How The Mighty Fall
By, Bob Lefsetz

MTV and CDs. The combination of these two delivered a plethora of profits.

Name the great acts of the MTV era. Sure, we've got Michael Jackson and U2, but both Mr. Jackson and the band from Ireland predated MTV. Michael Jackson was famous for eons. Ultimately his "Off The Wall" album made him a solo star, but not a superstar. That was dependent on MTV. And all those videos.

During the era of "Off The Wall", MTV didn't even play black music. But once the public saw Michael moonwalk on that Motown TV special, and he danced in both "Billie Jean" and "Thriller" on MTV, suddenly, he owned the best-selling album of all time.

Was "Thriller" that much better than "Off The Wall"? Actually, many consider the latter to be better. But "Off The Wall" sold a fraction of what "Thriller" did, because it lacked TV exposure.

I just upgraded my Mac to 10.5.7. Took an hour, what with repairing permissions, using the combo update and repairing permissions again. While I was waiting, I read magazines. First "Entertainment Weekly", then "BusinessWeek".

One of the business book gurus is Jim Collins. He wrote "Good To Great", which I never read, but have observed in the best-seller listings. Normally, I'd skip over an article of this depth, but not knowing how long it would be until I had my computer back, I decided to read.

Mr. Collins was brought to West Point, where he chaired a discussion amongst military men and civilians. Had America lost its greatness, was it in decline? The attendees were split as to America's future, half optimistic and half pessimistic. But what fascinated Mr. Collins was the observation of the CEO of one of America's most successful companies during a break. This gentleman stated: "I've been thinking about your question in the context of my company all morning. We've had tremendous success in recent years and I worry about that. So what I want to know is: HOW WOULD YOU KNOW?"

This question engendered Mr. Collins' analysis, it formed the basis of his new book, "How The Mighty Fall".

The record companies were quite mighty. But they broke the first rule of Mr. Collins' book. Which he labels Stage 1: "Hubris Born Of Success".

"Stage 1 kicks in when people become arrogant, regarding success virtually as an entitlement, and they lose sight of the true underlying factors that created success in the first place."

Bingo! MTV and CDs.

The record execs actually believed they were geniuses, who'd found the golden formula. From now on, hit acts would all sell ten million copies, there would be untold profits!

Rather than questioning their success ("We might have been just really lucky/were in the right place at the right time..."), they believed they were entitled to it. And ultimately blamed the decline of their fortunes on P2P theft.

Make no mistake, P2P has impacted the major labels. But not as much as the decline of music on MTV, the lessening importance of radio and few good tracks on overpriced CDs.

Stage 2 of Mr. Collins' theory of corporate decline is "Undisciplined Pursuit Of More". Here we have the Tommy Mottola/Clive Davis paradigm. If TV sells CDs, let us find the most telegenic performers and craft their acts for TV consumption! Mr. Mottola ultimately lost his job and Clive was pushed aside. Neither of these consequences would have taken place if the numbers were good. But they were not. Despite massive spending, there were many fewer CD sales.

Stage 3 is "Denial Of Risk and Peril"

That's the beginning of this century. "Those in power start to blame external factors for setbacks rather than accept responsibility". It was the damn Internet, IT RUINED OUR BUSINESS!

But what WAS the label's business? Manufacturing overpriced two-dimensional product for sale on television and Top Forty radio?

Stage 4 is "Grasping For Salvation". "The critical question is: How does leadership respond? By lurching for quick salvation or by getting back to the disciplines that brought about greatness in the first place?"

We've got Universal investing in the Farm Club and MP3.com and now Vevo. Is that their core mission?

We've got Warner investing in concert promotion and online distribution with LaLa.com.

And we've got the whole industry suing its customers.

All to protect a model of overexposure of limited product to reap giant rewards. But MTV moved on from music because it was no longer generating ratings. The industry was pissed that Viacom got rich and the labels did not... But once again, what was each entity's core mission? MTV was made to expose. The labels were made to..?

MAKE!

That's what labels do. Find and nurture talent. That is their core competency. That is their defining MISSION! But that got lost in the shuffle of incredible profits during the eighties and nineties. Labels weren't selling music, they were selling overpriced DISCS!

