“These are tough times for the music business. In 2006, the number of CDs sold worldwide fell 10 percent, the largest one-year drop ever — steeper than in any of the so-called Napster-era years from 2001 to 2004. Early indications suggest that 2007 will be at least as bad,” Seth Mnookin reports for Wired.
“Over the past several years, [Universal Music CEO Doug Morris] has been one of the most staunch and vocal proponents of aggressive copyright enforcement, at one point publicly blasting MP3 players as merely ‘repositories for stolen music,'” Mnookin reports.
“Last summer, though, Morris seemed to change direction. After years of tightening controls on his company’s content, he agreed to let Amazon.com and other online retailers [notably, not Apple’s iTunes Store] sell unprotected MP3s of Universal songs… Universal wasn’t the first big label to offer unprotected tracks; the EMI Group had begun selling DRM-free songs in May. But with its small market share, EMI’s decision seemed unlikely to have much effect on the market. Universal, on the other hand, was setting out to change things. In particular, it hoped to end Apple’s near monopoly on legal digital downloads,” Mnookin reports.
Mnookin reports that Morris “admits to being fairly ignorant about technology and insists that his job is to nurture the creative side of the business — work that’s being threatened by all of this other nonsense… Today, when he complains about how digital music created a completely new way of doing business, he actually sounds angry. ‘This business had been the same for 25 years.'”
“This year, 22 percent of all music sold in the US will move through iTunes. “If iTunes gets up to 40 or 50 percent, they’ll have too much power for anyone else to enter the business,” says James McQuivey, who analyzes the digital music industry for Forrester Research. If the labels want out, they have two choices: Find a way to unseat the iPod or allow iTunes’ competitors to sell unprotected files that can play on Apple’s ubiquitous device,” Mnookin reports.
Mnookin reports, “Morris is determined to do whatever it takes… Total Music is designed to unify Apple’s competitors in what amounts to a coordinated attack on the iPod. The details are far from finalized, but in Morris’ conception a Total Music subscription would come pre-installed on devices like the Zune, the Sony PlayStation, or a mobile phone. Universal is well aware of the difficulty of convincing consumers to pay for music subscriptions, so Morris wants the devicemakers to pony up the cash themselves, either by shelling out for a six-month introductory offer or by assuming the cost forever. This would be money well spent, Morris argues, because it would help the Microsofts of the world eat into the iPod’s market share.
Mnookin reports, “Unfortunately, Total Music will almost certainly require some form of DRM, which in the end will perpetuate the interoperability problem… Morris is incredulous. He’s once again talking about how his job should simply be finding and breaking new acts.”
Please read the full article as it contains much more than we could adequately condense here.
In the full article, Morris discusses the birth of Apple’s iTunes and its subsequent growth, “We were just grateful that someone was selling online. The problem is, [Steve Jobs] became a gatekeeper. We make a lot of money from him, and suddenly you’re wearing golden handcuffs. We would hate to give up that income.”
It’s clear why Zune continues to be pushed upon an unreceptive market: the labels are desperate for a way out before it’s too late (device makers are desperate, too: Universal got Microsoft to pay a ridiculous $1 per Zune royalty, regardless of whether any Universal content is ever played on the device). But, contrary to Forrester Research’s Microsoft’s McQuivey, we firmly believe it already is too late. Apple won long ago. Sheer momentum will complete whatever remains of the job. Zune is the WNBA of the digital media device world. In other words: boring mediocrity that real people couldn’t care less about propped up by vastly larger organizations with agendas unrelated to the product itself. Ginned-up “interest,” even with very well-heeled backers, cannot sustain failure forever.
The labels are desperate because they face a serious threat. Established acts (Radiohead and Prince, to name just two) have already let their contracts with the music labels lapse and simply gone straight to the consumer. Why pay royalties to the likes of Doug Morris when you can keep the bulk of the profits that your work and talent generates? More musicians will follow, many likely via Apple’s market-dominating iTunes Store, certainly in iPod-supported formats, if they wish to reach the largest possible audience.
Universal Music is acting like a dinosaur because it’s headed up by one. Doug Morris is a 68-year-old technophobe who just wants things to go back to the way there were: fat profits from overpriced CDs packed with filler. Trying to stuff the genie back in the bottle is an exercise in futility. If Morris doesn’t wise up by, oh, five years from yesterday, that’s how he’ll end his career: swept away by a tidal wave while trying to stave it off with only a finger in the dike. His business long ago passed him by and it seems certain that he has little hope of catching up, much less leading it on a new productive path.
