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<nettime> Lefsetz Letter: Income Inequality Killed The Music Business
nettime's_easy_listener on Fri, 2 Dec 2011 02:57:24 +0100 (CET)

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<nettime> Lefsetz Letter: Income Inequality Killed The Music Business


Income Inequality Killed The Music Business

   I'm a smart guy. I was educated at one of America's finest colleges.
   I'm a member of the California Bar. But even if I struck it rich as a
   writer, I could never garner the millions a banker or corporate CEO
   does. It's impossible. It's like asking a sandlot player to bat .400 in
   the big leagues. It's like paying a street ball player twenty million a
   year. Never gonna happen.

   Twenty million a year. There are bankers and CEOs who make this much
   each and every year. This is not U2, going on the road, raping and
   pillaging in stadiums for years. If U2 went out again, they'd have
   trouble selling tickets. Hell, they had trouble moving tickets for the
   last leg of their tour. They played it out, they mined the depths,
   they've got to let it lie fallow. Costs for the U2 360 tour were
   prohibitive. How much did each member of U2 end up with at the end? I'd
   say no way a hundred million, but let's just start there, let's go with
   that number. There are bankers and CEOs pulling down nearly a hundred
   million dollars a year. It took U2 years to achieve this goal, to make
   this amount. They're spent, but the bankers and CEOs are still rolling
   in dough. And the U2 360 tour was the biggest in history!

   So you're graduating from college, playing in a band all the time you
   were in school, and you ask yourself, should I give music a go or get
   an MBA, go to work for Goldman Sachs?

   Now it's no longer the seventies. Take a year or two off and you miss
   the bus. You've got to start now. There's only one band making mucho
   coin, but thousands of bankers and CEOs getting rich. Odds are better
   if you become a CEO.

   Or you could go into tech. Mark Zuckerberg is not the only young techie
   worth millions. There's that guy running Groupon and the guy running
   Zynga, and so many of the worker bees end up making millions too,
   that's what all the employees at Facebook are counting on. Do you think
   you can make millions as an A&R guy?

   1. The Labels

   Used to be running a label paid well, but it was mostly about the
   music, the lifestyle. Then, with the advent of MTV and the CD, suddenly
   Tommy Mottola was far richer than the acts. And Tommy and his ilk
   started hanging with other rich people in the Hamptons, they felt
   entitled to their wealth. Such that when Napster blew a hole in the
   paradigm, everybody was sacrificed but the top guy. The people running
   the labels are still as well paid as they were before Napster, before
   the recession. They're keeping up with the joneses, they're in charge,
   everybody's expendable but them. As for those people still working at
   the label...they're thrilled to have a job. Glad to be slaves on the

   And everything is driven by the bottom line. Hell, Warner is privately
   held, Sony and Universal are parts of giant corporations.
   Theoretically, they could invest in the future, they could leave money
   on the table, but they won't. The execs want that money in their
   pockets. And they don't really care about the label anyway, they don't
   own it. As long as they get paid for their multi-year contracts,
   they're cool.

   Music is not the focus, money is. It's a change in our entire culture,
   why should the label heads be any different. They've fought their way
   to the top, the top are handsomely rewarded, usually with double digit
   million incomes. If the guy running some industrial firm makes this
   much money, shouldn't they, providing entertainment for the masses?

   2. The Acts

   The best and the brightest don't go into music. It just doesn't pay.
   The only people pursuing music as a career are the lower classes, who
   are struggling to get on top. As a result, they'll do whatever it takes
   to make it, they'll whore themselves out when they get there, it's all
   about the bucks.

