Hi Bob – Please don’t use my name – but feel free to publish this reply anonymously.  

I’ve been in this business since the 80s and, in my current role, I primarily represent talent and I’ve been involved in the negotiation of several "360 deals" with every major label except for EMI.  I don’t know Bob Donnelly well, so I cannot know what practical exposure he’s had to these kinds of deals, but much of the content of his article (as reproduced below) directly contradicts what I’ve seen in the major label "360 deals" that I’ve been involved with.  

As just one example, in virtually every such deal that I’ve seen, the label’s "360" participation has been based on the artist’s "net" earnings after deducting for agency commissions, management commissions, tour costs and other hard costs.  The fact that Donnelly says the complete opposite must mean that either his research is way off the mark, or I’m the only lawyer in this business who’s successfully negotiated such concessions. My money’s on the former (although I’d be jazzed to learn that it’s the latter).  

Also, I’ve never heard anyone utter the phrase "multiple rights deal," so I guess Donnelly and I must just run in different circles.  

This reply doesn’t mean that I’m a "fan" of the "360 deal" (any more than I’m a fan of recoupment of advances at the artist’s royalty rate instead of the label’s net) but, when representing young and previously unsigned talent who WANTS to sign to a major, there are not a lot of other options out there with company’s that can say that they’ve successfully broken new acts.  So rather than just reject the model outright, we try very hard to negotiate the best possible terms of "360 deals" under the industry’s current circumstances, and we’ve done so with some success.  

I’m reminded of an incident that happened about two years ago, when a young singer hired a veteran music lawyer to negotiate the singer’s deal with a very powerful major – that lawyer had never actually been involved with a "360 deal" negotiation – and when he saw the terms, he killed the deal with much bluster and fanfare but assured his client that he would find a better deal that didn’t require "360" provisions.  He didn’t.    

From: Bob Donnelly
To: Robert Urband
Sent: Thu, Apr 15, 2010 9:21 am
Subject: OH WHAT A NIGHT!

Dear Bob,

I’m so glad that you agreed to join me for last night’s tribute to Peter Parcher…I hope you concur that it is a delightful event…and serves as a great way for those of us who are in the entertainment bar to connect with one another…as friends..and as potential business colleagues.

You mentioned that you will be getting together with Bob Lefsetz tonite or tmrw…and although I  have never met him…I read his blog on a regular basis…I don’t always agree with him…but I always admire his candor in letting us know exactly where he stands.

The article which i wrote on 360 deals was inspired by something Lefsetz wrote…and which I quoted in the beginning of my commentary…unfortunately those lines (along with many other paragraghs) were lopped off by the Billboard editors (…all the news that fits)…I thought he might enjoy reading the piece as it was originally written (and still available on our law firm’s website)…I have also included the Billboard version as well)

Enjoy the Opus event!

Bob Donnelly

________

Why Artists Should "Do a 180" on "360 Deals"
by Bob Donnelly, Esq.
Lommen Abdo Cole King & Stageberg

A new type of record label contract has come to be known as a "360 deal" (as in "360 degrees in a circle") since it seeks to make the label a participant in revenue streams from every quarter of an artist’s career. In his popular music industry blog, Bob Lefsetz wants to know why artists would consider such a contract. With typical humor, he writes: If you’re contemplating a major label deal and your success is not based on terrestrial radio play, and you don’t make pop music, YOU’RE A FUCKING IDIOT!… But where were the attorneys? Oh, I know they were afraid of pissing off the labels, not eating themselves. Are they interested in their clients or THEMSELVES?

Lefsetz Letter – 360 Deals

Background

I’ve been very fortunate to be affiliated with artists and their managers who have collectively sold over 300 million records. Not once during my three decades in practice did I ever get a call from a record company executive who said, "Hey Bob, we just had a phenomenally profitable year and therefore we are sending your client a big bonus check to show our appreciation for making the label lots of money." Now that the record business economy is faltering, label honchos are complaining that they can’t make enough money from record sales alone, and perhaps not surprisingly they expect their own recording artists to subsidize executive compensation packages worthy of Wall Street.

