Thursday, January 11, 2018

News Updates | Lefsetz Letter


Are you getting this in your inbox? Some nobody named Blake Morgan who insists Spotify is screwing musicians wrote a letter that was posted on the HuffPo and then taken down and this screed is now being tossed around online like it’s the Ten Commandments, or at least the Dead Sea Scrolls.

Morgan’s complaint is that Spotify doesn’t know what its business is, he seems to become completely unaware that distribution is a business unto itself, very profitable in fact, and believes that Spotify doesn’t pay fealty to the music it traffics in and the streaming service is dying and is going to go to the government for help. And the reason you’re reading nothing more about this is not because the truth is being squelched, but no one in power has time to waste swatting irrelevant ignoramuses down.

Just because you have an opinion does not mean it’s entitled to be amplified.

Yes, Spotify loses money. But a lot of cash has been reinvested in expansion. Ever hear of an internet company? And talk to the recording industry, Spotify single-handedly turned around their fortunes. Bitching about Spotify is like bitching about cellphones. Bring back landlines, think of all those handset manufacturers whose business was eviscerated!

But I’m not gonna waste my time going any further, all I’ll say is it’s the unsuccessful and uninformed who get up in arms about this stuff, because they’re not busy making money on their careers.

And there’s plenty of money in Spotify, I point you to the Manatt graphic on compensation, read it and get up-to-date on royalties. And speaking of up-to-date, the below graphic is from 2016, streaming royalties are only going up as more people subscribe, Spotify just hit 70 million.

U.S. Music Streaming Royalties Explained

As for being a cheerleader for Spotify… Who wouldn’t be? CD stores? It’s growing the revenue pot. Its value has increased to nearly $20 billion. Is Lucian Grainge complaining…



The $1.6 billion lawsuit.

There was a January 1, 2018 deadline in proposed legislation saying if you didn’t sue by then, you forfeited the right to compensation. THAT’S why Wixen filed suit, he wants to keep his options open.

This is not going to hurt Spotify’s stock price. The sky is not falling. This is mostly a database issue, or the lack of one. Something that affects the business at large, that no one wants to pay for but everyone bitches does not exist.


He’s already toast. He’s already been marginalized at Apple. Who cares if he says he’s gonna stay, and whether he does. He’s a marketing guy at a tech company.

As for his statement that the music industry cannot depend upon technology to solve its problems… Wait a second, the CD brought in beaucoup bucks, Napster killed revenue and streaming built it back up. Jimmy’s MAIN complaint is Apple’s market share is not increasing fast enough and he’s not getting enough of the cash. It’d be like Best Buy bitching about Amazon. Spotify has a free, ad-supported tier. Apple does not. That’s Apple’s CHOICE! Spotify wants a free tier because it eviscerates piracy and causes paid conversion, Apple is sans this tool, and now it wants to level the playing field in its favor, huh? As for exclusives… They’re not good for the industry, which is why they’ve been killed. Jimmy wants to make Apple a bigger service by providing that which Spotify does not. It’d be kinda like Microsoft saying it should be able to eclipse Google by including search results in Bing! that Mountain View does not have. Huh? Apple was caught flat-footed with machine learning playlists, i.e. Discover. Everything Jimmy thought was gonna work was old school and didn’t, Beats 1 radio, hand-curated playlists… Didn’t he read Brad Stone’s Amazon book “The Everything Store”? Book sales went UP when they used algorithms instead of people for recommendations, the data is better. And the bubble suggestions held over from the original Beats service… How quaint and unusable. A worse Pandora. Spotify builds features, Apple bitches. This is Jimmy’s paradigm, he’s positively old school, he thinks business is conducted on the telephone and you claw and implore your way to success. Today you never talk and you lead with data. Which is why the streaming services kill radio. They go with what is reacting, what’s real, they cut out the middleman, it’s how hip-hop became so big. And if you want to be that big you should embrace these tools too, drive fans to streaming, get paid. And if no one is listening, you won’t, get paid that is. Everybody starts equal. But not everybody wins.


No one is talking about this. How you can get so much music for free with Prime on your Echo, how you can get an Echo subscription for $3.99. Voice-activation is here. It’s better for music than most other products. Once again, music leads. Get an Echo Show, get Amazon Music, watch the lyrics stream by as you listen. You’ll be sold.

Then again, you’ll have to use it.

Some things never change. If you want to have an opinion, you’ve got to adopt, early.

And at this point Apple Music has been vastly improved. But the problem is it’s still worse than Spotify, hell, Amazon’s mobile interface is even better. The iPod had a better interface, better speed and a better box. You can be late to market only if you’re a great leap forward. As the iPhone was re Palm and the BlackBerry. Apple Music is a me-too product because Apple stopped innovating and was blindsided by Spotify. As for its voice-activated speaker… Too expensive and too late. And when was the last time people were concerned about sound, didn’t Apple lead with the lame white earbuds? Expensive comes first, cheap comes later. If you’re lucky, cheap comes first, that’s what tech has taught us. Google is nearly giving away their Home product and Apple wants us to overpay for essentially the same thing?

I don’t think so.


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