#OccupyTheMajors By, Bob Lefsetz

Posted on November 2, 2011 by


The inefficiency is you.

What private equity does is find businesses, invest in them, and then overpay the executives to help them eradicate inefficiencies in the system, so both can get richer. The executives are beholden to the stakeholders, not those working for them. This is why you’ve worked so hard and lost your job. You could be replaced, by a computer, or a worker in Asia.

The inefficiency in music is the artist. Few of them break even and those that do make tons of money, most of which historically has not flowed to the company.

Let’s start at the beginning. You want to get signed by a label. You think the employees love music, that they want to help you succeed.

The employees love money. Don’t blame them. Our whole country has undergone a philosophical change. It’s a race to the top. If underlings are sacrificed in the process, so be it. The label employees want to buy a house by the Park and vacation in a warm climate after traveling there by private jet. The bankers do it, why shouldn’t they?

So they only want to sign you if they see the potential for a huge return. A HUGE return. If you can make them a couple of bucks, they don’t care. It’s a matter of opportunity cost, their cash is better deployed elsewhere.

And since they’ve got so much money on the line, the executives running these labels want insurance. That insurance comes in the form of favored cowriters and producers. They don’t want you doing your own thing, it’s too risky. And they don’t want what isn’t easy to sell. If you don’t make Top Forty music, they just don’t care.

Used to be the labels could achieve success by ripping you off. There was just that much money in recorded music. CDs sold for an inflated price and they were the only way the public could own the music. And people had to buy an album to hear the hit. Furthermore, the acts paid for recording costs and the labels owned the result, adding to their underlying value. A label is worth nothing without its copyrights.

But then came Napster.

Someone had to sacrifice.

And it certainly wasn’t going to be the executives.

They trimmed underlings, then they went for you, the acts. They wanted more. They didn’t want to share in the decline, they wanted a piece of all your income, because they built you. And people have been lining up to take this deal, out of ignorance, out of a desire to become rich, even though so few ultimately do.

The problem is you. The act. You want someone to do it for you. And the only people who can do so will screw you. This is like a desperate person borrowing from the Mafia, the organization owns you for life, even if you repay the debt.

Why would you do this?

What is happening in the music business is no different from what is happening in the rest of the country. Hell, Warner is owned by private equity. And EMI may be soon. As for Universal and Sony, their parents would unload the operations in an instant if they could. There’s just no one to buy.

These are the people you want to get in bed with?

You’re like the worker who gets his union decertified, works ten hours a day at a feverish pace and then sees his job shipped overseas. At some point, you’ve got to say NO MAS. You’ve got to see that the odds are stacked against you.

hen you’ve got poor old Pete Townshend, railing that Apple has a responsibility to develop new talent. He’s lost in the sixties. That’s like saying Goldman Sachs has a responsibility to rebuild America, after raping and pillaging. The game has changed.

But technology does not only benefit private equity. It benefits you too. You can do it on your own. The public was intelligent enough to realize the labels were ripping them off, how come the artists can’t see the same thing? The fight against free music is the label’s, not the act’s. Recorded music revenue was always just a piece of the pie, but the game has changed. Now the biggest issue is getting people to hear your music, not pay for it. Why can’t acts understand this?

You’re going to get no revolution from titans working at the major label or Live Nation. Live Nation’s a public company, beholden to the shareholders. The executives are rewarded for making the stock rise, not for playing fair and nurturing artists. You wanna know why Live Nation does little in the club business? IT DOESN’T PAY!

It’s just that simple.

And the company believes if you can ever make it, you’re gonna need them, their deep pockets and expertise.

The game is stacked against you. Please realize this.

It’s the responsibility of the acts to do it for themselves, with new people. It’s the only way out.

If you don’t save yourself, nobody will.

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