In the past, when record labels faced additional costs associated with new modes of doing business, they simply passed those costs along to their artists in the form of artist royalty reductions (such as the so-called "research and development" costs associated with manufacturing compact discs in the 1980s). This time, the power grab is much more insidious because it involves taking a portion of income from categories whichfor the entire history of the modern music industryhave belonged exclusively to the artist.

Under the terms of a typical 360 deal (which the record company representatives would prefer to call by the more innocuous phrase "multiple rights deal"), labels are demanding a portion of an artist’s income from touring, publishing, endorsements, and sale of merchandise, in addition to the vast majority of the record sale income that labels have always enjoyed. And when you read the fine print, you’ll also discover that the labels want to make money from the books that artists write, the Hollywood movies in which they act, and the fan clubs they create. In fact the labels want to share in absolutely everything.

Does that sound fair to you?

Traditional Record Deals

Let’s briefly examine the economics of the record business, which until recently has been a profitable ATM for the multi-national entertainment companies which control the major record labels. In general terms, the record label is entitled to receive 85% of net income, and the recording artist receives the remaining 15%. Any funds that the labels advanced to the artist are then repaid solely out of the artist’s 15%. Now here’s the best part of all from the label’s perspective: in exchange for the advance paid to the artist, the label owns the copyrights to the master recordings in perpetuity. This is analogous to taking out a mortgage on a house, repaying the mortgage in full, but the bank winds up owning your house.

But wait, it gets better…for the record labels.

The labels will insist that they will be able to deduct from the artist’s share of income 50% of all independently contracted marketing, promotion, and publicity costs, 100% of the cost of making music videos (but the labels get to own the videos), and 50% of website costs (but the labels own the website).

And that’s still not all. If an artist signs a traditional major label deal today, the contract will call for the delivery to the label of approximately five albums. Since it takes an average of 1-1/2 years from the creation of one album until the commencement of recording of the next album, the artist will be indentured exclusively to that label for about eight years. The record companies explain that they need these egregiously long terms in order to allow for a reasonable return on their investment. But compare this to other fields of entertainment. The film business eliminated its equivalent of this practice (the so-called "studio system") more than 50 years ago. And if you sign a book deal with Simon & Schuster, you typically sign a book deal, as in a single book. Aren’t film companies and book publishers also investing in "building the brand" of their creative partners? How come they don’t require an 8-year/5 movie or 5 book obligation to justify their ROI?

Until the recent downturn in the music business, the record companies had carved out a lucrative arrangement where they were making between $2.50 and $4 in profit for each CD sold. (And don’t forget that, in this business model, the record company traditionally breaks even before the artist pays back her portion of costs and advances!) Labels have reaped billions of dollars in profits during the past few decades, but now that the business is not as profitable as it once was, the labels want the artists to reach into their pockets to improve the labels’ diminished bottom line.

What’s Wrong With 360 Deals ?

Let’s focus on the terms of 360 deals, and I will explain why I’m so passionately opposed to them. First of all, in many of these 360 deals the record company will demand that their earnings come out of the gross revenues, meaning that, if the cash that the labels actually receive has been reduced by any parties in the middle of the transaction (even if those parties themselves add value, as, for example, many music publishers do), then the label will add those amounts back in before calculating the percentage of revenue they retain. Think about that for a moment. The manager doesn’t get paid on gross, and the artist certainly doesn’t get paid on gross why then should the record company be paid on gross?

The 360 deals that I’ve reviewed require the artist to relinquish between 5% and 50% of revenues from sources other than record sales. To illustrate this point, let’s use 20% as the percentage that the record company is seeking from an artist’s live touring income. If that artist is paying all of the traditional touring costs (e.g. hotels, transportation, etc.) as well as paying her manager a 20% commission, her booking agent a 15% commission, and her lawyer and business manager 5% each, then that could result in a record company receiving half of every net touring dollar which winds up in the artist’s pocket. Does that seem fair to you?