The music subscription model, as we’ve repeatedly said on these pages and, as the market has proven, is a pipe dream. But that mirage of an easy, sustained flow of money tempts them further into the desert with each passing day. Business models that fly in the face of human nature are doomed to failure. People want to own their music, not pay a monthly fee that, if and when it goes unpaid, kills their music.
Even if Microsoft or some other corporation(s) somehow managed to assume all the cost of the entire music industry forever (lunacy), it won’t matter as the music is out there already and will continue to be out there for free. DRM — no matter what they come up with — will be circumvented: if you can hear it, you can steal it. And is the irony not thick that a company called “Universal” would want their music to be anything but? If they actually do try to go DRM-free with Total Music, then Apple is already way out front with iPod and iPhone, so there’s no real reason for consumers to change to other company’s devices. As long as Apple keeps doing what it does best – innovate – then Apple will continue to dominate the device market which is where the real profits are anyway.
This is likely why Jobs called for the end of music DRM: he’s confident that Apple can sustain its dominant position in the device market by continuing to make the best products. As we pointed out earlier today, just 3% of the music in the average iPod is from the iTunes Store. The rest was ripped from CDs that the music industry itself provided and still provides DRM-free and/or via piracy. The iTunes Store is nice, but if it disappeared right now, iPods (and iPhones) would still sell just fine.
Obviously, Universal and, indeed, most of the music industry, needs new blood. It’s unclear if they even understand what they’re supposedly fighting: iPod, iTunes, iPod+iTunes, piracy, the consumer, what exactly are their targets and objectives? Really, we’re just guessing in our headline. And should they even be fighting or should they instead work towards becoming useful entities that help — not hinder — musicians to connect with their listeners? People need to embrace change, not hopelessly try to block it, or they will not survive. As these dinosaurs like Doug Morris fade away, the fortunes of everyone in the music industry will improve dramatically.
Universal Music is acting like a dinosaur because it’s headed up by one. Doug Morris is a 68-year-old technophobe who just wants things to go back to the way there were: fat profits from overpriced CDs packed with filler. Trying to stuff the genie back in the bottle is an exercise in futility. If Morris doesn’t wise up by, oh, five years from yesterday, that’s how he’ll end his career: swept away by a tidal wave while trying to stave it off with only a finger in the dike. His business long ago passed him by and it seems certain that he has little hope of catching up, much less leading it on a new productive path.
That says it all right there. It’s pretty much evolve or die. Most of these labels have chosen the latter.
“his job should simply be finding and breaking new acts.”
more like grinding and breaking a new ax….
This guy actually gets paid?
What a buffoon!!!
He just doesn’t get it.
Canned. Real soon.
The music industry is only alive because not everyone has or understands computers.
Once iPod Touch devices gain larger capacity and cheaper prices, everyone will get their music through the device itself.
When our computers get BlueRay, audio cd burning will no longer be possible.
Yes CD burning is going out in favor of DVD and BlueRay, but it will take some time.
The Music Industry will then sell music at even higher quality to kill the audio cd.
Every time I listen to the inane rantings of a Morris or Bronfman I feel compelled to support Apple in its struggle with the music industry cartel. BTW, “Total Music” has illegal cartel written all over it–I hope someone at the Justice Department antitrust division is monitoring this very carefully. This idiot appears to be publicly announcing the formation of an old-fashioned, horizontal cartel to limit consumer choice and increase prices! There is nothing more clearly illegal in the antitrust field than that!!!
I agree the music industry is in a massive evolutionary phase. I love the iTMS because it allows me to find just what I want.
Go to any music store (the few left) and I am quickly overwhelmed by the volume of music available to the point where I don’t bother anymore. But for everyones complaining about the music dinosaurs, give me a workable business model for music production. If it only gets easier to steal the product, whether produced through a record label or directly from the band, the industry is doomed to collapse. Replace music with toasters. If every factory producing toasters finds that the consumers only need to see one then make their own from then on, toaster production will die. Same for music. Simply eliminating the record label doesn’t address this problem, it just quickens the pace of the death of the music business. Direct from the band to iTMS to me is only the first step in the change. The band to Bit Torrent to me only feeds the reaper in a self perpetuating collapse. How do you plug that hole? You may not like Doug Morris, but he sees the dam collapsing.
So let me get this straight – I order to keep Apple/iTunes from being a Monopoly we will just create one ourselves…. Now that really makes sense…. – Maybe they should concentrate on creating great music and leave the distribution to the people that obviously know how to do it a lot better..
“because it would help the Microsofts of the world eat into the iPod’s market share.”
Yeah… lets help Little Red Microsoft fight the Big Bad Wolf… wotta laff!
Let them get in bed with Microsoft and see how long they survive. It’s worked so well for so many “partners” before them.
Repeat: HIGHER SAMPLING RATES.
