The Lefsetz Letter

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Between Two Worlds
By Bob Lefsetz

What the movie business found out was that a film didn't have to be a hit to be financially successful.

Wait a second, that doesn't make sense. Isn't a hit SYNONYMOUS with REVENUE?

That's true. Create a blockbuster, and revenue comes pouring in.

But look at the film chart. Almost NO flicks are hits. Most are financial disasters. That's what it appears like when you look at the box office chart.

But the box office chart doesn't really tell you much. Because you see at this point, theatrical distribution...is just the tip of the iceberg.

What the film companies found out was that the public had an INSATIABLE appetite for movies. Oh, the theatrical need was being filled. But, there were OTHER avenues of exhibition. That could bring in money.

First there was television. This was part of Lew Wasserman's genius. When TV hit, the film companies FREAKED! It's OVER! This heinous new technology, it's RUINING OUR BUSINESS!

But Wasserman saw the POTENTIAL! He realized television needed PROGRAMMING! Not only new dramas and comedies, but FILMS! So, he purchased the Paramount library. FOR A SONG! To enhance his coffers. That's how stupid the honchos at Paramount were. They didn't realize what was in their archives was a GOLDMINE!

Then, came the advent of videotape.

Once again, the film companies went BALLISTIC!! The SAME man professing doom as a result of the online world said that VCRs were going to be the end of the business.

Yes, Jack Valenti said:

"the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone."

He asked for a modest royalty of $25 to $50 a blank tape!!

Stunning how wrong one man can be. For it's the VCR that saved the film companies, that boosted their revenues, that truly rescued their catalogues from obscurity.

TV didn't want the schlock. They needed RATINGS! They needed stuff that would pull EYEBALLS!

But video...suddenly, you could market to ones and twos.

But the funny thing is ones and twos turned out to be fives and tens. For once people were freed from having to visit the theatre on ITS schedule, and watch TV on ITS schedule, once they could watch whatever they wanted whenever they wanted, consumption WENT UP!

Think about it. The biggest crisis for YEARS after the advent of videotape was GETTING THE TAPE YOU WANTED! Go into a record store today. You'll see rack after rack of unwanted product. Stores are REDUCING INVENTORY because turns are so few. Is it true that people don't want this product anymore, or is the economic model WRONG??

If people could choose to hear WHATEVER they wanted WHEREVER and WHENEVER they wanted at a reduced price, would consumption GO UP?

The history of videotape tells us yes.

People BALKED at spending five dollars apiece to go to a film in a theatre. It had to be REALLY DAMN GOOD! And, if it WASN'T, they were PISSED! But, charge them $2.50. For an evening, actually twenty four hours, and allow them to watch it as many times as they wanted, with AS MANY PEOPLE AS THEY WANTED, and DEMAND SHOT THROUGH THE ROOF!!

Wait, wait just a second, what about PIRATES! What about people DUPLICATING VIDEOTAPES!

Well, the MPAA bitched and moaned about this. Employed copy protection, which only succeeded in pissing off consumers. For the tapes wouldn't play in their VCRs. The picture ROLLED! And then, after a series of lawsuits, a VCR was introduced that copied tapes and...nobody wanted it.

It seems that people didn't want the HASSLE of recording. Didn't WANT to be pirates. They just wanted to watch what they wanted when they wanted.

Hell, forget the Macrovisioned films at the rental house. They could TAPE RIGHT FROM THE TV! They could STEAL FOR FREE!

But almost nobody did this. You might have to edit out commercials. The film ITSELF might be edited. It was a GREAT BIG HASSLE!

Everything the movie companies were afraid of...turned out NOT TO EXIST!!!

The other night on KaZaA I downloaded the song "Between Two Worlds" by Shawn Colvin.

I wasn't looking for THIS TRACK! I was just searching under her name. Searching for ANYTHING! Hell, it seemed a wasted exercise, since I thought I HAD everything.

But this tune came up that I didn't own.

Tonight I transferred it to my iPod. Suddenly, while I was sitting here, it came on. I haven't been able to stop playing it. So much so that I pulled the machine from my pocket to gain more information.

Turned out the song is from the film "Grace Of My Heart", which not only have I SEEN, but I OWN THE SOUNDTRACK TO!!!

But I only played the soundtrack once. It didn't appeal to me. This was before the days of MP3s. I guess I could have made a tape of the Colvin track, but what a pain in the ASS!!

The song was forgotten, slipped through the cracks, until I stumbled on it YEARS later on KaZaA.

Like those movies in the archives. That they air on TCM. That people rent at specialty stores. There's a market for this song. The label just hasn't FOUND IT YET! Even though it EXISTS!

