“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.
Please PUBLISH MORRIS’S email so we can all write him and tell him how much we love him and his attitude. Better still : If all the musicians that we listen to and support were to get vocal and tell him what would happen if they all sued him and his peers for hurting their interests or got together and force him to re-negotiate their contracts . They would have 100% support of all their fans.
I always buy my music from iTunes and then borrow the CD from my local library and replace the tracks with Apple lossless. That way, I get drm free music in high quality format that I paid for and great album artwork from iTunes.
Mr. Reeee and Gavron,
Like you, I still buy and rip CDs for the sound quality and permanent backups but this article has me tempted to go iTS for the 256 available versions. Info like liner notes and lyrics can be found on the web but honestly I rarely look at the microscopic CD notes any more.
Have you done blind tests between the different compression levels? I couldn’t distinguish between loss-less and 192-bit compression on my high end system.
It’s checkmate already. If all the music publishers pull out of iTunes, all Apple has to do is become a label and it’s game, set, match for the remaining dinosaurs.
http://tmsruge.com
All the sharing of the music, right? Is it correct that people share their music, fill up these devices with music they haven’t paid for? If you had Coca-Cola coming through the faucet in your kitchen, how much would you be willing to pay for Coca-Cola? There you go,” he says. “That’s what happened to the record business.”
No, I have water coming through my faucet. You know, the #1 selling beverage that you pay more for in a bottle than you do for a gallon of gasoline even though it’s free from the tap? Bad analogy.
Hello! Newly registered, admittedly drinking the apple Koolaid for quite a while. Love my iPod Touch!
The new paradigm of doing business reminds me of what I said to someone many years ago when I was making a cassette (!) from Roy Orbison’s Greatest Hits. Asked why I was going to the trouble, I replied “Because Roy’s hits aren’t all great”. That, to me, is why iTunes and other sites are brilliant; the consumer decides what’s valuable.
One thing that I’ve noticed is that ever since registration, the number of on-topic posts have gone up exponentially, the number of trolls have decreased exponentially, and the political rants have withered. Yah registration!
Universal has no clue how to promote their artists, run a company, or deliver value to their shareholders. Why not let a random guy or gal off the street run it? I don’t think any one of us could worse.
Apple should indeed become a MUSIC LABEL. I bet anyone that cares matters or has a musical message worth listening to will join Apple’s NEW Record Label.
I also bet they’ll get paid royalties with respect and do much better than any major Label deal out there – ANY, is offering them currently. That would insure all artists that sell well a respectful and substantial piece of the pie they bake.
Apple loves music and Jobs knows first hand how important music is to the human element and soul. If even now , he gives the lion share of the iTunes money to the greedy assholes that own the record labels , then it goes without saying that he would not have a problem passing that money directly to the musicians themselves that joined Apple Records (or if they were to abandon their contract on the ground that they were entrapped and shortchanged)
MUSICIANS REVOLT – STAND UP TO THE GREEDY LABELS AND SUE THEM FOR DELIBERATE STIFLING OF YOUR TALENTS AND ENSLAVING.
“Please PUBLISH MORRIS’S email . . .”
He doesn’t “do” e-mail. But to make him feel like he’s with the times, his assistant has duct taped a power cord to his Smith-Corona manual typewriter. He’s the guy keeping Liquid Paper in business and funding for Michael Nesmith’s triumphant return.
Are these 2 statments not at odds with each other if CDs are down 10% but iTunes has 22% is that not a 10% – 12% upswing?
“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.
“This year, 22 percent of all music sold in the US will move through iTunes. “
@Pete via PS3: “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.”
That’s already been tried with several alternative higher quality audio formats with more DRM that.. guess what? FAILED MISERABLY. I mean really crash and burned.. to a smoldering crisp.
CDs are going to stay until all media is delivered electronically over the internet. That will be in an iPod compatible format, whether it be through iTunes Store or Amazon’s also ran MP3 store, or BitTorrent.
Consumers are NOT clamoring for a “higher audio quality” format, they are looking for convenience and price. No format that does not deliver on BOTH of these two fronts has any hope. No new media format can deliver that because it would require completely replacing CD players with new players, and if it includes more stringent DRM, well it’s just not going to happen.
I see Apple easily crushing CD format and Amazon for that matter in the next few years.
<OMG MDN *finally* listened and unchecked SPAM me box by default!!! Victory is mine!>
PLEASE PUBLISH MORISS’ S FAX # THEN….
Subscription services – Not going to happen. I bought a new vehicle with a satellite radio installed and an included one year free subscription. I never activated it. It’s a solution in search of a problem. If a music subscription were to be bundled with a cell phone contract, that would be reason enough to pick a different cell phone.
Established artists – Are going realize they don’t need the labels. Labels provide production, promotion, distribution and control. Anyone with the money can work with a studio to do the production. Promotion of a new offering is not a problem for established artists who are known. Distribution via iTunes is possible for just about anyone to arrange and demand-based CD production facilities are getting more common (CDBaby). That leaves control. Who needs that.
