Universal chief Doug Morris’ quest to defang Apple’s iTunes Store

“Relationships in the entertainment world can be famously fraught. And few are more so these days than the one between Steve Jobs and Universal Music chief Doug Morris. You may recall that Morris recently refused to re-up a multi-year contract to put his company’s music on Apple’s iTunes Music Store. That’s because Jobs wouldn’t ease his stringent terms, which limit how record companies can market their music,” BusinessWeek reports.

“Now, Morris is going on the offensive. The world’s most powerful music executive aims to join forces with other record companies to launch an industry-owned subscription service. BusinessWeek has learned that Morris has already enlisted Sony BMG Music Entertainment as a potential partner and is talking to Warner Music Group. Together the three would control about 75% of the music sold in the U.S. Besides competing head-on with Apple Inc.’s music store, Morris and his allies hope to move digital music beyond the iPod-iTunes universe by nurturing the likes of Microsoft’s Zune media player and Sony’s PlayStation and by working with the wireless carriers. The service, which is one of several initiatives the music majors are considering to help reverse sliding sales, will be called Total Music,” BusinessWeek reports.

“This isn’t only about Jobs; Morris badly needs to boost his business, and Apple is the one to beat. The iTunes store has grabbed about 70% of downloads in the U.S. And the iPod–well, what’s left to say about that juggernaut? Plus, music companies have been here before. A few years ago they launched services with the aim of defeating Napster-style file-sharing–and failed miserably. And let’s not forget that existing subscription services have signed up only a few million people, vs. hundreds of millions of iTunes software downloads,” BusinessWeek reports. “While the details are in flux, insiders say Morris & Co. have an intriguing business model: get hardware makers or cell carriers to absorb the cost of a roughly $5-per-month subscription fee so consumers get a device with all-you-can-eat music that’s essentially free.”

“With the Total Music service, Morris and his allies are trying to hit reset on how digital music is consumed. In essence, Morris & Co. are telling consumers that music is a utility to which they are entitled, like water or gas. Buy one of the Total Music devices, and you’ve got it all. Ironically, the plan takes Jobs’ basic strategy– getting people to pay a few hundred bucks for a music player but a measly 99 cents for the music that gives it value–and pushes it to its extreme,” BusinessWeek reports.

“The big question is whether the makers of music players and phones can charge enough to cover the cost of baking in the subscription. Under one scenario industry insiders figure the cost per player would amount to about $90. They arrived at that number by assuming people hang on to a music player or phone for 18 months before upgrading. Eighteen times a $5 subscription fee equals $90,” BusinessWeek reports.

Full article here.

The devil’s in the details when it comes to the Total Music concept. Will it work with all players, including Apple iPods? Will it work reliably? Do you get new releases the day they’re released? Will it require ‘Net access and leave subscribers without music if a ‘Net connection is unavailable? Will the music carry DRM? If so, how will that limit the subscriber’s ability to move the music among devices? Etc.

Some of these music cartels are obviously very threatened by Apple. Jobs played them perfectly. They now make too much from iTunes Store to pull out, but they are driven to dent iTunes Store’s dominance, so that they can wrest back the control they see slipping away to Apple.

So, there are lots of questions, but the bottom line is that competition is good, but the competition has to be good in order to compete. Do this “Total Music” thing right and we say “bring it on!” Who wouldn’t want to buy an iPod and get all the music they want for free – even if it costs $90 extra upfront? If it includes Apple iPods, we can’t see how it hurts Apple, as they make the best players and will only sell more iPods and iPhones. Do “Total Music” wrong (too many restrictions, crappy formats and quality, limited catalogs, and the rest of the usual B.S.) and it will die like so many others.

On a related note: We’re left to imagine what if Apple’s Mac had the benefit of entire industries working for years on various methods of toppling Microsoft’s Windows hegemony? We guess it’s okay to build entire industries (anti-virus, for example) around Windows’ deficiencies and support Windows no matter what while ignoring or even denigrating Apple’s superior Mac solution, but when Apple creates the best player/jukebox/music store combo all of the two bit also-rans must be propped up with higher bit rates, lower prices, DRM-free music, etc. for everyone but Apple’s iTunes Store,. Is that sort of stuff even legal? It sounds like collusion or something to us. Of course, we’re not lawyers – thank God!

It’s weird; almost like the world requires inferior solutions and products to dominate. Perhaps because there’s more money it in? Think about it: if everyone’s computer just works, then Best Buy wouldn’t have a Geek Squad employing unnecessary people, VW wouldn’t sell extra VW bugs with “Geek Squad” logos to Best Buy, the advertising firm wouldn’t need to make “Geek Squad” ads, the ads would run on the TV networks, the “Geek Squad” logo decal maker wouldn’t get paid, and so on, and so on, and so on. It would follow that, if everyone gets a Zune or some other piece of junk, maybe consumers have to buy players more frequently as they break, meaning the music cartels get a more frequent replenishment of subscription cash to fund their coke habits, and entire leech industries can perhaps be created to “fix” problems that don’t exist in the superior solution.