And here are a few more things wrong with this model. Record companies love to cross-collateralize. This thirty-one-point Scrabble word refers to the practice of taking an artist’s positive earnings from one category (e.g. publishing income) and applying it as a record company expense that affects the artist’s unrecouped balance in another category (e.g. the record royalty account). In summary, the labels are postponing, for as long as possible, the day when the artist actually receives a positive cash flow from her end of the pipeline. Yet when it comes to the income which they would like to receive from an artist’s 360 income streams, the labels would like to keep one hundred percent of the money to which they are entitled, without applying (i.e. cross-collateralizing) any of it to reduce the artist’s debt to the record company. Apparently, what’s good for the goose…is only good for the goose.

360 deals are also rife with conflicts of interests. For example, will an artist still be free to accept a sponsorship from a company whose business is in direct competition with one of the record label’s non music divisions? Are the labels going to defer their commissions (as managers and artists often do) in one phase of their business (like merchandise) in order to ensure that there will be enough money for a tour to stay on the road? And how will record companies deal with fiduciary obligations to their artists (which they were previously able to avoid?) And why are the record companies acquiring significant interests in merchandise when many of them don’t own merchandise divisions? And how do record companies think they are going to get around the booking agency laws in California and other states? And then there is the mother of all conflicts that occurs when an artist’s management company is owned by the same entity that owns the artist’s record company.

What’s Right With 360 Deals?

Labels justify profiting from multiple rights because they are making a substantial investment in the artist. And in all fairness, sometimes this is true. Our firm represents a young artist called Owl City who recently scored the number #1 single on the pop charts. I would be disingenuous if I didn’t acknowledge that such success would not have happened without the financial commitment and promotional and marketing experience of the Universal/Republic label team. The Owl City success underscores the point made by Bob Lefsetz that major labels are still the best way to break an artist whose music is uniquely suited to pop radio.

As an artist lawyer, I would be receptive to a 360 deal where the record company is obligated to make an investment in a band’s career. I’m not talking about what a label tells you that they plan to do and spend in relation to each album. I’m talking about what a label is contractually obligated to do and spend. But just try to get a label to commit in the contract to spending $40K on publicity, $250K on marketing and $350K on promotion for each album. It just won’t happen (unless you have an artist who is being aggressively pursued by several labels).

Here’s another way that I could support the 360 deal. If the record companies took their "360-degree interests" as collateral against their out-ofpocket investment in an artist, and then reverted those 360 rights to the artist when the company’s investment was repaid, these deals would make more sense to me. I still wouldn’t be happy with this model, but I could appreciate the rationale. But in many of these 360 deals, the label’s rights continue well beyond their recoupment of their investment. In fact, in some 360 deals the artist is required to pay her record company a share of her touring/merchandise/music publishing earnings long after the artist has been dropped by that label, and sometimes the payments are forever. Does that seem fair to you?

Alternative Record Deals: The Net Profits Deal

Is there an alternative to the 360 deal? I believe there are several. In the past few years many independent record companies have relied on the so-called "net profits" deal. In this business model the record company is able to minimize its risk by having the right to deduct all of its costs "off-the-top" (including those costs (such as manufacturing, distribution and marketing) which are normally not recoupable under the terms of a traditional record contract. The remaining net profits are then shared on a 50/50 (or other) basis between the artist and record company. Net profit deals don’t typically have a 360 deal type of obligation because the deal formula is structured to grant the record company a more favorable return of their initial investment.

Artist Self-Release Record Deal

Another alternative is the self-release model. If a band is willing to make financial and other commitments that are necessary to function as their own record company, it is in their best interest to do so. I realize this is easier said than done, and the road is littered with the carcasses of artists who have tried this and failed (including such luminaries as the Rolling Stones and Pearl Jam). But this is an especially opportune moment for artists. Thanks to the reduced price of innovative recording equipment and software such as Pro Tools, many bands are now able to finance the recording of their own album masters without becoming indebted to the record companies. This means an artist can now justifiably retain the ownership of the copyrights in her own master recordings.

