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?


  1. Yet another subscription model where the music cartel gets what it wants (a recurring revenue stream), and the consumer pays in perpetuity but owns nothing. They’re really going to remain stubborn and stupid all the way into bankruptcy, aren’t they?

  2. So Universal wants to win over the 1.2 million subscribers of subscription music services, basically reducing subscription-industry-revenue to one third (those subscribers are now paying $15 per month)??

    Wow, that sounds like a brilliant idea!

    MW: “any” – they don’t have any clue

  3. @MDN,

    I’m surprised in your take at some of the questions you’re asking:

    “Will it work with all players, including Apple iPods?”

    Of course not. Apple has no intention of tacking $90 onto the price of an iPod, and they wouldn’t license the necessary DRM anyway.

    “Will it require ‘Net access and leave subscribers without music if a ‘Net connection is unavailable? “

    Yes and no. Since portable devices can’t be on the net all the time, it would only require this at regular intervals, but obviously some sort of net connection is required to get the music and ensure you’re still “entitled” to it.

    “Will the music carry DRM?”

    OF COURSE it will have DRM. The music is not “free”, it’s SUBSCRIPTION. The fact that you pay the service price up front doesn’t change that. They’re not letting you keep this music. Oh, and what do you want to bet the DRM is some form of Microsoft’s?

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

    Well, aside from the fact this music is not going to work with iPods, the answer to your question is me. I don’t understand this at all. You guys used to rail against the subscription model, are you saying now it was only because of the lousy $10 monthly fee? That subscriptions suck at $10, but are awesome when paid for up front? Suffice it to say I strongly disagree.

    I hate subscription models because I don’t own the music, because it’s DRMed so they can change the rules whenever they want (and make no mistake, they WILL change the rules), and because the resulting exploding media could be “disabled” at any time. It was never because of the monthly fee, which is otherwise trivial. I thought this was Mac Daily News’ take as well, but apparently not.

    This is yet another ridiculous idea from Universal and the labels. That BusinessWeek tries to give it credibility means nothing:

    Total Disaster: Universal’s Never-Ending War Against Apple.

  4. “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.”

    Or that they own an iPod which has a median life before failure of 18 months.

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