In an interview with "Wired Magazine," Universal Music Group CEO Doug Morris claims that the record industry didn't know what to do about the burgeoning digital music explosion. But the historical record suggests otherwise.
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Matt Rosoff is an analyst with Directions on Microsoft, where he covers Microsoft's consumer products and corporate news. He's written about the technology industry since 1995 and reviewed the first Rio MP3 player for CNET.com in 1998. He's also a bass guitarist and an avid collector (and digitizer) of LP records. DISCLAIMER: This blog contains the personal opinions of the author and does not necessarily represent the opinions of his employers or of CNET Networks. As an IT industry analyst, the author occasionally agrees to nondisclosure agreements from Microsoft or other companies, and he will not violate the terms of such agreements on this blog.
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However, they did suck because they had to make do with the horrible licensing terms the labels forced on them. MusicNet at the beginning was only allowed to let fans have 100 songs on their computer at any one time. If you wanted another song, you not only had to wait a month, you had to get rid of one of your other songs. That too quickly changed to unlimited downloads, but still within the punitive "rights" that still exist today with all DRM music.
I'm convinced the labels set up PressPlay and MusicNet not with grand goals of entering the digital business, but to fix their market margins at ridiculously high rates and then dump the services (PressPlay was sold to Roxio to become the new Napster, MusicNet was sold to VCs, both for pennies on the dollar). Congress and the DOJ look at "willing buyer" and "willing seller" methods in licensing and anti-trust disputes. The labels created a "willing seller" and the first subscribers to PressPlay and RealOne (with MusicPass powered by MusicNet) created "willing buyers". Voila - a market rate had been established to baseline any future content negotiations or disputes.
The problem is that only companies with other ways of making money (like selling iPods) can even break even on the razor-thin margins labels leave for digital services to build a business. Apple is not willing to budge on retail prices because that would also increase revenue for other distributors, putting competitors in business. And as Morris points out, the labels are now beholden to Apple for the lion's share of their online sales.
The labels' have nobody to blame for their current problems but themselves. Morris' "get the money now" approach to a disruptive technology like the Intarweb tubes thing is exactly what's killing his industry in the longer term.
Reheated warmed over formula music has a lot more to do with flagging sales than new media could ever begin to accomplish.
Give us music to buy and we will buy it.
- by tourband November 28, 2007 9:58 PM PST
- 2000 - 2001? Not even close. Doug (with Mel) were introduced to a digital strategy for Universal as early as 1995-6 but they were unwilling to play nicely with others; some things are apparently the same).
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(3 Comments)BTW - they didn't miss anything, in fact, they knew what to do - they, like Strauss, Tommy, etc. simply made the choice not to jeopardize the receivables owed to their respective fiefdoms by the retailers and upset the balance of those existing relationships.
In fact, all of the senior executives at Universal, Sony, WEA, EMI and BMG chose this brass ring as opposed to the opportunities they were offered. If I remember correctly, at the time, the labels were owed about $8 Billion dollars from the retailers and no one wanted to jeopardize those receivables. SHORTSIGHTED.
This will always be remembered by me as a major disappointment in the annals of music history, you see, there was the advent of new technology which created endless possibilities mixed with the reality that the MBA culture had won control at the labels and all of the kiss ass politicians who had been failing upwards for years were in charge and no one could get a damn thing done because they knew it all, they knew everything, and they had degrees to prove it; hey guys, good move - this was the very f*cking reason labels needed creative's.
Anyhow, Doug speaks out of both sides of his neck and has a thousand masks. Great, another story about a POS with a lot of money and no integrity.