There are also many positive technological developments that weigh in the artist’s favor. Social networking platforms like MySpace and YouTube provide a marketplace to expose and promote new music. And they are free. Yet another factor that encourages artists to take control of their own business is that 95% of all digital download sales result from just three sites: iTunes, Amazon, and Rhapsody. And all three of these sites are easily accessible through digital aggregators such as Tunecore, InGrooves and The Orchard for a distribution fee of just 10% to 20%. It’s even possible for artists to control their own "hard goods sales" (i.e. CD’s) by selling them over the band’s website or using an intermediary service like CDBaby.

But I don’t want to imply that any of this is easy (it isn’t), problem free (it really isn’t), or inexpensive (it really, really isn’t). Prior to the Wall Street meltdown in the fall of 2008, venture capital money was flowing into the music business to replace the funding that was formerly supplied by the major labels. Music entrepreneurs found themselves able to cherry pick from a substantial pool of experienced and skilled music industry professionals who (as the Brits so beautifully describe it) were made "redundant" at the major labels. In addition to a great corps of former record execs, the Erteguns and Gordys of tomorrow could also hire from the same list of great independent publicists, marketing companies and record promoters as those used by the majors. And best of all from the artist’s point-of-view, these new start-ups were not demanding 360 rights. In fact most were not even requiring the artists to surrender the ownership of the copyrights to their master record
ings. Unfortunately the Crash of 2008 came before this new business model ever really had a chance to flourish.

While we await the return of the venture capitalists, I urge artists to look for new solutions. There is a British company called Polyphonic, which was started by the manager of Radiohead and seems very artist-friendly. There is an American company called ArtistShare, which helps artists finance their own recordings by allowing the fans to purchase the right to become one of the album’s executive producers or to invest some money in return for an all-access pass to the artist’s next tour. The technological innovations (like digital downloading and social networking) that revolutionized the music industry grew from the minds of young people who loved music, not from large record companies who sold music. I believe these same young innovators will also dictate the future of the music business for those artists who did not mortgage their futures by making 360 deals.

Conclusion

I genuinely believe that this is an especially propitious moment for artists to take control of their own destinies. And I expect record companies, who have always been the artist’s partner in record sales, to remain an important part of the equation, but not at the artist’s expense. Record companies say that they are seeking 360 rights because they are making a significant investment in the careers of the artists. If they mean it, they should put it into the contract. And if they don’t, then I sincerely hope artists will "do a 180" on 360 deals

HERE’S THE LINK TO THE BILLBOARD ABRIDGED VERSION OF THIS ARTICLE:
Buyer Beware: Why Artists Should Do A 180 On "360" Deals

I went to see the Grateful Dead exhibit at the New York Historical Society.  Thank God I slept late.  Turns out they don’t open until noon.  Finally, a rock and roll museum show!

Not that I’d recommend it.  You see there’s very little there.  It’s kind of like going to Carvel and getting only a dollop, going to In-N-Out and getting a cheeseburger or going to Mrs. Fields and getting half a cookie.  We want the complete ice cream cone, shots and all, a Double Double, enough cookies to fly high above the astral plane on the sugar buzz.  And that’s what the Grateful Dead delivered.  It wasn’t a concert, but an experience.  They played for hours.

And most people didn’t give a shit.

Actually, very few people cared at all for a very long time.  The Dead were famous for playing for free, not only because they believed in the cause, but for the exposure.  The best way to convert new Deadheads was to get them to a show.  One can argue the Dead didn’t make a decent studio album after 1970’s "American Beauty", but their live show grew their audience.  Slowly. Steadily.  And now we’ve got all the pundits saying to do it like the Dead.  Well, exactly how did the Dead do it?

Not through hit songs.  By time "Touch Of Grey" finally made it to MTV in the eighties, the band had been at it for more than two decades and was already established as a monster touring attraction.  The music was important.  But it wasn’t enough.  What made the Dead an institution was community.  The audience felt like they belonged.  They felt bonded both to the act and their fellow fans.  The Dead weren’t interested in everybody, just those who cared.  And this is much different from today.  When the goal of every band is world domination.  Quickly.  Accompanied by bags of money.

