Bob Lefsetz Vs. David Munns

Bob Lefsetz has been writing music industry related articles for several years now. As of late, they have become a lot more provocative and rightly so given the current state of the music business. They have become so provocative that he garnered a response from Vice Chairman David Munns of EMI Recorded Music.

I'm not going to try and swing the pendulum in either direction here. So I am going to leave it up to you to decide who is right, who is wrong, or if they are both sitting on the fence. I, for one, feel they both have some valid points.

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Click here to read the original article

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The response to the article from EMI Recorded Music Vice Chairman, David Munns:

Bob:

We've never met but occasionally I get forwarded copies of your missives. And although I respect anyone who is as passionate about music as you are, I rarely agree with your logic and industry-bashing. I know you're intentionally provocative. And it works. You frequently piss me off. But having read your dispatch of yesterday, NOW I'M the one who is READY TO STAND UP.

You make money in the music business, Bob, don't you? So do tens of thousands of others. Do you honestly believe that illegal file sharing hasn't cut into sales? Do you really think it's a coincidence that just as P2P systems were taking off, sales numbers plummeted? Here are the numbers:

* 2000: ten top-selling albums in the United States sold 60 million units.
* 2001, that number dropped to 40 million.
* Last year, it totalled just 34 million.

And don't try telling me that the declines are because music isn't any good. If it was so bad, why then at any given moment are four to five million users are swapping 800 million files at one time? Are they swapping crappy music? No, they're stealing music they want to hear: new stuff, old stuff, indie stuff, and really commercial stuff.
You argue that file swapping builds careers and causes people to go out and buy records. Now that's what I call UTTER BULLSHIT! Get real, man!
You're a lawyer, aren't you? At least you used to practice law. So you should know the economics. You don't make money, you have less and less to invest in new artists and take a chance on them. I'm a big believer that it takes 3-4 albums for an artist to really come into their own. But the way the business is going, we can't spread our bets as much as we'd like.
You're big on satellite radio, which I agree is a great thing for music fans. Do you think people should be able to steal that?
Should people be able to steal your iPod, Bob, just because they think it's cool and they don't have $500 bucks to spend on one?
Do artists have the right to promote their music via file-sharing services? Sure, if they want to and have the necessary rights to. What isn't cool is when an individual uses illegal P2P services to give music away without an artist's permission.
There's no reason to steal when there are legit services. We're not claiming there are "zillions" of options (please stop exaggerating, it's annoying). But, there are dozens of good ones. EMI granted rights for burnable, portable and permanently downloadable music last year to nine distributors in the U.S. And we did it a few months ago for Europe, where we have 20 online retailers offering a la carte tracks. And yes, in the interest of getting a legitimate business going, we and other music companies provided seed money to get some fledgling services going. And yes, we're right there with you on Apple's iTunes store (which, by the way, all the majors are participating in). We're glad that Apple's service has taken off so well and even happier that it's spurred so many other services to improve or jump in for the first time.

We think 99% of the population has a conscience. And they're willing to do the right thing. The RIAA's effort is aiming to deter the people out there that deep down know that file-sharing is stealing.

There is one thing that you and I do agree about. The music industry does need to understand the consumer better. It's a big priority for us. And we're taking steps to fix it here. If you ever want to talk about it, give me a call.

Go ahead. Share this with your list.

David Munns
EMI

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The response to David Munns from Bob Lefsetz:

God, you make it sound like I'm some kind of ANARCHIST! That I believe music should be FREE!

Anything but.

I just believe the systems you're employing...are not adequate.

I too had your position until two things happened. 1. I used Napster. 2. I became aware that tech is always a moving target. What's right at one moment is a mistake further down the line. If Napster hadn't been on the cover of "Newsweek", if the injunction hadn't been stayed, if everybody hadn't USED it, THEN we might be in a different situation.

But what is the situation we're in??

TENS OF MILLIONS of people have experienced file-trading. And what have they found? Certainly free files. But a BETTER DISTRIBUTION SYSTEM than the majors afford. Essentially instant access to unfettered files. THIS the majors have never proffered, and looking at the landscape, NEVER WILL!! So on one hand, you've got people inured to one system, and the other, people who won't deliver it. A STALEMATE! Which must be broken. The majors' tack is to adjust human behavior. Based on prohibition in America and the war on drugs, I don't think this is a good approach. One must take notice of reality and try to fit the distribution system to it.

I believe file-traders should be CHARGED!!

I believe EVERYBODY trading music online should be charged. Ten dollars a month.

And, if you don't pay, THEN YOU GET SUED!

Do you think there'd be an outcry then?

Very little.

Satellite TV providers zapped illegal boxes on the eve of the Super Bowl, did you hear a huge cry? No, because people felt if THEY were paying, everybody else should.

So we see the same problem, but proffer different solutions.

The solution you proffer, in my opinion, will not get you the results you desire. It will piss off the people you depend upon for your bread and butter and inspire hackers to write new trading programs that evade the law/detection.

People don't WANT to be crooks. They want reasonable alternatives.

As for your claim re the quality of music... Common wisdom is that music is not good and is overpriced and there's only one good track per CD. Even if this were UNTRUE, what are the labels doing to combat this perception?? Other businesses adjust for public perception, why not the record business? Why not lower prices? Shorter, higher quality albums?

It seems that all solutions are catered to the needs of the purveyor rather than the consumer.

The consumer wants UNPROTECTED files. You're not delivering this.

If you're really that interested in saving money, why don't all the labels stop paying inflated fees for independent radio promotion?

If you think that by suing and stopping file-trading sales will rebound, you're dreaming. And, funny enough, if you embraced lower cost distribution systems, more music would be consumed and careers and the business at large would be HEALTHIER, and you would make more profits. Charging a buck a track at the Apple Store isn't a breakthrough. It's just a way to buy a CD track by track. LOWER the hurdle.

Or be forced to, by the public will, or the government.

Or, possibly win the battle, and lose the war.

You're fighting to preserve an old system when a new system will garner you MANY MORE PROFITS!
Think about it. Would home video have taken off if every rental was ten bucks and only three people could watch a movie and only once??

No, the VIEWING experience was changed. A lower price was charged.

And students of the motion picture business now know that the theatrical release is just an ad for the home video.

And DVD was released at a DRAMATICALLY lower price, and look at the bottom line results! Oh, the other studios cried, but Warner Brothers' Warren Lieberfarb insisted. Just like Middelhoff tried to push the industry by investing in Napster, but couldn't get the others to play along...

Please, please, please...have your execs take a day or two off from the tedium. Have them install KaZaA THEMSELVES on their computers. Make them download four hundred tracks in a week. Both legally released and bootleg/live. Buy them good computer speakers (all of $150) to listen to the tracks. And then buy them all iPods to listen to these tracks away from the computer. THEN, two weeks later, ask them what they think about file-trading.

You'll be stunned.

They'll all say it IS stealing, but it's SO DAMN GOOD!

The key is to CHARGE people for this experience.

The first rule of war is to know thy enemy. I can tell from the above, you know your business quite well... As for the public, I don't think so. You think they're just thieves. They may be, but they're also experiencing aural heroin, which they don't want to give up. Dope dealers always hook the addict for free, then charge them for their addiction, why don't you?

Bob Lefsetz