New artists – This is not easy. It has never been easy. Historically, the major labels didn’t make it easier, except for a few. But the possibility of getting national exposure has never been more accessible to emerging artists. Look at Jonathan Coulton. He appears to be independently wresting a living from music using modern tools. Not having to divide the money with a label means the artist doesn’t have to sell near as many copies to make a living. It may be that, as his success increases, he will hire people to help him (he’s already using a booking agent). But they will work for him, not the other way around. And that’s a good path. And if he should score an iPod commercial with one of his tunes, he’s launched.
‘The times, they are a-changin’, to quote Bob Dylan. 125 years ago, all ice was centrally harvested by a few producers who thought business growth was better saws, better insulation and cheaper transportation of ice blocks. Today the first world makes ice in their kitchens. Tomorrow, more of the second and third world will make their own ice and more of the centralized, first world, industries will become decentralized. We’ll make electricity in our back yards and use it to power our homes and vehicles.
To bring this sort of back on topic, the Music Industry is just the next example of the crumbling of old business models.
The order is
Rapidly fadin’.
And the first one now
Will later be last
For the times they are a-changin’
First release in 1964. Still relevant. Damn, he’s good.
Jeff, the former is worldwide, the latter is in the US.
I, for one, am really enjoying watching the music industry squirm.
I’m surprised that there is not case of coercion being raised. The record companies for a few years now have been trying to break iTunes by giving deals to other competitors, trying to form alliances that specifically excluded Apple.
This smacks of how M$ beat Netscape.
I just wonder why? iTS is a huge success and the only digital model that works. Since Morris admitted he can’t understand the technology he should leave it up to people who have shown success with it to help him succeed.
I for one would not be surprised that at some point the Music cartels gang up on Apple and pull the plug. Then finally the US and EU monopoly agencies will be forced to change the way music is managed.
my hearing isn’t all that great (7 years in artillery will do that to you), but i can tell the difference between 128, 192, lossless and live. so i have stuff in lossless on an external hard drive at home, and 192/128 on my laptop for traveling. i have been buying stuff from itunes (over 2,000 songs) since the first day it was in operation, but i wish they sold lossless for those individual songs that i want.
“Once iPod Touch devices gain larger capacity and cheaper prices, everyone will get their music through the device itself.”
i hadn’t thought about that before, but if Apple will start recording your purchases so that you can redownload after a crash, or perhaps provide some other computerless backup method, i wonder how much that will happen.
interesting theory…..
Morris needs to read the book, “Who Stole My Cheese”. As a mouse you can whimper, whine, complain and starve when the cheese that was always there suddenly isn’t. Or you can set aside the self pity and wishes for the way things used to be, and move on to find a new source of cheese.
Music isn’t the only industry that’s been radically changed by the digital revolution. Many of us had to go through hard times before reinventing and adapting.
For Morris at 68, maybe he should simply retire. He’s obsessed with finding out who stole his cheese instead of doing the hard and scary work of finding something new.
PS– Hey, no default “spam me” check box! Thanks MDN for defaulting that to unchecked.
see the dinosaur
gallop fearlessly toward death
aware of nothing
dinosaur turn into brown pool
sleeps in ground
cost me 3 dollars
Morris fails the minute he mentioned subscription service. Again, people don’t want to rent there music and pay over and over for what they have when they can simply buy it for a dollar and keep it forever!
He still doesn’t get it.
‘Have you done blind tests between the different compression levels? I couldn’t distinguish between loss-less and 192-bit compression on my high end system.’
Yes, and 256 AAC is definitely better, no question. On my own high end system this bit rate preserves the middle range nicely. Songs sound richer and fuller without a doubt. Though I am supremely anal and can still hear the difference between any ripped track and the CD, 256 AAC is pretty darn close.
Having said that, I refuse to pay extra for what should have been the default bit rate to begin with . . .
Quit producing one hit wonders and maybe people will start buying music again!
MDN Magic Word: response
…and that’s my response, how fitting
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They want to fight pricay, and one could say it’s a laudable goal.
But then they look across the fence and see someone making money, and they want it. They are greedy. It’s that simple. They are incapable of understanding the simple economics at work, and that appalls me. Shouldn’t the heads of major corporations have even some *basic* sense? ANd it’s not just music. Look at the compensation packages paid to CEOs who are complete and utter failures. The American system is broken, and the idiotic ramblings of one music executive are just the tip of the iceberg.
Anyway, it turns out that APple is fighting piracy by providing a clean and simple method of obtaining legal tracks, but the music executives for the most part are too stupid to care. Because when they say they are fighting piracy, it’s not to get the best product to the consumer. It’s to get as much money in their pockets as possible. So when they see a successful model, not only do they want to pretend they can emulate it (even when they clearly don’t understand it) they want to act as if it’s *wrong* that anyone else can even *have* a successful model, and that model must be destroyed.
It was never about piracy per se: it has always been about greed, and that’s why they attack Apple and iTunes even in face of the fact that Apple is really spearheading an effective charge against piracy.