It took the Dead years to even make an appealing record.  Their first three albums were stiffs.  Completely.  They only got a bit of traction upon the release of "Live/Dead" in ’69.  It was the first Dead album that was truly listenable.  Then came the dynamic duo of "Workingman’s Dead" and "American Beauty", a one eighty in sound, and suddenly the alchemy took hold.  Fans of the records went to see the fully-developed show and were hooked.  And took their buddies.  All in search of a good time.

That’s what the music represented.  Get high, lay back for a few hours and let’s see if we can lift the roof off this joint.  You’re not waiting for the hit.  You’re not amazed by the pyrotechnics.  But if the band stands on stage playing long enough, we’re all gonna fall into a groove, you’ll feel it and be transported.

Not that it always went down that way.  There could be hours of lousy music.  But the band was trying.  To create something new and different each and every night.  Miss a show, and you missed a once in a lifetime experience.  So, you had to go.  Just in case. And while you were there, you met Bobby and Sue, Sally and Dave, like-minded people from all over the country, who too were in search of the elusive experience.  One that only the Dead could deliver.  Especially as years went by and music became slick and expensive, when the money was everything.

And speaking of money, there was a ticket stub from 1994 with a printed price of $25.  I don’t care how many years have gone by since, there’s no way you get to the ticket prices of today.  When the promoter and the act are adversaries, when the promoter is a public company and no gig is a transcendent event, just another blip on the cavalcade of revenue producing dates.  Bill Graham might have been a motherfucker, but the band respected him, was in business with him.  Today, the goal is to rip off Live Nation. To be overpaid by AEG.  And if the fan is fucked in the process, well, you can’t sell a record anymore, it’s got to be this way.

But the Dead could never sell a record.  They weren’t even stars by today’s anemic sales standards.  Sure, eventually some of those albums went gold, "American Beauty" even platinum.  But it took years and years.  Then again, create something desirable and you can sell it for years.  Is anybody going to want "Poker Face" down the line?  If you believe so, you’ve drunk too much kool-aid, and not the kind Ken Kesey was spooning out.

So, you’ve got to ask yourself, are you selling singles, hits, or a whole oeuvre of music?

The Dead weren’t selling hits.  They seemed unable to write one.  And it wasn’t about the album.  So don’t give me any mishegas about preserving the long form.  But it was more than a track.  You couldn’t distill them down to one three minute song no matter how hard you tried.  How to square "Uncle John’s Band" with "Dark Star"?  Impossible.  Which is why when someone tells you to settle on one sound and stay there you should scratch your head.  Might be easier to sell at first, but down the line, your one-dimensional sound lands you on oldies radio at best, maybe you can play the lounge at the casino, whereas the Dead ended up filling stadiums!

The free music, the tape trading?  That’s been overstated.  Most Dead fans had never heard a live cassette.  But those circulating cassettes did so with such fervor that the legend spread.  So if you think the way to emulate the Dead is to give your music away, you’re missing the point, that’s one tiny element.

But, that doesn’t mean you don’t have to give something away.  The Dead did this regularly.  Their fan club was free.  You got sample discs, newsletters and the ability to buy tickets.  In other words, every transaction was not a revenue generating event.  This was about music and life more than money.  And, as a result, the band’s fans thought the performers had their best interests at heart, and responded by not only buying tickets, but creating comics, home made merch and endless artwork.  This is how they evidenced their belief.  So strange in an era where rights holders clamp down on any innovative behavior by fans.  Don’t remix my music, don’t do anything unauthorized.  Maybe I’ll have a contest, with strict parameters, but it’s all got to be controlled.

The Dead were out of control.  They were on an adventure without a destination.  Sometimes leading their fans, sometimes being led by their audience.  They solicited feedback.  They didn’t know exactly what they were doing.  No artist really does.  You can’t plan art, you can only start.

