The Lefsetz Letter

JibJab

by Bob Lefsetz

What if the ability to make a hit was wrested from the major labels, away from radio and MTV. What if suddenly, they no longer had a monopoly, they no longer controlled the marketplace.

Is there anybody reading this who hasn't seen the JibJab movie? You know, the Bush/Kerry "This Land Is Your Land" animated Web flick?

Was the JibJab movie made by a major studio?

No, the funds were not required. It was completed with desktop computing power, which ANYONE can afford.

But the major studios control DISTRIBUTION! Think things are tough in the music business, they're NOTHING compared to the film business. The majors have almost a lock tight control over exhibition.

But the JibJab boys sidestepped the major distribution network COMPLETELY! They exhibited their film on the Web. Via cheap server space.

Still, we all know that you need MARKETING AND PUBLICITY! A major studio spends in the neighborhood of ten million bucks just to let people know the film is coming OUT! All blown in a matter of DAYS!

But there were no full page ads in the newspaper for the JibJab movie. No expensive time-buys on "E.R.", never mind MTV. No, the public found the JibJab movie and promoted it ITSELF! Via E-MAIL! The public made a HIT!

Yes, a hit. The number of people who've seen the JibJab movie will eclipse the number of those who see "Spider-Man 2".

Now you might say "This Land Is Your Land" is an anomaly.

Only in the fact that it was SO GOOD!

Most movies are tripe. Really, nobody other than teens looking to neck can go to most of the flicks. Everybody else is looking for something DEEPER, that doesn't play to the lowest common denominator, that shows CREATIVE THINKING! And, IRONICALLY, so is the teenager.

People e-mailed the link to "This Land Is Your Land" because they ENJOYED IT SO MUCH!

A major studio never would have funded "This Land Is Your Land". And, if by mistake, they did, they wouldn't DISTRIBUTE IT! Just ask Michael Eisner, who wouldn't put out one of this year's BIGGEST releases, "Fahrenheit 9/11" for fear of alienating...the government, right-wingers, SOMEBODY!

Suddenly artists can BYPASS THE SYSTEM!

Anybody can afford to purchase the computer equipment to make a record. Nobody is going to tell them what to lay down. Tell them what's commercial, what to wear. WHERE TO APPEAR! The artist suddenly has TOTAL CONTROL! Like he did in the late sixties and early seventies. Suddenly, the artist RULES!

People are ALREADY breaking acts on the Web. Oh, the definition of breaking might be different from the one HITS uses...but make no mistake, these new acts are having an IMPACT! Fans e-mail tracks, tell others to download the songs via P2P. Yes, the acts might not be getting paid DIRECTLY by this, but sales of songs is not the ONLY way you can make money these days. No, there's live appearances, and merchandise sales. All supported by BELIEVERS, by FANS, which most major label concoctions DON'T EVEN HAVE!

And, paradoxically, fans DO buy the CD, needing a totem of their affection. But really, what if all P2P traders paid a monthly fee, and the collected funds were distributed amongst ALL tracks downloaded, a la BMI and ASCAP?

This is the major labels' worst nightmare. Suddenly, everybody' has an equal distribution foothold. The retail stranglehold the majors have EVAPORATES!

Oh, it's got nothing to do with indies on iTunes. That's a sideshow. The public doesn't want to pay a buck for a copy-protected track. Hell, just look at the VOLUME! No, the truth is what Charles Goldstuck said at the Jupiter Conference...for the foreseeable future, the major labels are going to rely on CD SALES! This is like the president of Smith Corona standing up twenty or so years ago and saying they were banking on TYPEWRITER sales. It's ignoring REALITY! The majors THINK they can control the future. Make everybody buy on their terms. Only one problem, they've ALREADY FALLEN BEHIND, they've ALREADY LOST CONTROL!

It's not like the music MAKERS are stupid. No, they're ALL computer-savvy, unlike the execs. They KNOW about the new tools, and they know how to REACH people. And they know the Web is a great EQUALIZER! That since EVERYBODY can compete on equal terms, hype doesn't play. It's all about QUALITY! The bands and the fans have ACCEPTED this new paradigm, the only ones who haven't are the major labels.

The major labels are planning to outlaw P2P. And then have copy-protected discs. They're trying to squeeze out the new acts. They're trying to insure a future on THEIR TERMS! But, by having waited too long, infrastructure has been developed. Do you REALLY think they can stop P2P and e-mailing of tracks? Hell, they probably WANT to eliminate e-mailing ABOUT songs they don't control. But it's too late.

Now don't expect some hit Web act to be Britney. No, the Web is about developing a PLETHORA of acts with their own little fan bases. The majors are the TV networks, the Web acts are the cable stations. But even though it pulls a small FRACTION of the viewers of CBS, never forget MTV is a hell of a lot more PROFITABLE!

I'm not sure where the JibJab guys go. Their only potential revenue streams at this point are with the big guys, the major studios. All they're selling is FLICKS!

But a band has so many OPPORTUNITIES to make money. So even IF the music is free, they can still make a fortune. Hell, razors are SO cheap, but the BLADES cost. Maybe the system we've grown is BACKWARD! Maybe the major label and its CD sales are NOT the powerhouse. Maybe the powerhouse is the ACT ITSELF! And recorded music is just ONE of the revenue streams.

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 EVERYBODY who's in the music business. 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.

While Rhino may occasionally disagree with some of Bob's opinions, we certainly agree with his right to state them. At the bottom of each column we give you, the reader, the opportunity to respond and we encourage you to do so. We will post select comments.

Let us know what you think.

A word about submissions: We post what you give us, so please don't include your email address or any personal info. Your comments reach us, not necessarily Bob, so don't expect a reply from him. We gather and post your submissions in batches, so do expect a short delay. And don't get bent if we edit your comments. We probably won't, but we reserve that right.