Bob Lefsetz reader Tom Gray provides an insider's view the self-destruction and myopia of the major labels.

His letter:

Dear Bob,

We needn't be clawing in the dark to find the reasons why major labels find it so difficult to sustain themselves in the midst of a musical boom. Yes, they were luddite buffoons in the face of technological advances, and yes, they've completely failed to deal with the fall out from their mistakes. However, it is clear that the whole management structure and ownership of these labels is to blame.

When I was making records for Virgin/EMI we finished one record only to discover that the 'powers that be' had decided to sack 20% of the workforce, on our next release they closed down our entire label a fortnight before release. It became increasingly clear that EMI were essentially not in the business of selling records. In their desperation to make an annual increase in share value they became obsessed with big name signings, mergers and down-sizing: the only indicators that market traders understand. This bore no relationship to the music market itself. The big name signing at the time was mentally unstable, the monopolies and mergers commission were saying no and the only people who could save them (by selling more records) were getting sacked in their thousands.

I don't completely agree with your assessment of our lack of mainstream music, but, rather ironically, it's been the total failure of the majors to invest in development that has caused this apparent dearth. If you're spending $5 million on promoting a weak janet jackson album, when for the same money you could make a thousand albums by newer artists and cherry pick from the results, you've essentially lost the plot. Investment in the music industry means investing in talent, not mergers or management structures.

Selling music is easy: make lots of it. New stars will emerge. New sounds will emerge. There will still be huge runaway successes. There will be more to get from your P2P, more to get from itunes or even your local record store. If a band or artist make the company one dollar, that'll be one dollar more than any of the million-dollar flops that get tossed off with such alarming regularity. Tidy profits.... imagine that.

all the best,

Tom Gray (Gomez)

"Bob Lefsetz is the author of "The Lefsetz Letter." Famous for being beholden to no one and speaking the truth, Lefsetz addresses the issues that are at the core of the music business: downloading, copy protection, pricing and the music itself. His intense brilliance captivates readers from Steven Tyler to Rick Nielsen to Bryan Adams to Quincy Jones to EVERYBODY who's in the music business. Never boring, always entertaining, Bob's insights are fueled by his stint as an entertainment business attorney, majordomo of Sanctuary Music's American division and consultancies to major labels."

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