Now ALMOST NO ONE wants to buy the "Grace Of My Heart" soundtrack just for this song.

Okay, okay, we missed out on twelve bucks. (That's what it's going for on amazon.com.)

So, we'll sell them one track. Five bucks. Hell, otherwise it makes no economic sense.

Five bucks...that's too much!

Okay, 99 cents.

STILL TOO MUCH!!

Think about it. Think how many SONGS there are compared to films. The price should be around...a nickel, a dime. No, maybe we should make it all you can eat for ten bucks a month. Some people will abuse the system, others won't use it much. Kind of like netflix. Check it out, you can rent as many DVDs as you want. But you can only have three at one time. Hell, a REALLY savvy user. He could have 93 a month! But who really lives like that? WHOSE WHOLE LIFE IS ABOUT BEATING NETFLIX???

That's the fallacy here. That people just want to beat and abuse the system. Whereas we know from videotape, that the more people become INURED to the product, the less they want to cut corners, it's just not CONVENIENT!

Being a pirate online...it's hell. It's a lot of work and they don't have MUCH of what one is LOOKING FOR! Especially those deep catalogue cuts.

Yup, the MAJOR LABELS are confronted with an AMAZING opportunity to sell their CATALOGUES ALL OVER AGAIN!

Think about it, that's what PUT THIS BUSINESS THROUGH THE ROOF! The CD REPLACEMENT business. We've got another bite at the apple. But the labels don't want to partake. They're scared of the model. Yup, for fear of DEVALUING CURRENT PRODUCT, they're stamping their feet and saying NO WAY!

Go to a video store. The big, current hits cost EXACTLY THE SAME to rent as the STIFFS!! Stunning if you think about it.

But, the funny thing is, so ENAMORED of watching films, people, after they rent the hits, rent the STIFFS! Some flicks become considered classics in the VIDEO world.

You're never going to see a video for "Between Two Worlds" on VH1. You're never going to hear it on anything but AAA radio. And not even that, because radio is primarily about CURRENTS! As for Hot AC...hell, you've got to PAY!!

But throw open the doors and let the public rummage through the assets, and you'll be STUNNED at what people want to buy. And, the funny thing is, they'll pay MORE than you think they will! Talk to eBay addicts. There are no bargains to be found. No, the online marketplace has DRIVEN UP the price of items. Once more people had the ability to purchase them. Stuff that NO BRICK AND MORTAR RETAILER WANTS TO STOCK!!

The labels could establish/authorize trading sites tomorrow and they'd start cleaning up. It would be FOUND money. And, it would FEED ON ITSELF! Traders would get OTHERS to trade, there would be MANIA!

Yup, make no mistake, other than Eminem, Shawn Fanning was the biggest rock star of the past five years. He thought outside the box, he came up with something BRILLIANT!

But the labels were too stupid to realize it.

Oh, Napster's legal theory, that the site was perfectly legal...hogwash. But the underlying theory, EMPOWERING THE PEOPLE, allowing them access to what the labels weren't selling them...that was BRILLIANT!

Bertelsmann realized this. But the old boy clique froze them out. Yup, that's the record business, really FORWARD-LOOKING!

I GUARANTEE you that authorized trading/downloading would give this business a three year growth spurt that will blow your mind. And, as a byproduct, we'll find that the public demands much more than what we're exposing on MTV and radio. These outlets will loosen up, new avenues of exposure will come into existence, the business will be extremely HEALTHY! The PEOPLE in PARTNERSHIP with the LABELS. A recipe for GROWTH!

But the fat cats don't want this growth. Because they don't understand technology, they don't understand people, they don't know history, they don't want to put their economic positions at risk...they just want to collect their salaries.

 


Bob Lefsetz, Santa Monica-based industry legend, is the author of the e-mail newsletter, "The Lefsetz Letter". Famous for being beholden to no one, and speaking the truth, Lefsetz addresses the issues that are at the core of the music business: downloading, copy protection, pricing and the music itself.

His intense brilliance captivates readers from Steven Tyler to Rick Nielsen to Bryan Adams to Quincy Jones to music business honchos like Michael Rapino, Randy Phillips, Don Ienner, Cliff Burnstein, Irving Azoff and Tom Freston.

Never boring, always entertaining, Mr. Lefsetz's insights are fueled by his stint as an entertainment business attorney, majordomo of Sanctuary Music's American division and consultancies to major labels.

Bob has been a weekly contributor to CelebrityAccess and Encore since 2001, and we plan many more years of partnership with him. While we here at CelebrityAccess and Encore do not necessarily agree with all of Bob's opinions, we are proud to help share them with you.

 






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