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. – Apple iTunes provides simplicity.

    – These idiots want to give us complexity a la Microsoft.

    – Which one do you think people will want to use?

    – Which one will COST more to create and manage?

    – Why do they feel the need to dismember iTunes when it works well for customers.

    Are they mad? Anyway, they will be irrelevant when the Radiohead model picks up momentum…

  2. The only way the music companies “all you can eat” pricing would work is if they subsidize the cost of the music player. Basically they will have to operate like the wireless telephone industry for it to work. However, I find it hard to believe that many people would willingly add another monthly bill so they can overpay for the privilege of listening to their favorite music. I already pay a monthly music fee for the music stations that come in my cable package. So, I don’t think that I want to add another one, especially since I don’t even listen to the music stations that I already have.

    As for Apple becoming a music label. Would they even be permitted to do that with their agreement with Apple Corps? Secondly, putting together a label would be the easy part but the promoting of the artists would be the hard part. The music companies have control over the venues for music promotion whether it be the radio, mtv, vh1, etc. So, that would be the biggest hurdle to a download only music label. I am not saying that it couldn’t work but it would make it difficult for the average Joe to have even hear about a band from such a label. Perhaps, Jobs could use his influence at Disney to get some of those artists on some ABC network shows (TV shows are how I find out about new music anymore since I haven’t listened to the radio in 5 years or so). Although, to any audio entrepreneur on this site it could be a great time to start your own business.

  3. the cost of bandwith for this is going to put someone out of business for sure.

    $5.00 a month for all the music you can download? LOL That’s really going to put money in the hands of the artists…

  4. Let’s see if I get this right. Because Apple doesn’t allow higher prices, they are going to give away the music for $5 a month. Right, that should get the cash rolling in. Douggie, I’m spending more than $60 a year on iTunes, way more, and some of that money goes your way.
    Another thought: going for MS software and the Zune means eschewing over 100 Million iPod users to gain 1.2 Million Zunes, including those relegated to paperweight service.
    Smart move, Doug, real smart. The way you are driving your business against the wall, heck, you could become the next president (Flame Bait™).

  5. I was wondering when the music companies would get the idea to sell the music on their own. But I didn’t see their own device. Pretty clever.

    I wouldn’t be surprised if Microsoft came up with this idea (music companies selling their own music and player).

  6. To prevent mp3 players (or computers, etc) that don’t pay the tax from being able to play the songs, they will have to DRM it. And consmers will have to buy a special (and more expensive) mp3 player that plays the DRM’d music.

    Nah…. won’t happen

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