Traipsing through the exhibit, one was struck not so much by what a long strange trip it was, but that it was over, that what the Dead represented is now long gone.  The Dead were the precursor to Silicon Valley.  We used to need to get a new computer, we knew all the specs, now they’re sold at Best Buy for cheap and most people don’t care what’s inside.  It’s a mature industry.

And music is positively over the hill.

First and foremost, everybody wants to get paid.  Not only the labels, but the songwriters and performers.  They want the cash right away, not realizing that the heyday of the late twentieth century might be just that, a heyday, that’s gone, never to return.

Music is free and concerts are events you attend infrequently, hell, who could afford to go once a month, like we used to?

How successful would ecstasy be at $125 a hit.  Imagine if a puff of marijuana cost $75.  You’d still want to get high.  But it would be a rare event, and you’d expect to see skyrockets, you’d expect to have the time of your life.  Ergo all the dancing and pyrotechnics on today’s stages.  Because if you pay that amount of money for a ticket and the show’s not stupendous, you’re beyond disappointed, you feel ripped off!  And you’re not eager to go again.

So blame Universal.  And Live Nation.  And the acts.  But blame yourself too.  Because you no longer want to take a chance, you no longer want to risk going to a less than stellar show.  And when you go, you want something akin to "Avatar", all special effects with a lame story.  Whereas, when done right, music is enough.  Doesn’t matter how the performers look, doesn’t matter if they’re playing in front of a black curtain, if they’re in the groove, it’s transcendent.   But how transcendent can it be if the show’s on hard drive, if it’s the same every night?  That’s a movie, not music.

So, as you can see, we’re screwed.  Everybody’s paying lip service to a bygone era, but not emulating it.  Bands are not willing to follow their own direction, starving until their audience finds them, getting so good that they can’t be denied.  And an audience brought up on music videos wants the show to be just like the clips, or they’re pissed.  Shit, the Dead couldn’t play the same song the same way the following night, never mind a hundred nights straight!

The Dead never had their victory lap, no cover of "Newsweek" and appearance on the "Today Show", no acknowledgement by the mainstream.  Because they weren’t made for everybody.  Just for a small coterie.  But in America, a small coterie can keep you humming along quite well, throwing off a ton of cash, keeping everybody in smiles.

One of the signature Dead moments was a cover tune, in its most famous incarnation, segued into from Buddy Holly’s "Not Fade Away".

In between, it wasn’t sure where the band was going, but then you realized they were headed down that road feelin’ bad.

If you’re not willing to go down that road feeling bad, you’re not a believer in rock and roll.  The artist has to be able to keep his eyes open as he drives to the next gig, possibly a thousand miles away.  The fan has to wake up hungover and go to work.  And the label has to be willing to throw its hands in the air and realize that it may never get its money back.

But everybody had a very good time.  An extremely good time.  Such a good time, that they want to do it again.  The act wants to play more gigs, the label wants to make more records and the fan wants to go to more shows.  All in pursuit of that peak experience, unique, unavailable anywhere else.

Imagine if every love affair were identical.  That you went to the brothel and overpaid to get your rocks off.  That’s today’s music business.  You come, but you’re not satisfied.  And believe me, one thing Grateful Dead fans were was satisfied.  They felt by pursuing their interest in the San Francisco band they’d be rewarded in a way they were not in work.  They might even acquire a love interest.  And the music would inspire them and keep them warm at night.

That’s rock and roll.  And you see glimpses of it now and again, but it’s mostly absent today.  Because everybody must get paid. Everybody must get STONED, and you must NEVER FORGET THIS!

I watched Steve Jobs’ iPhone 4.0 presentation.  He’s at risk of becoming a caricature of himself.  Every feature is described with superlatives, as if a plumber lifted the back of the commode, delineated the inner-workings and pronounced them not only revolutionary, but emotionally satisfying, decreeing that users would truly love the operation of the toilet.  Except for a few jokes when he put up fake ads to demonstrate iAd, Jobs was so serious as to establish a divide between himself and his audience.  And this is death in the Internet age, if you’re not willing to come down off your pedestal and ingratiate yourself with the hoi polloi, you’re at risk of ridicule.