Until iTunes sells Lossless music files, I’ll NEVER buy from them. I’ll just stick with CDs and ripping my own.
There’s something nice about getting a real disk, actual liner notes, cover art and libretti.
You see, this bozo just doesn’t get it. We don’t have iTunes to make money. We sell iPods. They music labels already get the lions’ share of the profits. But it’s not enough unless their victims are screaming for mercy. Otherwise they figure they could increase their profits. Why else would musicians be starving artists? Of course, being a starving artist keeps them on the edge, and they write better music. A win-win situation for the labels, and a lose – lose situation for the artists.
We just live music. And we want people to be able to afford it, to buy what they want and not what they don’t want, and we want to help musicians to break the backs of those labels who don’t get it. And this bozo at Universal is the poster child for music moguls who don’t get it.
And it looks like he never will.
Bozo.
S.
They don’t want Apple to have monopoly because THEY want to have the monopoly – plain and simple greed. They want to sell what they want, not what the consumer wants, just like they did before. “Cartel” is appropriate because they are a form of mafia that rips off the artist and consumer alike.
Oh dear. They want to have rusty handcuffs from Microsoft.
What are they thinking?
Make way for the new generation old boy…
and MDNs take is waay to long!
The real ChrissyOne
This guy wants Microsoft over Apple? He better start relaxing, ’cause Ole Balmer is already applying the lube
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It occurs to me, after reading the whole article, that Universal is falling into the same trap that befell Apple in the late 1990s which almost brought the company to its knees. Apple, like Universal, was spending all its resources and effort trying to protect their interests through litigation. It is the death of any company when they take their eyes off innovation, great products, and fail to give the customer what they really want. This is what Steve Jobs has done so well within Apple; killed the lawsuits and got them back on track creating great products. As long as Universal remains caught up in so many protectionist schemes, Apple’s future as a music distributor is virtually guaranteed.
Apple already has the market lead and the new iPhone/Touch is going to have an immediate added effect on their market share all over the world as it cuts into the cellphone/ringtone market. It heads the list of music devices on most Christmas wish-lists. All the other competitors are simply fracturing their own marketplace while warring over crumbs. The Zune? Puh-lease!
Mr. Reeee,
I’m with you all the way.
My iPod classic is full of music (from bought CD’s) in ‘lossless’ quality.
It sounds really very good (almost state-of-the-art) with Shure 500’s.
Until iTunes (or anyone else) sell music in lossless quality or better then I’m not buying, and as you say, it’s not just the quality of the music, owning the CD with it’s cover-work and information also plays a role, albeit a smaller one.
There’s a huge international market out there for the first online ‘company’ that offers really top-quality music.
Apple has to choose whether it wants to be that company
Before the ipod and itunes I had stopped listening to music . Now music has again become important to my activities. I’m no apple fanboy but I’m grateful to apple for all they have done.
It amazes me that this tool facetiously believes iTunes is the enemy.
I was really terrified for Apple, until I looked again and saw that it said ‘Doug’ Norris. Whew.
Morris; with his two feet planted firmly in mid air.
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I’m just waiting to see revolt from the artists who are signed with Universal. This guy is placing a higher priority on what goes in to his pocket than what goes in to his artists’ pockets.
Typical, money-hungry, record label buffoon. What this guy should have said is what he really meant. “We want all of the money, all of it…that’s right, your share too.” Why is there such a thing called a record label ? They need to go away. Why don’t all the acts just let there deals expire then sell direct ? Oil companies, telecoms & record labels = they like old ways, where they just collect billions.
Part of Doug’s plan is to buy diamond studded knee pads for Jermaine Dupri.
This really is a hit piece saying so right at the start with that illustration of the guy. And the first sentence, “It’s Monday afternoon, and Doug Morris, chair and CEO of Universal Music Group, is eating lunch in his private dining room at the company’s Manhattan headquarters.” But it seems a well justified hit piece, the interviewer’s quotes really show Doug as an appalling character, one has to wonder if he had a couple of bottles of wine with his lunch. That such a classic example of the ‘Peter Principle’ can reach such a powerful position only goes to show how messed up the music business is.
“Really, an album that someone worked on for two years — is that worth only $9, $10, when people pay two bucks for coffee in Starbucks?”
The question really is, “is a cup of coffee in Starbucks worth $2”.
UB40’s first album was made on a four-track in a basement and produced four hit singles and a top selling album. Another British band I knew worked on an album for two years, didn’t like the mix they got at Abbey Road, flew to New York and rerecorded it. Cost a million and the album flopped. You could say that is good management vs bad management.
Better retire soon, Doug, let Bronfman take over, he can turn the $7 billion business in to $2 billion, do us all a favor.