3:47 p.m. PT:…becomes one of the “rockingest nerds on the Net” and dances all the way to the bank.
I like reading “resistance is futile” and making-money stories. Check out this one at Wired.com about 68-year-old Doug Morris, chair and CEO of Universal Music Group, which owns Island/Def Jam Records (see reference), among other labels. The dinosaur once reviled the digital file format (MP3 players are “repositories for stolen music”!) until he realized how much money he could make and how futile it was to resist changes in the marketplace.
According to the story, Universal sued YouTube and MySpace, then made a licensing deal with YouTube and Yahoo (which nets Universal over $20 million a year). Morris also worked out a deal with Microsoft that pays his company $1 for every Zune player sold, plus licensing fees for Universal’s music in Zune’s online music store. Sweet.
Not only that, but Morris is letting Amazon sell Universal’s songs in digital rights management-free (DRM) MP3s. (Amazon got into the DRM-free digital music download business earlier this year.) Smart guy.
Morris has embraced the new medium and he’s catching the next wave: unprotected digital files. DRM-free files give users the flexibility to share music and transfer it from player to player.
From Wired (emphasis added):
Morris was as myopic as anyone. Today, when he complains about how digital music created a completely new way of doing business, he actually sounds angry. “This business had been the same for 25 years,” he says. “The hardest thing was to get something that somebody wanted to buy — to make a product that anybody liked.”
And that’s what Morris, and everyone else, continued to focus on. “The record labels had an opportunity to create a digital ecosystem and infrastructure to sell music online, but they kept looking at the small picture instead of the big one,” Cohen says. “They wouldn’t let go of CDs.” It was a serious blunder, considering that MP3s clearly had the potential to break the major labels’ lock on distribution channels. Instead of figuring out a way to exploit the new medium, they alternated between ignoring it and launching lawsuits against the free file-sharing networks that cropped up to fill the void.
…
Finally, there’s [Universal's] move to sell select songs DRM-free. Amazon, Best Buy, Wal-Mart, and several other online retailers are currently offering MP3 downloads of Universal recordings. Unlike those sold by the iTunes Store, the files can be duplicated at will.
I’m fascinated by all of this because: 1) I don’t like digital file copying restrictions; and 2) as you know, Prince is suing sites like YouTube and eBay for copyright violations, etc. I can’t understand why he won’t come to some kind of agreement with YouTube. Then again, maybe he’s negotiating, and YouTube won’t agree to his terms.
Update (11/27): Former music industry insider Howie Klein writes:
“We viewed this ‘threat’ [digital music downloaded from the Internet] as an opportunity. Not an opportunity to sue teenagers and/or their parents, but a new opportunity to let people purchase their music the same way they do at record stores. We didn’t assume everyone wanted to be pirates, crooks or wanted to rip off their favorite bands — we just assumed that fans of new music would be hip to new technologies — it’s kind of inevitable and luddites always lose in the end anyway; people crave convenience…We proposed to our corporate masters that we sell ‘unprotected’ MP3 singles at a reasonable price– $1/$1.50. We wanted to experiment and see if this model would stick.
Why unprotected? Because we were already in a vastly successful business of selling unprotected digital files: CDs. If people wanted to get them on the internet — they should be coming from us… that would be the future of the business: an evolution of the day’s success…The short term test was to give people a choice — an alternative to piracy…Our proposal, after lots of corporate headscratching, hummimg and hawing, was denied.”
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What’s sad is it’s still a few people who are becoming very wealthy and non-blockbuster artists are sometimes cut out.
20 years from now, maybe sooner, this will be a non-issue.
It’s like the telephone, and how people never accepted that at first…..and boy have we embraced telephones, nowadays!
Some people don’t like change.
It’s like the telephone
Money does tend to shape many opinions.
The BORG are running the UN and CFR
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