But that does not mean the content of Steve’s presentation was worthless.  Watch how they integrate multitasking into the iPhone.  It truly transcends any previous implementation.  Makes so much sense, is so simple, that only Apple could come up with it.  Which begs the question why the iPad is such a better e-reading device than the Kindle.  We can argue backlit or not, but usability is far superior on the iPad, controls are intuitive and progress is put forth in pages, unlike the mystifying percentages on the Kindle.  Just like the iPod killed the Rio and other MP3 players, the iPad has triumphed over all e-readers overnight.  Maybe the lesson is that Amazon should not have ventured out of its area of expertise, not gone into hardware, which requires software to run, but isn’t he who’s first supposed to triumph in tech?  Guess not.  And now that’s what’s happening in mobile.

Palm is on its last legs.  It may never be sold, or be auctioned off for peanuts, like BeOS or the other game-changers of yore that never managed to get into the fast lane and died.  Windows Mobile is losing momentum.  RIM does e-mail incredibly well in an era where users demand much more than that.  And the iPhone, although not first in the market, is triumphing.

In the keynote, Jobs flashed a graphic showing mobile browser usage.  iPhone had 64%, Android 19%, BlackBerry 9% and others 8%.  This is staggering.  Or, should I ask, do you know anyone who surfs the Web regularly on their BlackBerry?  I own one.  Navigation is difficult.  I go to the usual sites, unless I’m looking up statistics or other raw facts.  Browsing is unintuitive and difficult.  But on an iPhone, although you might be hindered by AT&T’s network, it’s similar to the desktop and easy.  And he who owns online browsing wins?

Sure looks this way.

In today’s "New York Times", Gene Munster of Piper Jaffray, the most accurate Apple follower lays out astonishing facts:

"By the end of 2011, Mr. Munster said, nearly 50 percent of Apple’s total revenue will come from sales of the iPhone and iPod Touch. In 2001, 80 percent of Apple’s revenue was from its line of Mac laptops and desktop computers. That figure will slip to about 27 percent in 2011, he said."

Apple Places New Limits on App Developers

In other words, just like laptops killed desktops, mobile is about to kill laptops.  Not completely, but significantly.  Apple’s positioning itself for the future.  It’s battling on fronts the hoi polloi cannot comprehend.  Not only is there iAd, which posits that search will be done through apps, a market Apple dominates, but there’s the evisceration of Flash and Apple’s restrictions on developers, detailing what software can be used to write for the iPhone.

In other words, Apple has got its eyes on the future and is remodeling its entire business accordingly, doing its best to maintain the company’s momentum while fending off challenges from competitors that are yet to develop.

Contrast this with a music business where the usual suspects are still trying to get the public to buy CDs.  Universal trumpets ten dollar retail on physical product while iTunes sales flatten and there’s no reasonable mobile strategy.  If anybody’s winning in mobile music, it’s Tim Westergren and Pandora, whose growth rate almost doubled overnight with the launch of the company’s iPhone app, they’re adding 30,000 new listeners a day.  Good for music, even better for Pandora.

But what about music on demand on mobile handsets?  You’d think rights holders would be driving utilization on mobile platforms.  Spotify’s not free on the iPhone.  Why not authorize that right away?  And there’s a Rhapsody app and MOG’s got one in development and this is where customers are going to go if the rights holders help them.

The worst case scenario is sideloading.  Letting people transfer their collections to their handsets by synching with their computers.  Now is the time for people to see the desirability of having the entire history of music at their fingertips, and getting them to pay for it.  We don’t want people streaming what they already own via the cloud on their handsets, we want everybody with a subscription, paying a little for a lot.

But this would require forward thinking.  This would require a change of focus from today to tomorrow.  Tomorrow is coming.  And right now, it looks like all the excitement is in non-music apps.  Mobile is the future, especially in developing countries, now’s the time to create a winning strategy, one that gets all music to everybody for a low price.