Stage 5 is "Capitulation To Irrelevance Or Death". That's where the major labels are today. "In some cases the company's leader just sells out; in other cases the institution atrophies into utter insignificance; and in the most extreme cases the enterprise simply dies outright."

How long until a major label is sold for its catalog value? Before one of the Big Four gives up new music production? EMI already has stated it's not going to spend big bucks to sign and promote new talent.

Irving Azoff's Front Line is more powerful than any label today. By far.

What is the future?

Not the past.

"Never give in. Be willing to kill failed business ideas, even shutter big operations you've been in for a long time, but never give up on the idea of building a great company."

It's clear. PERFECTLY CLEAR! A record company needs to be about MUSIC! Everything flows from the tunes. It's all right to take a percentage of 360 degrees of revenue, so long as it's not a land grab, but a reasonable compensation for services rendered.

You can't sign an act based on whether you can get them on television or radio, neither of those deliver enough profits. You've got to sign an act based on whether it's GOOD! The iPod was a product seen as overpriced and unneeded, and then Apple rode it to one success after another. The iPod not only dominated its sphere, which blew up and became dominant, computer music rules, it also delivered sales of Macs and iPhones. In other words, your business won't deliver its future based on the Pussycat Dolls, but something seen as unneeded at first, which is so great its audience bonds to it and delivers revenue over a period of years.

Instant success on MTV ultimately rendered instant irrelevance. The wheel had to be reinvented time and again. Sure, you could break the first album, but you couldn't count on making money on the fourth and fifth, frequently not even on the SECOND (can you say Chumbawamba?) The execs lost sight of what business they were in. Ahmet was concerned with greatness. Mo too. Today's execs are just interested in tonnage. They could be selling ANYTHING! They are not NECESSARY!

That's what you need to survive..."to build an enterprise that makes such a distinctive impact on the world it touches (and does so with such superior performance) that it would leave a gaping hole - a hole that could not be easily filled by any other institution - if it ceased to exist." This describes XL Recordings, but not Interscope or Atlantic or Columbia. Everyone knows the real bands are on indies. That's commercial crap on the majors.

And maybe the majors won't survive. Maybe Doug Morris rides the train to complete irrelevancy, if not bankruptcy. But whoever takes Doug and Universal's place will be focused on finding unique talent and nurturing it. Artist development isn't finding more people to buy the first album, it's a creative arc, over a period of albums, wherein the act grows and more and more people come along for the ride. "Sgt. Pepper" sounded nothing like "Meet The Beatles". The Beatles couldn't have made "Sgt. Pepper" the first time out. There's experimentation, there's a learning curve. It's not just finding the same hack songwriters to write fodder for good-looking people.

Most lasting successes to not happen overnight. Because the public is not ready to consume the product/artist. Hipsters need to glom on, mavens need to spread the word, to ultimately reach Malcolm Gladwell's "Tipping Point". And once you've caught fire, you have to protect the essence. If the act is tied up with corporate endorsements/commercials, how honest can its music be? If the act works with the same producer as everybody else, how unique will the sound be? If you're not allowed to fail, how can you stretch yourself and succeed?

Labels demand singles. Won't release the album until they deem it ready. Which is about commercialism more than artistry. Instead of multiple albums in a short period of time we've got an extended selling period of the same damn collection to the point where the core audience abandons the act. And if you've lost your core, you've lost everything!

We're in the music business. The greatness of the major labels was that they sifted through the available talent and found the gems, and then helped the quality acts grow, both artistically and commercially. That's not the business of the majors today. Today it's about finding cookie-cutter stuff and yelling at the public to buy it, all the while bitching that they're stealing it. This is a recipe for disaster. This is why the recorded music industry is failing.

