"There’s no one in this room I haven’t screwed."

Irving Azoff at the Pollstar Awards

In "Moneyball" there’s a fascinating, as in unable to put down, recounting of Billy Beane’s efforts to get the players he desires before the trading deadline.

Let’s be clear.

The players are under contract to other teams. Beane is operating with little cash. But he knows the game. And utilizing his insight and knowledge, he’s doing his best to wheel and deal and get what he wants.

He just doesn’t phone someone up and make them an offer. He does research, finds out who else wants the player, tries to get them off the scent by offering them someone else… He inserts himself into other people’s deals. And he gets away with it all, because people like him, and they like the action.

I’ve been railing against music business school, and will continue to do so, because some things you just can’t learn in a classroom.

Hell, if you want to know everything there is worth knowing about the music business in a book, buy Don Passman’s "All You Need To Know About The Music Business." It lays out the contracts, the money, from there, you’re on your own.

And it’s he who is on his own who wins in the music business.

Actually, it’s usually he who is operating with his own cash who wins in the music business. Because if you blow your wad, you’re out of the game, you care just a little bit more when it’s your money.

How does Irving Azoff do it? How does he spit in his partners’ faces?

First and foremost, they’re partners. Because Irving’s got something to sell. That they need.

If you’ve got nothing to sell, you’re toast in this business, a nonstarter.

Going to music business school? Find an act! Then you’ll have power, then you’ll be in the game!

But good acts are so hard to find.

RIGHT! Which is why you shouldn’t be spending your time in school if you want to play in the big leagues. The odds are low. By going to school you’re looking for insurance. Just like there’s no crying in baseball, there’s no insurance in the music business. If you can’t draw a crowd, if you can’t generate revenue, no one’s interested, irrelevant of what you’ve done before.

Irving started off by controlling acts. He did so well by the Eagles that this led to other acts signing on at Front Line. Good word spreads fast. In other words, it’s not your line of b.s. so much as your track record. Irving won for his artists. That built his stable.

And once he had his stable…he had something labels and promoters wanted.

And then the games begin.

As the cliche goes, it’s not show friends, but show business. The titans at the top of this business have no friends, they’re so fearful of being screwed and screwing one another.

All those promoters Irving says he screwed? They screwed him too. Do they teach you how to do this in music business school, how to keep two sets of books?

But despite there being no friends in the music business, you’ve got to be friendly. Irving is successful because of his charm.

If you’re not the type who makes friends, if you’re glum and downtrodden, you’re not gonna make it in the music business. Maybe you can succeed as an artist, as someone in production, in the studio itself. But you’re never going to be a wheeler-dealer.

It’d be like going to Caesar’s and finding out all the employees are depressed.

No, in Vegas, the help is upbeat and friendly, otherwise you wouldn’t be interested.

Music is a casino. The acts are the chips.

And then you play.

There’s risk.

But the goal is to eliminate as much of it as possible.

You don’t want to take chances. Which is why big acts make deals with Arthur Fogel. Sure, they could probably sell out without him, but what if they don’t? They don’t want to shoulder that risk themselves…

So, Irving knows all the players, he’ll talk to nobodies and up and comers, which too many titans won’t, which is why he’s lasted and they haven’t, and he cracks jokes and makes people feel good. He reveals intimacies, he becomes faux friends, and then he gets what he wants. You give it to him. Because you’re charmed and you need what he’s selling and you know he’s gonna be around tomorrow.

Sometimes you take a loss today, run red ink for the opportunity to be in the black tomorrow.

But it all comes down to the deal.

And to do the deal you need knowledge.

You need to know not only systems, the ones delineated in Passman’s book, but how the entities subvert those systems. Sure, you might be owed royalties under the contract, but what if the label is underreporting, what if they’re just not paying at all, which happens all the time.

If you roll over and cry, turn up your palms and say there’s nothing you can do, you’re done. You’ve got to be innovative.

Maybe you hold up the release of the record of another act under your control. Funny what you can do to make money rain.

And it’s just about a tiny edge. Billy Beane just wanted the A’s to be a little bit better, that’s all it took.

Billy either knew or had access to knowledge of every player in the business.

