Universal Music Group's View of the Digital World

[MacRumors]

Wired has a revealing article on Universal Music Group's CEO Doug Morris and his views on the digital music industry. The article provides insight into how only an outsider like Apple could accomplish what the music industry was unwilling and unable to create -- a successful digital distribution system.

Morris's attitude is shockingly revealing as to the underlying motives of the music industry and how it has affected their decisions.

[Morris] wants to wring every dollar he can out of anyone who goes anywhere near his catalog. Morris has never accepted the digital world's ruling ethos that it's better to follow the smartest long-term strategy, even if it means near-term losses. As far as he's concerned, do that and someone, somewhere, is taking advantage of you. Morris wants to be paid now, not in some nebulous future.

It was this attitude that prevented the record labels from letting go of the CD and embracing online distribution. To be fair, however, Morris claims that nothing could have been done differently:

"There's no one in the record company that's a technologist," Morris explains. "That's a misconception writers make all the time, that the record industry missed this. They didn't. They just didn't know what to do. It's like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?"

Even now, their major efforts are not intended to satisfy any particular need or necessarily build a long term model, but instead to wrest the control they inadvertently gave to Apple with the creation of the iTunes Music Store. iTunes remains responsible for the largest portion of Universal's digital music sales.

To counter, Morris is presently involved in a making their Total Music plan a reality. Their plan is to offer users a "free" subscription plan for unlimited access to all their music. The plans would be subsidized by hardware vendors interested in taking a piece of the action from Apple's iPod and iTunes.

The author points out that this plan may be ignoring a strong consumer preference for flexibility and simply be trading in one proprietary format for another, but Morris doesn't appear to care:

Unfortunately, Total Music will almost certainly require some form of DRM, which in the end will perpetuate the interoperability problem. Morris likely doesn't care. He is more committed to Total Music -- or any other plan that allows protection -- than he is to a future where music can truly be played across any platform, at any time. "Our strategy is to have the people who create great music be paid properly," he says. "We need to protect the music. I know that."

Article Link

[arn]

This is a very revealing article about why the music industry is the way it is. I was surprised by it.

arn

[Colnagofan]

Years ago, when CDs first came out record companies charged a lot more than they did for the same music on LP because of the higher cost of CDs. As the cost came down the prices did not. The value proposition is broken and has been for a very long time.

[SciTeach]

Originally Posted by arn

This is a very revealing article about why the music industry is the way it is. I was surprised by it.

arn

Agreed. It makes you wonder about how the bottom line is made in the industry and how much control they want.

[Cleve]

This idiocy is why there are no movie rentals either.

http://9to5mac.com/appletv-where-are...ntals-34235859

It's amazing that a company with that much money can be that blind to the world around them.

[Benjamindaines]

Eh well, give it time and all these nay sayers will be retired or dead. Then we can take over!

[BOOMBA]

The guy comes across as a bit of a tool.

[illw!l]

"There's no one in the record company that's a technologist," Morris explains. "That's a misconception writers make all the time, that the record industry missed this. They didn't. They just didn't know what to do. It's like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?"

Um, call a vet? What the hell would Morris do?

[neven]

I hate to nitpick, but since this is the quote that's been going around all day...

"They just didn't know what to do. It's like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?"

Let's see... I'd use my some of multi-million dollar profits to hire someone to figure it out pronto. But hey, that's just me.

His further claim that they couldn't even hire someone because they wouldn't know whom to trust is asinine as well. Does he take the same attitude with other aspects of his business? "We need to expand into the growing Southeast Asian market, but what do I know about Southeast Asia? It's like if you suddenly asked me to fix my yacht. What can I do? I can't just hire some sort of expert on Southeast Asian business - for all I know, it could be a guy from Minneapolis-St Paul!"

Originally Posted by illw!l

Um, call a vet? What the hell would Morris do?

He'd sit around for eight years and insist that the dog was fine, eventually blaming the neighbor's cat's when the dog died.

[gwangung]

Idiot. He doesn''t know his market, he doesn't understand his customers (he treats them as ENEMIES) and he doesn''t care to learn ...

Total moron. Ought to clean him out of the corporate genepool and improve the breed....

[Spaceboy464]

What a moran. I can't wait till they get what is coming.