Maybe recordings do not generate as much revenue in the future as they did in the past. Rather than whine, be the company that MAXIMIZES revenue, that accepts reality, that notes change and adapts to it. That does not mean charging huge upfront fees for anybody who wants to sell or stream music online. Those are your partners, they're the ones who are going to make you money. You control the essence, the music. That's what lasts. No one wants the remnants of Friendster, but they do want the music of yesteryear. Especially those classic rock hits. Bands that tested limits and developed, all at the same time, the ones selling tickets to arena shows today. "Purple Haze" is so good, you want to hear everything Hendrix ever did, it never grows old. You might want to listen to "Ice Ice Baby" as a novelty, but you don't want to hear anything else Vanilla Ice does, and only a small coterie want to see the guy perform live. But the Stones? It's not only "Satisfaction", but "Midnight Rambler", and "Under My Thumb" and "Can't You Hear Me Knocking". "Brown Sugar" was deep into their career, there's a cornucopia of greatness. Which is lacking in quantity and quality today.

http://www.businessweek.com/magazine/content/09_21/b4132026786379.htm?campaign_id=rss_topStories

Performance Royalties, By Bob Lefsetz

"The last time the artists united was when they all said they wanted their MTV."

Andy Gould

Last week, at the close of Musexpo, there was a dinner at the Gordon Ramsay restaurant in the London Hotel. I ended up sitting with Ron Spaulding, head of Fontana distribution, Jason Flom, A&R man for the ages, and Andy Gould, producer of Rob Zombie's movies as well as manager of so many musical acts.

Andy and Jason reminisced about the old days, women and cocaine in New York City hotels. And then Andy started speaking of how the industry had mishandled the future, because it believed it would be the same as the past, that no change would ever take place, that the end would never come.

Andy was of the belief that if the artists had just told their fans not to steal, the problem could have been thwarted. I thought this was hogwash, sometimes the inevitable march of history flattens you, as is happening with the newspaper industry today. What could publishers tell readers? Stop going to our Website, continue to subscribe to the physical paper?

But Andy was on to something. The inability of artists to unite on their own behalf. Like with this performance royalty, how come the artists weren't standing up.

I couldn't agree more!

We live in a land of perception. How come the artists and rights holders always come out on the wrong end of the stick?

Like with this Choruss thing. Sure, the devil is in the details, but I've broken bread with Jim Griffin over this topic, the intent of the rights holders isn't to fuck college students, but to create a legal avenue for music acquisition that generates revenue to purveyors. Suddenly this is a foul goal? Music should be free forever more? There should be no legal alternative to P2P theft?

But if you read the online prognosticators, this is an evil plot by the record companies, to collect names and add heinous college fees. How this story has gotten so twisted, I do not know. But I will say that Choruss has done a bad job of telling its story, of getting the facts of its mission across. Labels have been hated for so long, having sued their customers, consumers no longer give them a pass, they believe if the labels are behind it it's a rip-off, it's faulty, it must be stopped. So a few bloggers take down the entire mission.

Kind of like what's going on with the radio industry.

Those cats got so fat over the past few decades it's unreal. Clear Channel is bitching today because it took the company private and then got caught in a cash crunch. This is the record industry's fault? This is like Wall Street saying we've got to sympathize with bankers, because after enriching themselves with multi-million dollar bonuses their trading houses were bankrupt. Sure, we ended up giving them money, so they would lend, which they haven't done, but at least the public outcry is a roar.

I don't care what excuse radio uses, financials or breaking artists or what, they need to pay a performance royalty. It's a raw matter of fairness.

It's great that songwriters get paid. But last I checked, when a song is broadcast, there's someone SINGING IT! And it's not always the person who wrote it. There's a performance right for satellite radio, Internet radio too. But somehow, being an antiquated industry, terrestrial radio should be immune? Isn't this like letting old plants pollute based on their age? No, we RETROFIT THEM, so they don't foul our air any longer!

Andy now represents the Monkees. They didn't write those hits and record royalties were anemic or nonexistent back in the day. So, having sung "I'm A Believer", one of the great records of all time, Micky Dolenz should continue to go uncompensated? Believe me, it's his breathy delivery that makes the track, and revenue is generated when stations air this sixties classic and those of other uncompensated artists.

This is not breaking new ground. Around the world the performer is compensated for radio airplay. And, most countries have laws preventing performance monies from coming to the U.S. unless there are reciprocal rights! In other words, it's not only money for U.S. radio play, but WORLDWIDE radio play!

But somehow this has been portrayed as record label and artist greed online. While the rights holders hope and pray that elected representatives will save them.