Have you been to every shed and arena? Do you know who did well there and who did not? Who said they sold out but really papered? Do you have the relationships to extract this knowledge?

Media makes it seem like the winners are just like you and me. That if we study hard, we’ll make it.

Nothing could be more wrong.

Yes, the game is rigged against you. In order to play, you’ve got to know how it really works.

And once you do you’ve got to figure out how to be everybody’s "friend" while gaining information and getting what you want.

Irving was not the first.

Geffen came before him.

Someone else will come after.

But don’t decry the man, study him.

That’s what’s wrong with this business. No-talents and losers who just don’t understand how the big shots earned their status.

Do you think Jimmy Iovine made it because he’s the world’s greatest record producer?

He’s not. But he’s got a way of ingratiating himself, making you believe he’s on your side, that he can get you what you want and where you want to be if you’d just sign up and play ball with him.

Would Mutt Lange have made it without Clive Calder and Ralph Simon?

Not only did Mutt have the knowledge, making sound-alike records for eons, he had a team that was looking out for him, fielding opportunities, he was part of their inner circle.

It’s hard to do it alone, you need a team.

And the winners are working 24/7. They only watch TV or go to the movies when it’s business. Because it takes all your effort to win.

Negotiation is the businessman’s up. It’s their time at the plate.

Swing really hard and you’ll hit a homer when you connect, but that won’t be too often. Everybody knows who negotiates too hard, if you’re winning all the time, somebody’s losing and they’re not happy about it. If you need to take everything, soon you’ll end up with nothing.

It’s a skill. Developed over time. You’ve got to have the kishkas for it.

But without a talent for negotiation, you’ll never make it, don’t think otherwise.

RE-DATA MINING

"When Data Guys Triumph"

This is an article about how "Moneyball" has altered the career path of business students, how they’re now doing work in analytics, looking for inefficiencies.

The money quote is:

"In most industries, Generation Moneyball isn’t yet in charge. But as the Nobel laureate Max Planck once said, ‘A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die’ and a new generation grows up that is familiar with it.’"

In other words, Doug Morris is gonna die and those who inherit the music business will be beholden to none of the precepts handcuffing him. Having grown up with Napster and the free dissemination of music and ideas they’ll harness new tools to break new acts in new ways.

It’s not about changing the old guard, but waiting for when they move down the line.

The old guard is still fighting Napster. The old guard is complaining about meager Spotify payouts.

The new guard knows that getting noticed is your hardest job. How do you harness the Internet to spread the word on great music, knowing that once you’ve amassed an audience there are multiple ways to monetize, not all of them the same as in the old days.

Right now innovation is in tech, Silicon Valley is where the action is because there’s no old guard to prevent entry. You have an idea and you play.

But you’re frozen out of music. The major labels don’t want youngsters and it’s the same at Live Nation and AEG. Live Nation is not a growing concern, it’s an operation shrinking in search of profitability. But Irving Azoff is not going to live forever. Nor is Randy Phillips. And when they’re gone…

If you think the new breed of music executives will look like the old, you’re sorely mistaken. The new will be data-savvy, will have grown up with not only the Internet, but Spotify and Facebook and… Their perspective will be totally different.

But those in charge of the old game today can’t risk utilizing these new people. They believe they’re going to destroy their business model. Music must be expensive. It must be broken via radio. It’s best to get someone to go to one gig a year at an inflated price than many for bupkes.

Isn’t it interesting that so many of the new acts want tickets to be cheap.

They get it.

They’re going to inherit the business.

GROUPON

Coupon Sites Are a Great Deal, but Not Always to Merchants

Everyone knows the merchants get screwed, that they end up with twenty five cents on the dollar, that most customers are schnorrers who don’t become regular customers.

But what has not been mainstream knowledge until now is that these surfers generate ill will, that they partake and then complain:

"And the long-term reputation of the merchant may be at risk, according to a new study

Daily Deals: Prediction, Social Diffusion, and Reputational Ramifications

by researchers at Boston University and Harvard that analyzed thousands of Groupon and Living Social deals. The researchers found that fans of daily deals were on average hard to please. After they ate at the restaurant or visited the spa, they went on Yelp and grumbled about it. This pulled down the average Yelp rating by as much as half a point.