[Fuchal]

"There's no one in the record company that's a technologist," Morris explains. "That's a misconception writers make all the time, that the record industry missed this. They didn't. They just didn't know what to do. It's like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?"

I would hire a surgeon to operate on my dog. In the same way, if I were in the music business, I would have hired consultants to help show me what I should be doing instead of "watching my dog die right under my nose".

[saxman]

This is a good summary of the recording music industry (at least the big companies). It has been more or less their philosophy for a long, long time. Unfortunately people in charge of the big recording companies care little about the music. It is a sad commentary

[shadowfax]

Originally Posted by illw!l

Um, call a vet? What the hell would Morris do?

No, screw the vet. Are you made of money? You put old yeller down.

Unless he's making you hundreds of millions dollars per year, in which case you call a vet to perform the surgery to fix him, and then pay for another procedure to make sure he never dies.

Or, more likely for Morris, you hire an outlandish "faith healer" named "Total" to fix him. This one will work so much better than "Rhapsody," the old tribal healer.

[buddhagoth]

Originally Posted by Colnagofan

Years ago, when CDs first came out record companies charged a lot more than they did for the same music on LP because of the higher cost of CDs. As the cost came down the prices did not. The value proposition is broken and has been for a very long time.

CDs have never cost more to produce than LPs. Even when LPs were the standard delivery format for music their costs were relatively high. CDs have always cost a lot less but were sold for a lot more because at the time they were the latest thing.

The article cited certainly does show, though how the major label mentality still is holding on with a death grip.

Cordially,
BG

Originally Posted by saxman

This is a good summary of the recording music industry (at least the big companies). It has been more or less their philosophy for a long, long time. Unfortunately people in charge of the big recording companies care little about the music. It is a sad commentary

Thank you kindly for making the distinction between the big majors and others, especially the indie players. There is no such thing as "the music industry" in that everyone involved in it thinks the same way or has the same terrible attitude as quoted in the article here.

Big recording companies mean big business where profit is the principle concern. Thank the stars for Apple and iTunes and the net that have gone such a long way to level things.

Now, who's gonna tell Universal and the like that they're totally irrelevant now?

Cordially,
BG

[junker]

I will try to keep this civil....

I lived in Nashville TN for many of my 37 years. You may think of it as nothing special - outside of country music, but you'd be wrong. It is a who's who of music industry business there - Sony, BMG, Warner Bros. etc etc.

I worked various jobs around music row, grew up and went to a high school with many kids of parents from Big name country music and old rock and roll bands. I feel like I got to know the industry from the inside a little bit.

From what I remember (I don't live there anymore) musicians are mostly an enjoyable bunch. Music Biz folks - absolute scum. I say this with no apologies. That said, I knew a few people who worked in lowly positions in the biz who were cool - but most at the top are shmoozing snakes - that's why they couldn't figure out any solution - too busy trying to get into your pocket or into a deal. No creativity or appreciation thereof. Simply put: managers wrangling their way into the pants of desperate acts (multi-interpretation intended).

So, this whining about not being able to "figure it out" and all this hand wringing about lost profits, in my eyes, is poetic justice to the bastards.

I wholly support and encourage artistic creativity, and I think we should too. I think that some programmer out there should devise a program whereby the bands/musicians can create a website, do secure business, play music, sell per song, show videos, have links to a tshirt distributer who'll print their shirts, buttons, whatever - one sweet all encompassing package to give the money back to the artist. Yeah, yeah I know about myspace. But there are limitations.

mp3 file sharing is here to stay. Period. Deal with it. Even Apple's DRM can be circumvented with enough patience.

And where are my cheap Cd's??? When they first came out, I was promised it would go down in the future...All I see is 19.99 cd's. No wonder Tower Records folded.

Ok, I should stop.

[synth3tik]

Fortune magazine has ranked Steve Jobs as the most powerful person in business.

I rank Doug Morris as the biggest douche in business.

[k2director]

How do these chimps get put in charge of major companies like Universal?

Apple created the legal digital music industry single-handedly. It made it easy and affordable to buy legal music, while these idiot labels had their thumbs up their ass, desperately clinging to an out-dated model.

Now they're jealous of Apple's success and leverage, and are threatening to mess up the whole industry by fragmenting it, with each label doing its own store, with different prices, and different terms, etc.

