The Future

Bob Lefsetz is a music industry observer, and publisher of the Lefsetz letter:

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“According to a source familiar with his thinking, Jobs has recognized that ‘mobile ads suck’ and that improving that situation will make Apple even harder to beat.”

-BusinessWeek-“Apple vs. Google“

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Aren’t ads supposed to suck?

Google survives, quite nicely, on providing targeted ads. You may not click on them, but enough people do that Microsoft decided to invest zillions in a futile effort to compete (Bing’s market share of search just declined.)

But on a smart phone, where it’s frustratingly difficult to use the search function, what are the odds someone is going to click on the ads strung alongside the desired results, especially when the typeface is almost too small for anybody to read.

No, to survive, somehow you’ve got to put the ads inside the apps. And make those ads desirable to the surfer.

The Google Nexus One may have gotten a lot of media play, but sales suck. Still, prognosticators believe the Android platform will ultimately triumph, because Google is indomitable and the WinTel strategy is always best…license to others, swarm and defeat.

But the Android phone allows only a tiny number of apps to be installed. And there’s no vetting process, that’s one of the reasons that apps are kept separate in their tiny space, so as not to taint the rest of the phone’s memory, supposedly loaded with media that Google makes it almost impossible to transfer from your desktop to your phone.

Usability… On the Nexus One, it sucks. Syncing with Outlook is bad enough, but you install music via drag and drop? Didn’t that die with the Rio?

But that’s all secondary to delivering ads on smart phones. Developers have to be able to make money, if not, they won’t create the apps that Apple touts, three billion of which have already been downloaded.

And what has this got to do with music?

Nothing.

And what has this got to do with iPods?

Very little.

The smart phone is killing the iPod. But Apple had to do this, to prepare for the future. And the company has to create viable advertising on the iPhone in order to continue to grow.

Contrast this with the record labels. Continuing to bank on the CD, so busy protecting what they’ve got that they can’t create what will help them survive in the future.

The future… It’s a vast unknown. But you’ve got to enter it if you want to survive. Or plan on cashing out soon, because the future arrives ever faster these days.

For all the innovation touted by the major labels, 360 deals, Vevo, where is the quantum leap, that makes people pay attention, that rains revenue? Seemingly every iPhone app is cooler than Vevo. And Vevo’s supposed to be the future?

Meanwhile, the labels are fighting with Apple when the Cupertino company could give a shit. Music doesn’t drive iPhones, it’s an afterthought, apps drive iPhone revenue…the labels just lost all their leverage. This is like content companies fighting ISPs and electronic manufacturers in Washington, D.C. Who does the most billing? Who can afford the best lobbyists? You’ve got to see when you can’t win and develop a new strategy.

The future of the music business is the development of new ways to get the public closer and more involved with music and the people who make it. Apple’s fans will seemingly buy anything and everything the company makes. This is the paradigm the music business invented, but has forgone. Not only does nobody want yesterday’s Top Forty artist’s music, nobody wants U2’s new album. Sure, the band can tour in extremely large venues, but what’s the long term play, other than squeezing more money out of Live Nation? The YouTube simulcast was a step forward, but in order to make us truly care, we’ve got to feel closer to the band, Bono has to stop pontificating in the “New York Times” and be available for feedback on the Internet.

Yes, we want to be able to reach our artists.

And seemingly every artist with traction wants to throw off the major label constraints and try new things. Nine Inch Nails is selling a DVD of footage created by fans. Shit, the majors don’t even want the fans to shoot video!

Apple is moving forward. Read this “BusinessWeek” story. It’s positively scary. Jobs & company are playing on a plane that most can’t even see. But we’re gonna get there. And if you want our revenue in the future, you’ve got to set up for years down the line right now.

Insanely great products.

We know what insanely great music is. We know what insanely great promotions are. Leverage these. Build loyalty. Bond users to you and super-serve them, field all complaints, sell people what they don’t even know they want and never ever tell them they’re wrong, be such a bright, shining star that they have no choice but to follow you.

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