Same deal with the Ticketmaster/Live Nation merger. No one's going on record, no one's selling the story to the public, they're just counting on the usual suspects, their lawyers and paid for people in D.C., to get approval.

Now the government has launched an investigation into the Google-Apple relationship, the cross-pollination of their boards. But somehow Ticketmaster/Live Nation is immune, based on some twisted notion of stare decisis? Obama takes on offshore tax havens and the credit card companies but somehow he's going to give Ticketmaster and Live Nation a pass? Irving Azoff and Michael Rapino might know a lot about concert promotion, but they don't know diddly-squat about public perception. Their deals are made behind closed doors, acts plotting to scalp their own tickets as the public nearly riots. Isn't this a recipe for disaster?

And these same wealthy artists are so afraid of pissing off radio that they won't take a stand. Andy Gould said the artists should unite, on their own behalf.

Enough bitching about Ticketmaster Springsteen, how about standing up for a radio performance royalty?

And Don Henley! You can only support Walden Woods?

And Jay-Z. Supposedly you're a great businessman, why are you leaving this money on the table?

Even Pete Wentz. You've got everything covered but this?

When are the artists going to stand up on their own behalf? When are they going to organize and change public perception. Where are the ads, where's the benefit concert, WHAT'S THE PROBLEM?

This is a no-brainer. The only people opposed are those who own the stations, fighting to keep more of the pie. The public would hew to the rights holders' side if the story was explained. But rather than take their case to the public, rights holders would rather put their faith in Mitch Bainwol and his team at the RIAA. Isn't that just like putting the war effort in the hands of Halliburton and Blackwater?

We're living in an age of clarity, and egalitarianism.

We need a performance royalty.

And our best chance of getting it is if those who are in line to reap the rewards stand up and say WE'RE MAD AS HELL AND WE'RE NOT GOING TO TAKE IT ANYMORE!

Extremely important letters to Bob Lefsetz, weighing in on the royalty controversy:

Dear Bob
Ellen Shipley here.
Recording Artist in the late 1970's-1984; hit songwriter ("Heaven is Is A Place on Earth".......)
Survivor of the monstrous music business for 30 years. One of Dave Marsh's best friends. Mother of two kids, three dogs.
Married to veteran keyboard player (as they like to describe him) Ralph Schuckett.
It's all there---google away!

I thought I was through. Sold part of my catalogue in 2007 to feel clean.
Not getting paid again.

I like your style. This is what I have to say....If you're interested in this piece of the rotting music business pie, let me know.

It's time to tell the story of the Music Publishers who have ripped off the songwriters for years
and the songwriters who have buried their collective heads in a PC bubble in order to keep getting covers...
The audits, the sell-outs, the fear..... All the dirty little secrets..song writers feeling forced to give their publishing away to Recording Artists
(who think its a privilege for you to have a song on their record --so bow down, eat dirt and give them part of your royalties or you won't get your song recorded);
to managers who think you"re lucky to have them and they should be rewarded beyond the percentage they already take; to heads of publishing companies who want to make as much money as they can whether they actually work for you getting covers on records or they sit round taking the credit anyway even if they did nothing.
The Big Time lawyers who play golf or footsie or whatever with the Big Time Publishers that you need to hire so you can get your own money from the company that somehow doesn't want to give it to you.
although the money is yours and they have no right to keep it. Oh--they always have kids at the same private school---cute.
The endless games you learn to play; the lack of fighting spirit on the part of the song writers;
the lack of a song writing community; the lack of any "power" on the part of the song writers as they are taught to believe they are totally dispensable, replaceable,
("if you don't behave we'll use someone else's song on the record") ---low man on the proverbial music totem pole. Wow! Really??? Go write your own shit
which some artists inevitably do although they can't write. Which reminds me---do you iknow the one about the song writer who has to sit with the
recording artist who can't write at all but hold his/her hand and then give them credit as a writer of the song even though THEY CAN'T WRITE???
Swallow that. Quietly.

Yeah. I know. I'm venting.
I was angry 30 years ago when a DJ at a radio station told me to blow him or he wouldn't play my song on his station; when my Record Company A&R guy
wouldn't stop eating his Chinese food and talk to me about my record even though I flew 3,000 miles for the appointment; when, when when........
I'm going to stop now. I'm not having a pity party. I'm having a "someone tell the fucking truth, already" celebration because it's time...