STUPID, STUPID, STUPID.

I hope Universal pays dearly for this. I'll definitely do my part to see that it does...

[Di9it8]

Originally Posted by BOOMBA

The guy comes across as a bit of a tool.

No wonder there are problems in the music industry if this the strategic thinking of the boss of one of the largest organisations.

[rtdunham]

as a retired journalist, i might read articles differently than many folks. at any rate, an observation or two about this news piece:

First, the Wired article is an excellent summary of the circumstances, and the story was excerpted well here.

Second, many of the most provocative quotes are quoting Wired author Seth Mnookin, NOT Morris. Mnookin may have characterized Morris' opinions accurately, but we're hearing Mnookin's take on it, not Morris' "from my mouth to your ears." The comments about wringing every dollar, and other stinging quotes, aren't Morris' words.

I'm just sayin'...

[MacPhilosopher]

I find two of his points almost hilariously stupid:

First, his analogy of the dog needing surgery is flawed. The music industry are/were the distribution specialist/owners. He seems to think they were merely the visa/mastercard portion of the industry. As the distributors (Vet) they are the ones who should have known what to do when the technology paradigm shift (dog needing surgery) really got moving.

Second, if he believes that the major music labels really care how much of a share of their money the musicians and songwriters receive, then he is delusional. History shows that the labels intentions have always been to maximize their own profits while minimizing compensation to the creative side of the industry. This is where iTunes really frightens the labels, I have friends that receive close to 2/3 of the gross .99 cents Apple charges. Digital production was the beginning of the shift, digital distribution is its crest. It is time for the industry to realize they are now just contract companies for promotion. Their share of the profits should drop in accordance. We can all rejoice in the fact that they can no longer shove Brittany Spears and Hanna Montana down our throats. The free market will finally rule. Note: I often find that executives and CEO's love to tout the power of the free market while behind the scenes they actually control and suppress that freedom to trade.

[SRSound]

I can reinforce, as someone nestled deeply in the industry, the view this article gives you of the music industry execs is spot on. They are greedy bastards who dont care about the artist or consumer; most of them are in the industry purely out of a desire to make money and that's all they care about it. While it's a disgusting situation, the next few years will bring exciting change as power exchanges hands. I look forward to it.

[JAT]

Originally Posted by synth3tik

Fortune magazine has ranked Steve Jobs as the most powerful person in business.

I rank Doug Morris as the biggest douche in business.

Never heard of Jamie Kellner?

[IJ Reilly]

Originally Posted by k2director

Now they're jealous of Apple's success and leverage, and are threatening to mess up the whole industry by fragmenting it, with each label doing its own store, with different prices, and different terms, etc.

They aren't jealous, they're scared. They're scared that they've already given away the store. And they're right to be scared. One of the truly interesting facts revealed in the article is that Apple is verging on effective control of the retail music business. The industry is not going to want to be dealing with any one retailer with as much power as Apple is gaining, so they are making their moves. No surprise there.

The other issue that should be frightening the industry silly is that they are rapidly becoming irrelevant. More and more musicians are bypassing the industry entirely and going directly to their fans. The music distribution model is changing fundamentally, and they can't really do a thing to stop it. The industry should be asking themselves what audience and purpose they will serve in ten years or so, when an entire generation of musicians and music buyers are used to not needing them at all.

[MacPhilosopher]

Originally Posted by rtdunham

as a retired journalist, i might read articles differently than many folks. at any rate, an observation or two about this news piece:

First, the Wired article is an excellent summary of the circumstances, and the story was excerpted well here.

Second, many of the most provocative quotes are quoting Wired author Seth Mnookin, NOT Morris. Mnookin may have characterized Morris' opinions accurately, but we're hearing Mnookin's take on it, not Morris' "from my mouth to your ears." The comments about wringing every dollar, and other stinging quotes, aren't Morris' words.

I'm just sayin'...

Thanks...I went back and read the article. Have to disagree with you here. The quotes from the article are proper and the one that is not a direct quote from morris reads just as it should, as an opinion of the author about Morris. The other quotes read just as powerfully in context as they are in quotations in the thread. You are correct, though, in pointing us to the original to confirm the points made in the thread.