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. “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.”

    That’s the first thing I thought! Apple’s iTunes Store was helping bring music-lovers back from the “music should be free” model of P2P networks to the idea of “music should be cheap and easy to buy.”

    This Total Music service would teach people that “I’m entitled to whatever music I want, for free.” When people who get used to this run into annoying restrictions (won’t play on iPod, cannot copy to my laptop or desktop, etc.), they are going to feel absolutely justified in downloading whatever they want. And this service is guaranteed to have annoying restrictions.

    So, if this service catches on, the music industry has created its own doom.

    Then again, the more that iTunes catches on, the less reason there is to need to a middle-man.

    Wow.

  2. Reading articles involving the major music labels can make your head explode…

    Let me get this straight, the labels want to set up a service where music will be free for the consumer and they want this because they don’t think Apple isn’t charging enough. But they’ve tried to do this subscription, all the music you want for no extra charge deal before and it bombed, and therefore they can’t just pull their music from iTMS which they would like to do because Apple isn’t charging enough.

    So essentially they are pissed that Apple isn’t charging enough for music the labels can’t give away for free.

    The mind wobbles.

  3. Wireless providers may go for this concept, because they have an ongoing revenue stream from the user. Most digital media player makers will not, because they are already finding it hard to undersell Apple on cost. Covering another $90 (or more) per device would be the road to bankruptcy. The only exception would be Microsoft, who seems to have a business strategy based on losing money on many of its products.

    Plus a $5 per month subscription fee… How is that going to be sustainable? The cost of doing business will probably take up most of that $5. If the user downloads 10,000 songs, what does each artist earn per song? Pretty much zero. After the labels spend millions to implement this plan, Apple should introduce a plan that allows artists to distribute their work directly through the Apple Store. They will earn more per song than their “cut” from 1000 subscription users.

  4. +1 @ gRen
    This is what i wrote down here few days ago: Apple Co is already a Label and Apple Inc has the means and the style!
    Beatles Apple and Mac Apple together! Come together…. right now… over me… could iTunes’ crew sing!

  5. Apple inc. have not taken control, they have passed the control from them GREEDY FAT BASTARDS & passed it on to their customers, us. We can choose to buy or not to buy, we can copy from our legally bought CD collections to our ipods. No transfers form ipod to something else of course and we have a choice of DRM or no DRM.

    How can that situation be described as Apple taking all the control? I HAVE THE CONTROL, I CHOOSE TO BUY WHAT I WANT, WHEN I WANT TO. I will not accept them GREEDY FAT BASTARDS telling me that the month is over I have to renew my collection! WHY SHOULD I when I have a choice?

    ipods rule O K!

  6. Anybody here up for a class action lawsuit charging the big three with price collusion…

    this really looks like a slam-dunk case, and heck, we might get some real nice juicy documents describing how these guys describe iTunes/iPod users. Maybe they have been calling us thieves and and other nasty things

  7. If Doug Morris actually gave a f**k about what he was doing, he’d already have turned around his business.

    He is just another cigar-smoking executive with EXTREME dollar signs in his eyes, and his greed for money outweighs giving choice to the consumers. In my view, iTunes is THE BEST choice for the SOLE reason that a) more music is sold on iTunes than in most music stores, and b) the one-stop application model that is iTunes is the ONLY choice for me (and most other people).

    If he wants to take on iTunes, bring it on. But I’m pleading for some sanity in this situation RIGHT NOW. Not 1,000 years down the road, NOW. I can’t stand to see these assholes decide surrepititiously that THEY must have control.

    I applaud EMI for actually giving a damn about the music. Wish every other label followed suit, no matter what your fucking price problems are.

    And I’m in on the class-action suit against the other three if you actually get it together.

    BJ

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