Let me know if you are interested in this chapter.

I am going to meditate now that someone at one of those BIG PUBLISHING COMPANIES will send me a check.

THanks----

Ellen Shipley



___________________________

Bob,
I'm Andre Pessis. I've had 16 hit songs including songs recorded by Huey Lewis, MR Big, Waylon Jennings, Bonnie Raitt, Tim McGraw, Southern Pacific and others.

I would like to add to Ellen's list.

How about the practice of record companies forcing songwriters to help pay for Indie promoters on singles with the threat that they will never get another cut with that label if they don't?

Or how about the fact that record companies make it a policy to withhold a percentage of songwriter and publisher royalties and won't pay unless audited which forces the songwriter and publisher to pay Harry Fox a percentage in order to Audit?

What about producers who take a big chunk of publishing to play your song for the very artist that they are supposed to find material for?

What about the policy of putting your song on hold and asking you not to play your song for other artists without any payment or guarantee of a cut, yet in the movie industry, writers are given a fee for an option?

Sometimes these holds last so long the song is no longer "current".
Years ago Rod Stewarts people asked my then publisher Bug Music for 100% of the publishing for a songof mine that he wanted to cut. When Bug asked them - How will we make anything?, they were told to take part of the writers share of royalties.

And finally, what about the practice of big companies paying a producer a hefty fee to place a song on the record of an artist whether or not it's the best song for that project.

The music business has always been corrupt but the art itself saves us time and time again and so we adapt by developing Rhino hide in order to get paid for what we are truly in love with and good at. Big sigh.

Andre Pessis

________________________________

Dear Bob,

Ellen is obviously telling it accurately. I can't imagine her comments if she lived through the music business of the 50's and 60's. I'm not being negative but one always has the option of saying no, I know a number of successful people who did, Ray Charles, Bryan Adams, Don Henley, Diane Warren, Kara Dio Guardi, James Taylor, Quincy Jones, Donald Fagen, Walter Becker, Jimmie Buffett, Paul Simon, Randy Newman, and The Dixie Chicks off the top of my head. I also know some good publishers who worked with and for writers, a bunch of artists who were grateful for a good song, a few decent attorneys who cared about their clients and a couple of managers with talent and integrity but mostly she is right.

The business or what's left of it is littered with the trash that greed
always leaves behind. That's the good thing about where we are heading now. The artist can be self sufficient and offer their work directly to the fans.

Maybe between Ellen's 2 kids, 3 dogs and Ralph she has some good music percolating in there that she kept safe because of her horrendous people experiences. I don't blame her a bit if she has it and keeps it safe.

But she has the gift of creating music and no one can take that away
from her whether she shares it or not.

Joel Sill

________________________________

Bob,

Thanks for printing the letter from Ellen.

Regarding publishing, song-writing, producing, real talent, and generosity;
I'm a songwriter. I have some cuts and two big hits. I believe in songs first. Not shredding, blowing, rapping, hyping, hybrid cosmetic/movie/tv/clothing lines. Songs. What will make me hit the rewind button? An amazing song. Still today. A great song is the only thing that matters.

I work with David Lasley, an amazing singer/writer who currently is on tour singing with James Taylor.

David's songs have been hits for Bonnie Raitt, Boz Scaggs, Anita Baker, etc. Endless cuts. Genius writer, sweetheart of a guy. I have learned the most important lesson from him. Hold on to your publishing. Own your content.

David's gave "You Bring Me Joy" to his publishing company as one of the songs to fulfill his agreement of ten songs a year. He felt strong about it. They passed. He runs into Anita Baker, gives her the song personally, she records it. Top ten hit behind Rapture, the big single.

Result?

The publishing company creates an amendment that states from now on, if we pass on a submitted song, WE STILL OWN IT. Basically, this means they can pass on everything you submit, own it, and not pay you. You would actually be in breach if at the end of your year, there were no "hits" submitted, and they wouldn't have to pay you. All because they couldn't admit they were unable to detect a great song.

Years later, a huge diva singer tracks David down and says I want to record "You Bring Me Joy." David is honored and says sure. But first, they want him to sign a new agreement making them co-writers! They say it's a risk for them. He says "It's already been a hit!" And passes.