Maybe, in order to really grab market share and garner more support from companies, Apple should make Mac hardware that breaks more often and work to screw up Mac OS X, so that it requires a wipe and reinstall every six months in order to properly function?

64 Comments

  1. This is the stupidest idea I have in quite a long time. Add $90 to the cost of every MP3 player sold – yeah, that will be competitive.

    So you can buy an uber-cool ipod for $150 or a similarly spec’d out Zune for $240 (or more since the hardware manufacturer will want a markup on the $90 they are paying the music companies). Lose the Zune, no problem, buy another and pay another $90. Want the new Zune, no problem, pay another $90.

    “Who wouldn’t want to buy an iPod and get all their music for free – even if it costs $90 extra upfront?” ME!!! I don’t!

    I don’t want to pay $90 upfront on EVERY MP3 player I ever buy. I have bought (at least) 2 iPod shuffles, a Motorola SLVR, iPhone, 4G iPod, 5.5g iPod, Sansa MP3 player. That’s 7 devices x $90 = $630 extra going to the Music Industry. How’s that $630 benefiting me? I am able to use my entire music collection on any or all of those devices FOR FREE

    The other huge problem with this scheme is that it will rapidly advance the notion that music is free. The music companies would be training people to not spend any money on music. Try getting that cat back in the bag.

    The subscription model is not good for most consumers. If it wasn’t good as a standalone choice after buying your MP3 player, it is a much worse choice prepaying for 18 months of subscription.

  2. How about Radiohead? According to a recent article on google news, in two days people have downloaded 1.2 million copies of their new album from their website. That sounds impressive to me. And I’d love to know what the average price paid was/is. I plan on paying $9.99. It’s well worth it.

  3. WOW. At first I was a little bit worried. If all the Music companies got together and did something worth while, Apple could be in trouble.

    Then I heard the magic word. . . . Subscriptions. LOL. . ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />

    Yep, its brain dead time again. A bad idea, terribly implemented, and poorly supported. It will die on the vine and cost the music companies millions and millions. LoL Bring it on.

    Just a thought. If Microsoft sold its new Zune flash units and absorbed the cost of the music all by it self (you know, so it could hurl injury at Apple) and you could get free music for the life of the unit. . . . . . then . . . just . . . maybe I would buy the cheapest Zune flash.

    I keep it for when I travel and load it up to the max before I go. It lasts for the whole business trip and I toss it in a drawer waiting for the next trip.

    4 years later, when they kill the thing cause they are not making any money on it, I join a class action suit cause the advertising says I get music for free for life. . . . . . as a class, We win 2 billion from MS. Hey, this could work. ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />

    en

  4. the problem with high corps is that they don’t understand people.

    People in high management, think of bills as money into their salary

    People in the lower class or the average earner, think of bills as an expense that goes to management. We hate it, like creditcard debt.

    which is why they still don’t understand why we hate complexity.

    It’s either buying the CD or getting it off itunes.

  5. In the last legal settlement with Apple Corps. record company, Apple (the computer company), obtained the rights to use the Apple Corps. logo and the two companies generally are really, really cosy right now.

    I would not be surprised at all if Apple somehow became a record label or used it’s association with Apple Corps. to do essentially the same thing. They could easily offer end to end support for the music industry in a pinch.

    Also, Apple has recently been investigating subscription services, advertising and all the things that the big music companies are looking to with this move anyway. this means that as a company, Apple is perfectly placed and prepared to counter anything that the big three can throw their way.

    I would only be worried about Apple’s fortunes in this matter if the new service contemplated here actually *does* work on the iPod and actually *doesn’t* have DRM attached (two things suspiciously not mentioned). Since both of these are unlikely, this sounds like a non-starter to me.

  6. “They arrived at that number by assuming people hang on to a music player or phone for 18 months before upgrading.”

    This actually requires the device makers to have a device worth upgrading to.

    I have a 2G iPod nano which works really well. It plays music for me when I’m biking or sitting in the office. While the 3G iPod nano is pretty cool, I see no reason to throw out my 2G iPod nano.

    So the only reason I can see for people to replace their music players every 18 months is either fashion (gotta have the latest) or “planned obsolescence.”

  7. As of this last week, Nine Inch Nails is now independent. Artist who embrace the paragidgm shift will increase, as will the pain caused to the labels of having to adjust to the new paradigm with fewer acts.

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