‘Offering a Groupon puts a merchant’s reputation at risk,’ said John Byers, a professor of computer science at Boston University who worked on the project. ‘The audience being reached may be more critical,’ he said, ‘than their typical audience or have a more tenuous fit with the merchant.’"

Whew, you think you want everybody, but you don’t. You only want your core, you want to grow slowly, you want lifers, not casual observers.

Look at it this way. If you blast yourself unannounced and unwanted into everybody’s face, you’d better be incredibly good, or you could be toast in a day.

Discounts hurt if what you have is of value.

Coupons give you the illusion you’re doing something, helping your career, when really you may be hurting it.

Sometimes you’ve just got to wait. Focus on your music instead of your marketing. Most people don’t like most things. And the best way to convince them they do is via quality and word of mouth. Better to have a friend take a newbie to the gig than the act cutting a discount so the newbie gets in. The newbie, according to this study, may talk trash, tell everybody he knows that he went to your gig and it wasn’t even worth half-price.

Furthermore, it now appears that Groupon is a fad, just like Guitar Hero.

The key with fads is to adopt early and get out early. The opposite of what the music industry tends to do.

Give Live Nation credit for getting in on Groupon.

But if they think it’s gonna pay dividends for them next year…

Furthermore, did it ultimately hurt them this year?

Sign up here:

jason hirschhorn’s Media ReDEFined

Every day I get an e-mail from Jason Hirschhorn entitled "Media ReDEFined". It’s a compendium of news stories that would be interesting to someone like Jason:

"Jason Hirschhorn is an entrepreneur most comfortable at the intersection between entertainment and technology. He was formerly CEO of his first venture, Mischief New Media, Chief Digital Officer of MTV Networks, President of Sling Media, most recently Co-President of MySpace and serves on the Board of Directors of MGM. Jason is also an investor in Svpply, ThisMoment, Howcast, Buzz Media, and other startups."

Huffington Post

And you’re probably more like Jason than a rock star. But today’s savvy stars track the kind of information Jason disseminates.

The stories are not music-centric or cable-centric, but they all revolve around the media sphere that enthralls us.

And there’s always a nugget or two that eluded my surfing, that fixates me. Like today’s link to a story on the Amazon Silk browser:

Amazon Gets Its Right With Video Explaining Its New Silk Browser

Skim the article, but watch the video.

The video has techies, Amazon employees who look like you and me, today’s rock stars as opposed to those stage-running, costume-changing money whores sold out to corporations hyped in all media known to man, explaining how Silk works.

Now I haven’t had my hands on the Kindle Fire. Seemingly no one other than Amazon employees has. I’ve got no idea how well it truly works. But I’m enthralled by this video. Because it’s not about flash, but substance. It’s logical, it explains something.

This is the future.

If you’re launching a new project, you’re better off with YouTube videos explaining the gestation than slick overpriced image-based ads posted everywhere known to man. Those who really care will seek them out. And will tell others, like I’m telling you now.

We want to know more. Play to those who do and they’ll spread the word.

Meanwhile, despite the above video, I think the best comment on the Kindle Fire was on last night’s SNL, which I bothered neither watching nor recording, knowing the best nuggets would make it to the Web, where I could cherry-pick them and not waste too much time:

Seth Meyers on Fire When It Comes to Amazon’s New Tablet

What Seth Myers says in the above video is this:

"It’s expected to sell well among parents who always buy the wrong thing."

That’s great comedy. Saying in very few words what those too close to a project cannot see. Kids want the best, it’s parents who sacrifice. Kids lead. Which is why so much advertising is targeted at them.

And finally, I’m not sure if Jason Hirschhorn covered this story in Media ReDEFined, but you should read it:

"Spotify Usage Explodes: The Social Network Effect"

To be very concise, Spotify saw monthly usage increase by more than 50% after announcing its new integration with Facebook.

This is fascinating to me because I’m O.D.’ed on the Facebook hype. At some point can you get off the merry-go-round, saying you’re sick from being bombarded with new services and endless information?

I guess not.

Turns out Facebook is powerful.

How long it lasts and how profitable it will ultimately be are different questions.

In other words, if you’re breaking something new, you go where the customers are. They’ll spread the word for you, if your product is good. And right now that’s Facebook. 

