, they're just leaving so much of it on the table. We live in a society of winners and losers, and music is the same. If you're looking at your royalty statement or your touring income and you're not happy, don't keep doing what you're doing, you ain't goin' nowhere. You've got to double down, change... Lemmings die, smart innovators live. That may mean you glom on to the sound of the day, that may mean you get a big investor, but it's always been a hits business and it still is today, only we are not interested in B material, we need nothing to fill out the char...great, and only great, wins, and very little is great, but that which is is ubiquitous, and very profitable.

FREQUENCY

There's been a big change in music in the last ten years. Used to be an act put out new music every three to five years. If you do that now, unless you're Justin Timberlake, you're forgotten.

Album cycles have sped up.

Acts put covers and live material on YouTube.

In other words, we are in an era of creation as opposed to marketing. It's an artist's wet dream. You have a ready and willing audience that wants to eat up everything you have to say. Feed them. Constantly. Singles may take longer than ever to happen on radio, but if you don't think radio is losing its influence, you're in it.

Furthermore, the tail of almost anything is not very long. Is anybody listening to "Gangnam Style" now? "Blurred Lines"? Beyonce's latest?

Baby boomer thinking is that you make an impact and last.

Youngster thinking is what have you done for me lately?

If you haven't done anything lately, you're on the way to extinction.

MERGER OF SOUNDS

Country artists rap, some don't even include banjos and fiddles in their music anymore. If you believe there's a separation in sound, you're unaware of the audience. Kids consume everything. All the influences. Don't be surprised to hear EDM elements in country music soon. The younger generation thinks this is de rigueur, the same way they've got no problem with gay marriage. Times change. And they have.

RECORD LABELS

Everybody needs money. And leverage comes from catalog. Major labels have catalog, as long as they proffer fair deals, they will survive. Someone else could swoop in and replace them, but they'd have to have very deep pockets, because they don't have that catalog cash cow.

INTERNET RADIO

Will not look like terrestrial radio. Despite all of its publicity, its festival, its awards show, Clear Channel has still not penetrated the new paradigm, which is personalization, or I hear what I want to on demand. iTunes Radio has put not a dent into Pandora's mindshare, Apple's only hope is to expand internationally before Westergren's company. There is a first mover advantage, and Clear Channel/iHeart does not have it, no matter what they say.

FACEBOOK

Zuckerberg is smarter than everybody. Because he realizes Facebook is not forever. That's what his recent acquisitions have been all about...tomorrow. In other words, Fleetwood Mac was right, don't stop thinking about tomorrow, but the music business is famous for this. Expect further disruption by those not married to the past, this business leaves itself wide open for it.

SPOTIFY

Signed, sealed, delivered, it's done, Spotify won. Why? Because it was a good idea, executed well at the right time. And the company had deep pockets and was willing to lose money. It's the free tier that made Spotify win. Beats has no chance. Rdio and Deezer have already been forgotten. Only YouTube can compete with Spotify. There's only one winner online, and if you think otherwise, tell me who competes with Amazon, which keeps getting bigger a la Zuckerberg, having just made a deal for HBO's content.

CONCERT PROMOTION

The dream was with the decline of the labels, the promoters would step in and break acts, this has not happened, because promoters don't want to invest, they don't have the vision, if you sell tickets, they'll book you, but if you can't, they don't want you. Artist development will continue to come from outside sources.

FESTIVALS

Are not where you break acts. Don't believe otherwise.

But festivals work primarily because of the camaraderie of the audience, it's very different from the traditional concert experience where you're married to your seat, at the festival you get to interact with others, and we do live in a social network.

MOBILE

Desktop? Done. Tablet? Done.

Last quarter's iPad sales were not spectacular, Tim Cook says it's an inventory thing. But pundits believe otherwise. It's all about the mobile handset, which keeps getting bigger. Mobile is going to be where you listen to music, buy stuff and get information. And if you're not making it easier for consumers to do this on their handsets, you're missing out. If anything, America is behind the curve on this. In India, in developing nations, in Europe...mobile already rules.

FOOD

Hot dogs and popcorn will not do. Even kids know good food. The whole country has gone upscale. This is the blockbuster syndrome in action. If your venue or festival is not serving gourmet fare, you're losing money and disappointing your audience.

COKE

Is dying. That's not my opinion, check the statistics, kids don't want it. So everything you thought was forever might not be, everything is up for grabs, the future will be owned by those not married to the past, who are disrupting on a regular basis.

As for music and creativity...that's king, because few can do it and it affects us so. How it will come to be will always be a gray area. Right now, tracks are massaged by many over a long period of time. Tomorrow individuals might write them in an hour. That's the magic, never underestimate magic.


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