   Ergo the crazy endorsement and product deals. The acts feel they're
   entitled to the money. Look at all the other half as famous people,
   they're loaded, so the acts feel they should be loaded too. And the
   corporations are willing to lay cash on the acts, because the
   corporations have money to burn, their taxes have been lowered, check
   the statistics, they're sitting on huge cash reserves. The CEOs can use
   this cash to hang with stars. This is how the Gaddafi family got
   household name talent to play their shindigs. This is how that guy who
   made bad body armor got the biggest stars in the world to play his
   son's bar mitzvah. Used to be no CEO could afford it. But now, they
   can. And the acts see no reason not to take it. Hell, they don't want
   to fly commercial, they too want to vacation in St. Barth's. Music has
   become about the money. But the odds are low and so is the money, so
   you get the desperate, willing to do anything to make it, kind of like
   the athletes. Those NBA players are not model citizens, but they're
   essentially one-dimensional, it's comes down to their playing ability,
   their performance on the court. But we believe musicians are their
   music, that they're three-dimensional, that we can believe in them, but
   we can't.

   a. Artist Development

   Few of the classic acts did their best work on their first records. But
   labels allowed them to marinate and mature, to develop. Now the label
   says no, because the executive wants his money up front. There is no
   long term. And that's why there's no "Hotel California". Nobody peaks
   on their fifth album, there usually isn't even a fifth album.

   b. Writing Your Own Material

   This is what blew up the rock acts. This is what made us believe in
   them. Now, material is written by committee. If the label's gonna take
   a risk, it wants insurance. It doesn't want the act blowing half a
   million dollars on something that won't sell. So inherently, we've got
   less believable stuff. Sure, there will always be music, but the heyday
   of the music business was when the rock star was responsible for
   everything and was beholden to no one. Ain't that a laugh.

   3. Concerts

   Sure, there was scalping decades back, but tickets were not the
   equivalent of a thousand bucks. Because no one had a thousand bucks to
   blow on a ticket. But the bankers and CEOs do. So the hoi polloi can't
   get a good ticket. And since the acts need to make as much money as
   they can, and recorded music revenue is down, the price for all tickets
   is heavily inflated. Therefore, people go less, they just can't afford
   it. And they take no risks on new acts, not at these prices. And what
   are the odds the new acts are good? They're just moneygrubbers like the
   rest of them.

   Meanwhile, everybody fighting his way up the food chain is spreading
   disinformation, saying his hands are tied. And when finally nailed
   down, they utter some b.s. about just trying to feed their family. But
   with the money they've already made, they can feed their children's
   children's children.

   The incentive to be an artist, to make great, lasting music, has been
   blown away. Used to be, a working act could have a middle class
   lifestyle and maybe some future performing rights income and other
   royalties. Now, you're either starving or fighting to hold on to what
   you've got so the bankers will hire you for a private. It's desperation
   all the time.

   Back when we were all in it together, when the gap between rich and
   poor was smaller, it was reasonable to be a musical artist. One took a
   chance expressing himself. You could always give up and go to law
   school, find a place for yourself on the middle class spectrum. But now
   if you're not on your way to riches immediately, you're boxed out.
   Which is why parents push their kids to get into the Ivies, why
   teenagers are creating websites and apps. They want to get in on the
   ground floor. Used to be people picked up guitars. Now they flock to
   their computers.

   But what if a label exec couldn't make millions, whether it be as a
   result of taxes or the demands of employees and acts. What if CEOs and
   bankers made this same amount. Hell, what if forty acts could make the
   same amount of money as a CEO or banker, and there were another hundred
   who were solidly middle class, and being so meant you could live
   comfortably and pay the bills?

   Then you'd have the sixties and seventies all over again. Because this
   is the way it was.

   Conclusion 2

   The cost of our diverging economic rewards system doesn't only affect
   lifestyle, it affects art. There's been no great protest music in this
   decade, despite there being so much to protest against, because the
   acts don't align themselves with the oppressed proletariat, but the
   rich bankers and CEOs. And if you take too big a stand, there goes your
   endorsement deal, there goes your invitation to the party.

   But if you could make enough money without the endorsements, because
   you just didn't need as much to survive, then the acts could play by
   their own rules.

   Conclusion 3

   Blame time and again is being put on the public, on the poor. As if the
   people stealing the music could afford a grand a ticket. This is just
   the fat cats turning the argument around. Rather than investigate why
   the public is fed up, they just label the public thieves and say
   they're doing nothing different than the bankers and CEOs. Which is
   paying off Congress to make things go their way. That's what SOPA's all
   about. If people lose a few rights along the way, what difference does
   it make? We've got to make our money, we've got to get our check!

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