p2pnet.net news:- Famous for being in the right place at the right time, as of June 1st, Jimmy Iovine will no longer be employed by Universal Music. He is ankling the firm to return to New York City to run LimeWire, the P2P service based on the Gnutella protocol.

Two factors seem to have triggered Jimmy’s departure, the radical drop in CD sales and his kids’ reaction to the RIAA lawsuits.

Always in touch with the younger generation, the true Dick Clark, Jimmy thought it was time to get out while the getting was good. His move reminds one of nothing so much as that old Graham Parker chestnut, crawling from the wreckage into a brand new car.

So how did Jimmy get out of his Universal deal?

Turns out his contract has got a bonus structure based on sales volume. And, if a certain volume is not reached, either party can terminate the deal. There was some debate as to whether digital sales counted in the formula, but unfortunately for Universal, even when they were added in, the sales target was not reached. Doug Morris was flabbergasted that Jimmy would want to move on, then again, unlike Mr. Iovine, Mr. Morris is notorious for still living in the twentieth century, still believing in the formula of getting records on terrestrial radio and seeing if they react at sales outlets. Hanging out with Steve Jobs, Jimmy has now seen that podcasts are a better way to reach the public, that new media is the way to go, so he got up and left.

But why not start his own label?

Because distribution is king. Universal might own all this fabulous content, but if they can’t get paid for it, what difference does it make? It’s best to be where the rubber meets the road, where people acquire and pay.

Yes, but who’s paying for LimeWire now?

That’s just the point. Mr. Iovine believes Ted Cohen’s editorial in “Billboard” represents the tipping point. It’s time to license P2P and see how it all turns out. Negotiating a fifty percent interest in the company, for his imprimatur, Jimmy is now the licensing point person. And smart money has him closing deals.

The new pay LimeWire will at first feature unique content that eclipses anything ever offered at the iTunes Store. To save the business, now that he’s got the ball rolling saving Africa, Bono will cut a solo track, only available via LimeWire. Turns out that there’s no solo deal in U2’s contract, and that Bono is free. Everyone felt U2 was like Metallica, and no solo discs would be allowed, but Bono doesn’t need to leave the band like Jason Newsted to make his own music, his effort is condoned by Edge and the other two.

But that’s just a start. There’s a whole Stevie Nicks/Tom Petty duets album in the can. Each cut as good or better than “Stop Draggin’ My Heart Around”.

And Jon Landau inserted a key man clause in Bruce Springsteen’s contract with Sony. Turns out if Andy Lack isn’t in charge of a combined SonyBMG, if he’s not top dog, Bruce can walk. Being a man of the people, Bruce is leaving the big bucks behind, to do something for the good of the business, for his fans. Then again, will he end up making more money when everybody owns his albums, when they can be purchased for such a low price? As to Jimmy producing said record, nothing has been confirmed. However there are still some unreleased tracks from the “Darkness At The Edge Of Town” sessions, and Max Weinberg has said they’re every bit as good as “Candy’s Room”. However, believing in the new paradigm, Bruce is not going to appear on Conan. You see to be exclusive to LimeWire, you can’t do television. Word of mouth will drive sales/trading. Jimmy feels this is the only way for acts to maintain their cred, and their longevity.

Of course there have been negotiations with Irving Azoff for the Eagles. Jimmy thought he had the inside line, since he produced Don Henley’s duet with the aforementioned Stevie Nicks on her debut solo album. But Irving wanted fifty percent of Jimmy’s action, twenty five percent of the company, to close the deal. And still believing in the major label mantra, that the executive is bigger than the act, Jimmy said no.

Of course the Pussycat Dolls can’t come along. But Jimmy believes it’s only a matter of time before the majors cave and make a deal with him, and he has all the content. And despite the flash and hype of the new acts, all the money is in the heritage acts anyway, so Jimmy’s starting there. It is believed the acts that get broken on LimeWire in the future will be more akin to the classic acts anyway. That they’ll be able to sing and play, and will write hummable tunes. Timbaland is in negotiations with Kazaa, as is Snoop, for that company is offering elephant bucks to performers to make a big splash upon relaunch, but Jimmy turned those dollars down, famously saying it would be like making a deal with Sony Connect. Who wants to be king of nothing? Dre? Dre’s still up in the air, blown away his godfather walked out without telling him. He’s worried his new album on Universal will stiff without Jimmy there to steer it, so he’s sitting on the sidelines for now. He tried to get Jimmy to stay through its release, but expediency has always trumped loyalty in Jimmy’s book.

So how’s it going to work?

At first, before the major labels sign on, LimeWire will cost two dollars a month. Then, every time a major label group signs on, another two dollars will be added to your bill. So when all the majors are on board, it will cost ten dollars a month for all you can eat, unprotected MP3s. There will be no indie bonus. The indies, although a growing percentage of overall sales, are getting screwed again. Yes, you see every time a major signs on $100 million is transferred to their account, which, of course, goes straight to their bottom line, staving off Wall Street until LimeWire truly takes hold. For it’s envisioned that once LimeWire takes off, within the next twelve months or so, there will be so much money distributed, the majors will be rolling in profits.

The deal is LimeWire skims fifteen percent right off the top. The rest is distributed to the labels owning the traded tracks, a la ASCAP or BMI payments. How that money is then distributed is up in the air. One hopes fifty percent will go to acts, and that publishers will go to a percentage rate, but expect big battles. The only way to avoid all this is to make a deal with LimeWire directly. Then Jimmy coughs of up fifty percent of the revenue. Of course, then he keeps fifty percent. On top of his fifteen percent distribution fee. It’s not clear if Jimmy wants to expand this sphere of the business or not. After all, the money’s truly in distribution, a fiber cable never called in the middle of the night looking for dope or crying about its girlfriend leaving. Advisors are telling Jimmy to just make enough deals to launch the ultimately truly legal service. But can Jimmy avoid double-dipping? Only time will tell.

And what’s in it for the consumer, you ask? Well, in addition to the exclusive content, Jimmy has made a deal with Mitch Bainwol and the RIAA. Anybody owning a LimeWire license will be exempted, immune from lawsuits. Yes, a credit card bill will with a LimeWire charge will be an absolute defense against a lawsuit. Jimmy’s kids told him that college students still would not pay, but blanket trading licenses for universities are being negotiated as I write this.

The future has finally arrived. And contrary to all the spin, it was not brought to you by Steve Jobs, but someone from the music business, who understands relationships, who understands musicians, who understands the audience. Mark April 1st down on your calendar as the day the music business was saved.

Bob Lefsetz - The Lefsetz Letter

Slashdot it!

If your Net access is blocked by government restrictions, try Psiphon from the Citizen Lab at thIs the end (of the Net) nigh?zze University of Toronto’s Munk Centre for International Studies. Go here for the official download, here for the p2pnet download, and here for details. And if you’re Chinese and you’re looking for a way to access independent Internet news sources, try Freegate, the DIT program written to help Chinese citizens circumvent web site blocking outside of China. Download it here.

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Tired of being treated like a criminal? They depend on you, not the other way around. Don’t buy their ‘product’. Do bug your local politicians. Use emails, snail-mail, phone calls, faxes, IM, stop them in the street, blog. And if you’re into organizing, organize petitions, organize demonstrations and then turn up on your local political rep’s doorstep, making sure you’ve contacted your local tv/radio station/newspaper in advance. Don’t just complain. Do something!

This entry was posted on Monday, April 2nd, 2007 at 6:37 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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