I remember hearing the diva's album without David's cut and by then it didn't matter about the material. Her package was so established that the songs, (all B and C quality) were unimportant. But what happens is, all her imitators do this very thing and the watering down of songs continues.

Own your content.

He is consistently writing, lives to do it. He is the only writer in LA I have ever met who will refer other writers to a project if he doesn't have a song that fits what is being looked for. NO ONE does this. He was part of a song-writing community that no longer exists. Before the hype. Before producers started saying, "I am getting cowriter share of every song because I'm the producer." Not because they were writers, but because they could.

He actually believes in and supports the art of song-writing. He'll call from the road and say "check out the bridge on Joni's tune from Hissing of Summer Lawns. Use it as a template and write one like that."

Bob, you need to find him and interview him. Ask him how Bonnie came to record "Ain't Gonna Let You Break My Heart Again" from Nick of Time. Amazing story!

Ellen is exactly right. I have sat with a no singing, no writing, talentless hack who looks like Brad Pitt, written the song completely for him and at the end heard him say, "I really loved writing with you!"

Now, I'm a New Yorker, and we don't buy into bull shit. So I responded, " I don't mind making a deal that says we co wrote this, but right now, shake my hand and admit you had nothing to do with writing this. Look me in the eye and admit it, and I'll sign an agreement and keep my mouth shut for life." "Oh man! dawg! Why you gotta be like that? It's all good!"

True!

I wrote a song for a medium sized career artist looking to blowup. This tune was killing. Her husband/manager said, "we have to have cowrite on this." Which was a compliment. They believed in the song. He actually mentioned (or dangled the carrot) the idea of the song being the album title and tour name! So I said fine, as long as I get a percentage of the gross of t-shirts, hats, tour swag etc with "our" song title on it.

They passed. I wonder why.

Artists will never admit to being exhausted from a long tour, with no new song ideas, and having a demanding label that wants a followup album. They will give a "newbie" a chance and will suddenly be a co-writer on a song. If the newbie disagrees? "I'll have to pass on your song. My audience needs to think I am writing." And that's actually better than most artists, who talk to you through their managers and do the good cop - bad cop thing.

New music is supposed to be different from what's on the radio now. Not an imitation. It has all crumbled in and caved on itself out of greed. But it's not only the execs at the labels. The producers. They all want to be Quincy! Who was a musician first and foremost.

Geoff Emerick, Phil Ramone, etc, they all say the same thing. We let the artist do their job. We encourage, but they are the writer/singers. We only document, and get the best performance out of them.

Today producers manipulate. They correct performances. They cut and paste.

It started in the 90's. Labels signed "artists" on age and looks alone, and producers had a much bigger hand in the final outcome. Send the artist to the Beverly Hills Car Wash for a nip and tuck, auto tune their voice, and play all the instruments yourself on a computer. It's the man behind the fucking curtain. And it killed it. For all of us. Lip synching in "concert." Non-singers getting Grammy's for singing! Madonna can't sing but she is adored for "reinventing herself." Uhm, no. She is hiding behind the reinvention. Paula was auto tuned on her albums. Now she judges singers on TV. Barely.

Black Eyed Peas "Where Is The Love" is a great pop song. The new one? A fucking cheerleading nursery rhyme. A safe, lame ass song with no feeling. Why can't they come up with another batch of great songs? Because they're busy being all that ya'all! Ya feel me?

Elton John, Stevie Wonder, they came up with so many great fucking songs in a 7 year span, it boggles the mind. They loved the craft of song-writing. Elton or Stevie could not get signed today. BTW Elton partied and fucked his way through two continents! Bein all that!

At a NARAS event a few years back, Andy Johns spoke about recording Led Zep. At the end of the night he said, "We witnessed the beginning of the end. One of the execs from Atlantic walked into Jimmy Page's studio and tried to hang. Page kicked him out. He yelled "Do I come in to your office and tell you what to do?" Humiliated, the execs mumbled to each other, "we have to find talent that listens to what WE say." "It has long been coming down the pike", said Johns.