"The chief economic consequence of the creation of derivative securities was to price the risk more accurately, and distribute it more efficiently, than ever before in the long, risk-obsessed history of financial man. The chief social consequence was to hammer into the minds of a generation of extremely ambitious people a new connection between ‘inefficiency’ and ‘opportunity’ and to reinforce an older one, between ‘brains’ and ‘money.’"

"Moneyball"

Ergo Pandora…

We’ve entered a new world of winners and losers. You get to decide which side you want to be on. The old saw of starting at the bottom and working your way to the top is a fallacy, except for those gaining knowledge along the way, ultimately utilized in their own independent efforts, as opposed to those expecting to be rewarded and moved up the corporate food chain.

If you want to be a musician, hone your skill and follow your muse.

If you want to be a businessman, you’re going to have to be much smarter than the average bear, hard work will not be enough, not in industries like entertainment where it’s hard just to stay in, never mind win, you’re going to need an edge.

Future winners will not be those who went to music business college. The most those graduates can strive for is middle management. Those who succeed in the future will be rank outsiders, crashing the party, like Tim Westergren, with Pandora.

Westergren noticed an inefficiency in the market. Traditional radio excluded too much music and was peppered with too much you didn’t want to hear, not only music, but commercials and verbal drivel. What if you could deliver a music discovery platform that was closer to people’s desires, without all the detritus?

Pandora went public. Westergren is the one with the riches now.

Where are the inefficiencies? How can you amass data to quantify the status of the landscape and get insight into a path for the future?

That is your challenge.

Listen to no one who says otherwise. They’re just invested in the past, you’re invested in the future.

How can you eliminate as much chance as possible?

Westergren’s reliance on hired critics is not as good as Slacker’s reliance on deejays who program, but Pandora wins because of externalities. Being first in the marketplace, owning word of mouth. He who is the best doesn’t always win, success comes to he who gets the word out, who gains traction and maintains it.

And if you’re really good at it, you own the sphere. Until that sphere dies or you take your eyes off the ball.

We don’t need a better algorithmic search engine. We’ve got no problem with Google. Maybe a complete rethink might succeed, but it’s no wonder Bing is a money-loser. I don’t have a search problem, do you?

Then again, Google is being challenged in the mobile sphere and many now get their information from Facebook.

And having built so much infrastructure, Amazon is now killing its competitors not only with its buying power, but the vast trove of data it has regarding its customers. Amazon knows what people want. That makes it easier and more cost effective to deliver it to them.

If you want to be Jimmy Iovine, don’t do what he does, try to do better than what he does.

Create systems that allow you to spend less and make more for your acts while still delivering success. It’s very tough to beat Jimmy at his own game. But the field is wide open for a new game.

Read all the self-help books you want, but they’re a waste of time. They’re mostly about instilling confidence. Providing insurance that you’re on the right path.

If you don’t believe you can win, you’re not gonna.

If you need insurance you won’t take the risk.

But don’t take the risk without modeling. A hunch is not enough.

It looks like Steve Jobs creates products on a whim, but that’s not true. He’s aware of the cost of components, the delivery chain, the ability to partner with rights holders. You only venture into the unknown when you know as much as you can about what is able to be known. You do your best to make sure you succeed.

And your success is based on insight.

Steve Jobs saw that MP3 players were inefficient. Hard to use and hard to load music on. But he saw a burgeoning market for MP3s. Ergo, the iPod.

And telcos had built out high speed wireless, but every handset available, i.e. the BlackBerry, first and foremost, was terrible at surfing the Web. The BlackBerry is still terrible at surfing the Web, which is why it’s declining in popularity. Jobs saw all this and created the iPhone.

Even the iPad was a refinement of what came before. And ultimately a larger iPhone, not that big a stretch.

Not to denigrate Apple’s achievements, just to illustrate they were not build on thin air.

Sure, you’ve got to have an idea. But ideas are not as hidden as you think. They’re hiding in plain sight for he or she who can synthesize the existing data.

And then you need an edge.

The edge in "American Idol"?

19/Simon Cowell held the recording rights to the winner, and this was their area of expertise, so they could utilize TV to build recording stars.

It’s all about the edge.

Without it, you won’t win. Not for long.