BMG/Concord

Nature abhors a vacuum. You cannot compete with TikTok and Instagram when it comes to social media. And you cannot compete with Apple and Android when it comes to smartphones. However, you can compete with the three major labels very easily. The tools of production and the avenues of distribution are in the hands of the proletariat. It costs nearly nothing to play, however that does not mean you'll win. Separating the wheat from the chaff is the question facing recorded music today, and so far no one has come up with a solution. Radio has diminished power, even DSP playlisting cannot push a record over the top. So what we wait for is spontaneous combustion, someone outside the conventional framework, an independent who surfaces via an unpredictable amalgamation of social media and word of mouth and...who knows what else. But despite their front line, new music business being encroached upon by independent acts, no independent label can truly compete with the majors because they lack a catalog, guaranteed income at almost no cost that keeps the lights on. Used to be the majors had a lock on distribution, that was their power. An independent might be able to get a record in the store, but good luck getting paid. Only those with a continuous flow of product could count on their accounts ponying up, at least until the outlets went bankrupt. But now the majors don't have a big stick, they can't insist you go through them to succeed. However, as a result of their catalogs, the majors write the rules, i.e. what DSPs pay, never mind licensing all over the internet. And the truth is licensing income keeps increasing. Seemingly every new platform needs music to run, and ultimately they make a deal with the rights holders. Which is why when Wall Street talks about a potential slowdown in the growth of Spotify, et al, it's being myopic. Music has never had more uses, all of which pay, they keep on inventing new ones. (Which is another argument against selling your publishing rights/royalty streams.) Now the death of the major labels has been predicted since the advent of Napster, and it has never arrived. But consolidation happened. In a world where there are unlimited new assets. When there's consolidation in conventional spheres, there are a limited number of assets to be purchased, but not in music. And that's just new music. When it comes to old... Classic rock acts are reaching the end of their lives and they want to cash in and are selling to... Well, the majors could have bought everything. Let's be clear, the majors have woken up to the power of independent acts, and have tried to gobble up this sphere of distribution, i.e. Universal's purchase of Downtown, but what is the value of publishing rights? And how much do you pay? Yes, Universal might have kicked off the furor with its purchase of Bob Dylan's catalog, but the truth is most sales have been to new indies. And two giants have emerged, Primary Wave and Concord. They both have assembled cream of the crop publishing rights. They paid a high price, but the value will keep going up. So, the majors let the indies in on publishing. But the majors also ensured that when it comes to streaming, publishers got screwed, their piece of the pie is small. So... Now we've got a fourth major, based primarily on the acquisition of rights, all those songs and recordings that Concord bought. Concord slowly built up a monolith, in plain sight. As for new music... It has been eclipsed by the nascent, nimble BMG. So you put them together and... Voila! You've got a fourth major. A fourth seat at the table when it comes to setting prices. A fourth place a new act can go to sell its wares. But the dirty little secret is new music is a crapshoot. No one can break an act. What we're really looking for is quality new music production, a wider variety of acts getting an investment and a push, not having to do it all by their lonesome. But all the money is in catalog. So... It's good to have a fourth major. It adds competition. But the problem of new music remains. Is the chaos of today going to continue? Well, the era of universal hits known by everybody looks like it will never return. And the public is overwhelmed with choice, to the point many don't pay attention at all. Then again, do you like the offerings? For all the BTS mania, you can get tickets very cheaply for their shows now. Demand is limited. Demand is limited for all, but never has what is considered major been so minor, never has the major stuff been unpalatable to so many. The film companies have addressed this by making films in ever fewer genres and the end result is that Netflix has eaten their lunch. Netflix bought distribution rights in plain sight, just like Primary Wave and Concord bought rights in plain sight. But Netflix ultimately invested a ton of money in new production, and with first mover advantage won the subscriber wars. Netflix with a lot of new stuff wins, the also-rans with little lose. But we have no big kahuna in music with a plethora of new music gaining our attention. This isn't like the heyday of Asylum Records, when you could buy an LP based on the label. And Netflix is a different business model, it's a walled garden of distribution, whereas in music everything is available on the DSPs. But the real story is no indie can survive long term because it has no catalog to continue to generate high margin revenue. But the new BMG/Concord does have a catalog. But will it invest in new music, break the logjam of endless mediocrity? That is what we want. We will wait to see if this new entity delivers. -- Visit the archive: http://lefsetz.com/wordpress/ -- Listen to the podcast: -iHeart: https://ihr.fm/2Gi5PFj -Apple: https://apple.co/2ndmpvp -- http://www.twitter.com/lefsetz -- If you would like to subscribe to the LefsetzLetter, http://www.lefsetz.com/lists/?p=subscribe&id=1 If you do not want to receive any more LefsetzLetters, http://lefsetz.com/lists/?p=unsubscribe&uid=0eecea7b60b461717065cbde887c8e25 To change your email address http://lefsetz.com/lists/?p=preferences&uid=0eecea7b60b461717065cbde887c8e25