David Emery Online

Universally Clueless

29 November 2007

A translation (and comment on) of the Doug Morris – chair and CEO of Universal Music Group – piece in Wired.

”...For the past several minutes, Morris has been listening to Rio Caraeff, executive VP in charge of the company’s digital strategy, tell me how the sagging fortunes of the music industry highlight the need to diversify revenue streams. Caraeff explains that the company will eventually need to transition from running a product-based business to running a service-based one. He talks about ringtones, subscription services, and deals with mobile providers, stressing the need to raise the industry’s “digital IQ.”

Morris seems distracted.”

Sorry, what’s a ringtone?

”...It’s safe to say that increasing his digital IQ and pondering a service-based business model aren’t the topics that get him out of bed in the morning.”

Which is fine; digital revenue really doesn’t matter too much to a record company these days, does it?

”...And in November 2006, Morris parlayed Microsoft’s desperation to establish a true alternative to the iPod into a $1 ransom to Universal for every Zune music player sold — and that’s on top of the licensing fees Microsoft pays to have Universal’s songs in its Zune Marketplace online store. It’s a sign of Morris’ power that he is able to pressure so many players in the technology world to bend to his will.”

It’s more a sign of how much Microsoft was willing to bend over to get content.

”...Last summer, though, Morris seemed to change direction. After years of tightening controls on his company’s content, he agreed to let Amazon.com and other online retailers sell unprotected MP3s of Universal songs.”

Oh shit, we’ve done exactly the same as we did with MTV; given someone else all the power. Better try and screw over iTunes as quick as we can, whatever the cost.

”...There was a cartoon character years ago called the Shmoo,” he says in a raspy tenor. “It was in Li’l Abner. The Shmoo was a nice animal, a nice fella, but if you were hungry, you cut off a piece of him and put onions on it, and if you wanted to play football you just made him like a football. You could do anything to him. That’s what was happening to the music business. Everyone was treating the music business like it was a Shmoo.”

Sorry. What?

”...It was only a couple of years ago that we said, What’s going on here?’ Really, an album that someone worked on for two years — is that worth only $9, $10, when people pay two bucks for coffee in Starbucks?”

Of course, no work goes into a cup of coffee at Starbucks. People don’t grow the beans, people don’t staff the cafes and people don’t make your coffee.

“If you had Coca-Cola coming through the faucet in your kitchen, how much would you be willing to pay for Coca-Cola? There you go,” he says. “That’s what happened to the record business.”“

Insert bottled water analogy here.

”...Morris goes on to rail against criminal-minded college students and low-life punks who steal the music that his artists work so hard to create. He admits to being fairly ignorant about technology and insists that his job is to nurture the creative side of the business — work that’s being threatened by all of this other nonsense.”

Morris goes on to admit that he has absolutely no clue what he’s talking about.

”...Morris insists there wasn’t a thing he or anyone else could have 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?”

Quite frankly, this just pisses me off. Are you seriously trying to tell me that in a company of Universal’s size there wasn’t at least one person who understood what was going on on the internet?

”...Personally, I would hire a vet. But to Morris, even that wasn’t an option. “We didn’t know who to hire,” he says, becoming more agitated. “I wouldn’t be able to recognize a good technology person — anyone with a good bullshit story would have gotten past me.” Morris’ almost willful cluelessness is telling. “

Ok, fine – you can’t recognise a good technology person. So you do nothing instead?

”...Universal is also experimenting with the subscription-based plans that many — including the new cohead of Columbia Records, Rick Rubin — see as the wave of the future. The idea is to charge customers a fixed monthly fee (which could get tacked onto their cell phone, cable, or Internet bill) in return for access to unlimited music from a given label and, say, the opportunity to hear new recordings a week before their general release. Morris is currently championing a version called Total Music.”

Which I’m sure will be really something special, given Universal’s obvious technical expertise in even the highest parts of the company.

”...(Similarly, the iPod won’t play DRM-encoded files purchased through other retailers.) This lack of interoperability, combined with the iPod’s overwhelming dominance, gave Apple a stranglehold on the digital music marketplace.”

Of course, they do play MP3s, so they hardy lack interoperability.

“Total Music is designed to unify Apple’s competitors in what amounts to a coordinated attack on the iPod. The details are far from finalized, but in Morris’ conception a Total Music subscription would come pre-installed on devices like the Zune, the Sony PlayStation, or a mobile phone. Universal is well aware of the difficulty of convincing consumers to pay for music subscriptions, so Morris wants the devicemakers to pony up the cash themselves, either by shelling out for a six-month introductory offer or by assuming the cost forever.”

We want other people to solve all out pesky “how to make money from something given away free” problems for us.

That would be mighty clever, wouldn’t it?