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The End is Near...The New Model is Very Close!

What I’ve been saying for months Bob Lefsetz said here:

I was having lunch with a retailer at the NAMM show (National
Association of Music Merchants) on Saturday and he told me in SIX MONTHS last
year his catalog sales went from far in excess of fifty percent of his
non-store business to twenty.  Yes, instead of purchasing via paper
catalog, most of those not entering his store now buy ONLINE!

This is a very important statistic.  Focus on the RAPIDITY of the
shift.  The retailer was just going about his business, publishing multiple
editions of his paper catalog, and the Net came in and wiped that
business out.  Turns out, he barely NEEDS a paper catalog.  And that people
have no fear of ordering on the Net, they see it as EASIER, and MORE

Sound like the recorded music business?  If it doesn't, you're just not
paying attention.  It's going to happen the same way.  With over fifty
percent broadband penetration in the home, and the proliferation of
iPods, in the not-so-distant future, CDs are going to take a sales
nosedive that will blow your mind.  Like the death of the vinyl record, BUT

But the major labels state they're prepared.  They've got DIGITAL
SALES!  At the iTunes Music Store.

But, the iTunes Music Store is guaranteed to put them out of business.  
Because they're replacing an ALBUM business with a SINGLES business!

Focus on the above example.  The old paradigm is going to be
eviscerated in the blink of an eye.  It won't be a parallel market.  It won't be
digital tracks existing alongside major album/CD sales.  It's going to

So, instead of making ONE decision to purchase an ALBUM!  At ten
dollars or more!  You're going to make one decision to buy a SINGLE at a
BUCK!  Or, even if they succeed in raising the price, what, at most, $2.99?

It just doesn't add up.  In order to work, the labels need to REPLACE
the revenue of CD sales.  But this goes against human nature.  It's much
tougher to get someone to make MULTIPLE decisions than individual ones.  
Which is why car manufacturers sell options in PACKAGES!  You want the
sunroof?  Then you must get the sport package, with a beefier
suspension and 17" wheels...  Then there's the cold weather package.  And the
safety package.  Never mind that the item you're building upon, the
automobile, is an expensive, profitable item TO BEGIN WITH!  In other words,
the options are FROSTING!  But there's no CAKE in the recorded music
business world.

Yes, we've seen John Kennedy of IFPI trumpet the ascent of digital
tracks.  But most of the press is too stupid to analyze the facts.  But you
know you're in trouble when even ROLLING STONE reveals the truth
(1/26/06-page 14).

Take Click Five for example.  They sold 400,000 digital copies of "Just
The Girl", but only 268,000 copies of their album, "Greetings From
Imrie House".  In the old days, let's just say 100,000 of those singles
buyers would have purchased the album.  The label would have gotten TEN
MILLION DOLLARS IN REVENUE!  Whereas at the approximately sixty cent
payment for digital tracks at the iTMS, for 400,000 UNITS, they're going to
get $240,000.  That SUCKS!

We've got Weezer selling 972,000 copies of their album "Make Believe"
and 962,000 digital singles of "Beverly Hills".  Do you think everybody
who purchased a single then went out and bought the album?  It's
SELF-EVIDENT that this didn't happen.

Then we've got the "New York Times" revealing the strange case of
"Laffy Taffy".  The number one record by DL4 has sold TWICE AS MANY digital
singles as albums, and the album isn't even GOLD YET!  

This is DEATH!

From now on, when a record label breaks an act, getting it all over TV
and radio, they're going to sell SINGLES!  (Hell, why should I buy an
album, the act isn't real and the album SUCKS!)  And make essentially
ONE-TENTH of what they used to!  Believe me, this doesn't sustain a
private jet lifestyle.  This forces you to lay off employees, accelerating
the downward spiral into marginalization.

The label HAS GOT to sell the album, or its equivalent.

Just think about it.  When the CD dies, the labels GO OUT OF BUSINESS!

Yet, there's John Kennedy and the rest of the business leaders going on
record they've been SAVED!  NOTHING could be further from the truth.

The labels' ONLY hope is to license P2P.  I mean ONLY!  If they can't
find a way to get vast quantities of music to MANY people at a fair
price, they just can't stay in business.

Oh, they talk about today's subscription services.

But there's a problem.  Even if the songs are available, and they're
not, and the software works, and it doesn't, NOBODY HAS GOT A PLAYER!  
Because iPods dominate the market!  And the iPod is about OWNERSHIP, not

Then there's cell phones.  They TOO are a singles market, just at a
more exorbitant price that most people won't PAY!  Sure, you could start a
subscription service with THEM, but you'd have to be able to play the
music on your computer, at home, elsewhere, and the cell companies are
loath to give up ANY control.

But there's ALREADY a subscription service.  It's called P2P.  THAT'S
where people get their music.

EVERYBODY who has an Internet account should pay a music fee.

Or, at least sell trading licenses, so people who don't want to get
sued won't.

More people will acquire more music and it will drive not only the sale
of music, but ticket and merchandise sales TOO!

Makes no difference to me.  Right now, music is free.  To EVERYBODY!  
It's the LABELS that are stupidly refusing to charge for the mass
acquisition that is taking place.

And I'm no longer a voice in the wilderness.  The mainstream press is
starting to wake up, to the fact that there's something rotten in the
labels' pronouncements.

This train is driving right for the cliff.  It's almost like the dot
com era all over again.  The debate doesn't hit the salient point.  Which
is LESS music is being sold for LESS revenue!  How can this be a key to
success?  Especially at the cost it takes to BREAK an act today!

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