[Dixielandjazz] The current state of the Major Record Industry long, delete if not interested.

[tcashwigg at aol.com]

Subject: Major Label letter,  written by Bob Leftsetz:

      The Major Label Game
 Posted: April 6, 2006
  It's beginning to look a lot like Detroit. Where claiming it was only 
giving the public what it wanted, GM drove itself to the brink of 
bankruptcy. And Ford had to decide it was not going to be the Ford of 
yore, but a much smaller company. Both entities failed by having no 
vision. Believing that the way things are today, they will be forever 
more.

  It starts with the SUV. Making more money per giant SUV than car, GM 
threw all its development money into remaking trucks like the Suburban. 
Sound like selling CDs to you? That ten dollar wholesale number looks 
pretty good to the major label. So, it wants to forestall its 
evisceration. As market conditions work against it.

 ADVERTISEMENT

  Toyota. The Japanese company knows it's about innovation. So, it pours 
tons of money into hybrid engines. Then, lo and behold, gas prices rise 
and a fickle public is INTERESTED in driving a car that gets twice as 
good mileage. It's kind of like the Administration. Who could FORESEE 
that radical Muslims would fly airplanes into the World Trade Center? 
Well, with the oil cartel dictating prices and said prices being higher 
in most of the developed world, it was OBVIOUS that prices would rise, 
but GM did nothing to prepare for this. At least Ford eventually 
developed a Hybrid Escape. Then again, would you buy a Ford? Not most 
people. Since they believe Toyota is the mark of quality.

  Speaking of quality. Does ANYBODY other than the major labels 
themselves believe that they purvey the BEST acts? Maybe the biggest 
selling, which they trump up with promotional dollars like Detroit 
sells cars to rental companies, but certainly not the best. Would you 
rather own a BMW or a Chevy? Turns out the BMWs of the music world, 
those based on what's under the hood, those that perform and are not 
all gloss, are increasingly on INDIE labels, where they can do what 
they want. GM couldn't build a BMW because some bean counter somewhere 
would say based on PAST numbers there was a limited market share for a 
BMW. People want chrome, not performance. But, BMWs numbers BURY GM's. 
Sure, GM sells MORE cars, but it's LESS PROFITABLE! What is the major 
label game? Shipping tonnage, or maintaining a lasting business?

  Then there's the issue of costs. In both cases, Detroit and the major 
labels, they're OUT OF LINE! Major labels keep cutting low-level 
employees, keep consolidating backroom functions, but NOBODY AT THE TOP 
TAKES A HIT TO HIS EXORBITANT SALARY! At least Rick Wagoner took a 
serious hit to his paycheck. These guys at the major labels are 
fiddling while Rome burns and somehow it's not their fault. 
Furthermore, they don't rein in costs. That's why they say CDs cost so 
much. MARKETING COSTS! Well, today marketing can be free. Not only on 
the "Today Show", but most importantly on the Web. But somehow the 
majors are wedded to the old paradigm. Price and positioning in an 
evaporating retail world. Radio promotion, even though Spitzer cracked 
down. ALL THE OLD WAVE TECHNIQUES IN A NEW WAVE WORLD!

  Then there are the tentative moves. The indie distributors formed by 
the majors. This is kind of like GM's Saturn. A good idea at the 
inception that is not handled correctly. First and foremost, CDs are 
dying. So, do the indies NEED a distributor? Second, the deals are 
crap. There's no new paradigm thinking. No one page contracts that give 
up a healthy percentage of the action. The indie distributors are just 
a FARM TEAM for the majors. And I ask you, who wants to play on the 
FARM TEAM?

  It's a new world, and despite their carping, the majors are doing 
nothing about it. They're just trying to preserve their OLD WORLD! And 
the old world they're clinging to is dying. And, they're going to be 
crippled in the future.

 What do accountants say, the numbers don't LIE?

 Last week the business was down 2.9% from 2005! An anemic year.

  But it gets worse. NEW album sales are down 3.4%! While catalog sales 
are down .7%. If this is not testimony to the fact that the industry's 
hero, Clive Davis, has go it all wrong, I don't know what is.

  It's all about the catalog baby. Creating lasting acts that will sell 
for DECADES! Something Clive doesn't do. Something all his imitators 
have forgotten. The INDIES don't purvey evanescent shined-up crap. 
Because they know you have to shove it down people's throats, and they 
ultimately have a bad taste in their mouths from the hype and REJECT 
these acts. You've got to have a slow build. You've got to enter 
people's hearts and minds. You've got to sell acts by TRUST! Something 
the majors just aren't doing. Which is going to MARGINALIZE them!

  At least the majors, unlike Detroit, HAVE these catalogs. Of 
evergreens that will continue to sell. Still, selling them on disc is 
going to become passe.

  In order to survive, the majors must change their paradigm. They must 
see their advantages. Which is primarily possessors of a sleek system. 
They should sign EVERY act, to almost no advance, and pay a healthy 
royalty four times a year. They should start this TODAY! Before these 
acts can easily get paid online. And don't need them. THEN, if an act 
gets traction, the major can offer a new deal, to put promotional money 
into them. There must be HONESTY in the relationship, not the bullying 
fly-up to the major deals of today.

 The majors must embrace digital distribution INSTANTLY!

  What we have now isn't true digital distribution. It's just a way to 
get a lower quality version at the same aliquot price per track. What 
about all those costs savings? With no manufacturing and shipping? Why 
don't they end up at the purchaser's door? Why can't the public buy 
TONS of tracks at a CHEAP price? Hell, they'll buy them all over again 
when they get a new computer/iPod. How often does someone remove the 
stereo from one car and put it into another? It's cheaper and less of a 
hassle to get a NEW ONE! THAT'S the new music business, it's FLUID! 
With product changing hands CONSTANTLY!

  And, it's less about the Ford Taurus. Or Chevy Cavalier. It's more 
about niches and customization. Turns out not everybody wants the same 
car, and not everybody wants the same music. But, the major labels 
continue to employ a BROADCASTING model in a wide-open cable world. The 
key is to make everybody a music consumer, and sell them SOMETHING! Not 
to try and sell everybody the SAME damn thing. THEN you end up as GM. 
Is there ANYBODY in the music business who wants to own a Chevy Malibu?