Great songs are still the most important part of this. Satellite, internet, independent concerts, house concerts, small venues. Artists, honor your individuality! Joni Mitchell says in order to be considered hip, you have to be willing to be considered being thought of as unhip. Songwriters, believe in yourselves! And hold onto your content!

Name and email withheld.

Bob Lefsetz opinion....follow him at twitter.com/lefsetz


Rights, distribution and radio. Those are the three cards the major labels and their controlled publishing companies held. And until Napster, those cards always triumphed.

You needed exhibition to sell. And that's where the labels' relationship with radio was so important. Independent labels could not get their songs played. Still cannot get their songs played, despite the Spitzer agreements.

It was not easy to get records in retail establishments. But even if you managed to accomplish this, it was almost impossible to get paid if you didn't have a steady flow of desirable product. That's how retail worked. Stores paid you when they needed new product. If you had no new product to deliver, you didn't get paid. And it's hard to run a business with no cash flow.

And then we get to the rights. This is what tripped up Napster. He who owns the product gets to say how it's sold. You just can't take someone else's wares and give them away for free. You can't take them and sell them either, the rights holders have veto power.

So, innovation has been locked out.

I just read a fascinating story in the "New Yorker". Entitled "The Instigator", subtitled "A crusader's plan to remake failing schools."

Speaking of failing schools. I'm stunned how many times I make an argument and my readers can't comprehend it. They've never been taught the power of analysis. You've got right and wrong, black and white. Subtlety? Wrestling with the facts to your own conclusion? Frequently their teachers couldn't even exercise this. And now, everybody gets a college education, but they take business courses, they've got no understanding of the arts and reason, and our society is poorer for it. But the poor are another matter entirely. They often go to schools where the teachers literally don't teach. And the students end up dropping out, and that ends up as all of our country's problem. Because even if you pull yourself up by the bootstraps and buy a BMW, where are you going to park it? Where can you leave it where some poor citizen doesn't break in and steal the airbag, to sell for cents on the dollar so he can buy drugs, feeding his habit that he employs to cope with the futility of life.

We don't live in India. Not even China. We're not a country rampant with strivers, willing to work long hours to get ahead. Rather, you don't need an education because you're going to be an athlete, or a rapper. Sure, some kids go on to get computer science degrees and change the world...

But they haven't changed the music business. Because of the triumvirate of rights, distribution and radio.

This guy Steve Barr. He's been taking over schools in Los Angeles, one by one with his charter organization Green Dot. High schools. When it's supposedly too late to have an effect. But his Green Dot schools now send eighty percent of their students to college, whereas in L.A. we've got a forty-seven percent dropout rate. Standardized test scores are twenty percent higher than L.A. Unified's. How did this happen?

The power of one.

Steve Barr is fifty, met his wife at Burning Man, married her three weeks later... He's not conciliatory, he threatens to create rival schools if the district doesn't play ball. He's got a deal with the teachers union, but it's not the standardized contract, and he makes all of the teachers in Green Dot schools reapply in the transition. Where is the Steve Barr in the music world? Where is the single individual who's going to change the landscape, for the benefit of listeners?

It's not Irving Azoff. Sure, he wants to deliver rights to the artists via the Ticketmaster/Live Nation merger, but now, in light of the Obama administration's recent antitrust pronouncements, I doubt that merger goes through. And even if it does, Irving's so tied up with Doug and Jimmy and the rest of the usual suspects that he can't lead a revolution.

But he did start one. With the Eagles and Wal-Mart. Suddenly, the big acts are no longer signing with the major labels. It's not financially prudent. Which brings us to distribution.

Physical sales are dying. Getting paid online is no problem. The biggest problem is attention! How is anyone going to know you're releasing music, never mind hear it?

Music radio means less than ever before. Not only because of the endless commercials, but the alternatives. Net radio, streaming on demand, iPods...why be subjected to unappealing tight playlists if you have options?

Rights. This goes back to Mr. Azoff. If suddenly the artists control the rights, it's a whole new ball game.

But Irving deals with the old acts, the superstars. How about the wannabes?

The lawyers make those 360 deals because they want to get paid. As do those acts who put down their John Hancocks. Handlers convince them it's the way to go, or they're so desperate for cash, they see no alternative.

But there is an alternative. Especially when 360 deals forfeit so much for so little. Check SoundScan, no one's going diamond, almost no one is going platinum. How much can the label advance?

Still, innovators in the music sphere have been hamstrung by those rights the labels and the publishers still hold. How many stillborn online music services have we had? Playing by the established industry's rules is a license to go out of business. Just ask iMeem (which supposedly has found new financing, but they're losing money streaming music.)

For the past few years, the innovators have thrown up their hands. If you want to be in charge of your own destiny, you create an iPhone app, you don't try to solve the problem of music distribution.

But this is going to change.

New acts see value in giving away their music. And if you control it, you've got the right. How long until there's enough unfettered new music, tunes the creators control as opposed to the fat cats, that someone from the outside can roll up these rights and create a viable alternative to the established game?

It's just a matter of when. The old guard just wants to keep the old system in place. Kind of like the French three strikes law. What kind of garbage is that? Rearguard and unenforceable. Do they really think it's going to increase revenues significantly? No, legal alternatives are necessary. But they're impossible to establish when the old guard has so much power.

But we've established that the old guard is losing its power!

We're not talking artists here, we're talking businessmen. Great artists are almost always shitty businessmen. But great artists recognize great businessmen, which is why when David Geffen started his eponymous label, John Lennon, Donna Summer and Elton John immediately signed to the company, even though Geffen had been out of the business for years. It's why and how Irving controls all those acts today.

But Geffen's essentially retired. And Irving is not about the new wave, but the old.

And what people want most is exhilarating new music. We love our oldies, we want to remember our summer camp girlfriend, but we don't want to be married to her.

So he who controls new music controls the world! What if new music does not align with the usual suspects? What if new music goes with the entrepreneur? Who is more about protecting the artist and his career than making a quick buck?

The old players don't like this, they don't want this. But they're losing their stranglehold. We've got a ripening landscape wherein a revolutionary like Steve Barr can build a position and then cause the old guard to blink. Break a bunch of new acts by delivering the tunes in an innovative way and how long is it until the old guard has to sign up on your terms?

You've got no leverage if you control no rights, if you can't break your act without terrestrial radio and physical distribution. But if you can get the word out online, and control all revenue streams via a storefront you own, the old guard will come to you.

And even if the old guard does not capitulate, it ends up being neutered. Because of its diminishing control of hit music.

I'm doubtful anybody in the established music business can lead the charge. There's too much history, too many alliances with the past. As Malcolm Gladwell says in the same issue of the "New Yorker", David only beats Goliath if he puts in incredible effort and is willing to do what is "socially horrifying". "Socially horrifying" means you challenge the rules, and break them. Or as Gladwell states, "He couldn't fight the establishment, because he WAS the establishment." "The price that the outsider pays for being so heedless of custom is, of course, the disapproval of the insider." Even Irving Azoff, with his reputation for questionable veracity, can't fuck Jimmy Iovine. He's in business with him! You're not going to break the rules if your wives are friends and you vacation together, play golf every weekend at the private club.

So, it has to be an outsider who leads the charge. Who has to be desirous of putting in the effort. But after Napster and Grokster and KaZaA and the Pirate Bay, no one's been willing to make the effort. But what if you weren't stealing? What if you were setting up a better shop across the street? More in tune with what the public desires? Then, you're on the road to success. But not overnight.

It takes time. You can't play by the old guard's rules if you're trying to break them. You can't be desirous of driving a Lamborghini based on the venture's profits in the first year. Which is why the charge won't be led by people like Tim Westergren, or Michael Robertson, who aren't about music, but money. The lead will be taken by someone who's been to a million shows, who's got multiple hard drives of music, who first and foremost is a music lover! That's how Ahmet made it, that's how all the legends made it. But too many of those in power today have always worked for the man, they've never done it themselves, which is why they are vulnerable.

Never underestimate the power of one. The David who challenges convention with a ton of effort and succeeds. There is no innovation in the mainstream music sphere. It's not wanted. Risk is anathema. But we've just about reached a tipping point. Where someone unknown is going to amass rights and power and change the entire game. Just you watch.

http://www.newyorker.com/reporting/2009/05/11/090511fa_fact_mcgray