Tag Archive for 'Universal Music Group'

Doug Morris: Music Industry Genius or Bitter Luddite?

Published on November 30, 2007 in Blog. 1 Comment Tags: , , , , , , , , , , , , , , , , , .

Spotted on: Wired.com (and thanks for this awesome article)

In the wake of the announcement that Universal and SonyBMG are uniting to start a new download service to compete with iTunes (which will offer 75% of all music sold in the US), Doug Morris, Universal Music Group’s CEO, was profiled in Wired Magazine the other day.

Let’s start with my favorite quote from the article: “There’s no one in the record company that’s a technologist, 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?” (quoted from Wired article).

Answer: I would find a veterinarian. The head of the world’s largest record company claims ignorance of the fundamental shift in the entertainment industry over the last decade. I find it interesting that the largest music company on the planet was unable to prepare for the digital revolution. Ignorance may be bliss, but you’re still dead when the falling piano you don’t see hits you.

As if that isn’t ironic enough, Morris goes on to say “We didn’t know who to hire… I wouldn’t be able to recognize a good technology person, anyone with a good bullshit story would have gotten past me.”

Perhaps this is why you have twenty VPs, Mr. Morris. What good is an army of executives if they are incapable of determining who to hire and what to do? Mr. Morris makes it obvious how major labels have destroyed their business model and viability.

For years, Doug Morris has been railing for stringent enforcement of copyrights (the ones his company has been taking form artists for decades), and he was at the source of Universal attacking Yahoo, YouTube, and Myspace for their flippant distribution of corporately owned content. This powerful industry insider has the pull to force companies to give him what he wants: licensing fees, commission on Zune sales; the most powerful man in the music industry calls the shots. And now he’s changing his tune, embracing digital technology. It isn’t for the benefit or convenience of audiences though, it’s an attempt to consolidate the digital realm.

The article discusses how iTunes pulled the wool over Morris’ eyes. Since Universal could not find anyone with a technology background to advise them, they (and Morris) never saw the power Apple’s iPod would have to control the industry. Considering how much music is sold on iTunes, that can only be played in iTunes and iPods, this is probably the first time anyone successfully put the Big Four on the defensive. Major labels had free reign to do whatever they wanted and completely controlled the market, one day they woke up and realized out they weren’t in control anymore. It was a conscious choice not to hire anyone who knew about the internet, and not to adapt to a shifting industry. Controlling massive catalogs and marketing muscle isn’t enough. They want every penny, and they don’t care if we know it.

Here’s another great quote: “It was only a couple of years ago that we said…an album that someone worked on for two years, is that worth only $9, $10…?” People never really understand what’s happening to the artists. All the sharing of the music…Is it correct that people…fill up these devices with music they haven’t paid for? If you had Coca-Cola coming through the faucet in your kitchen, how much would you be willing to pay for Coca-Cola? ….That’s what happened to the record business.” (quoted from the Wired article).

While this is a noble sentiment, in reality artists are not making a ton of money off of these deals, at least to compared to what the record companies reap. While we all want to support hard working artists, it’s difficult to find compassion for a seven billion dollar a year company. Sometimes audiences forget that artists are human beings when faced with the behemoth of major labels squeezing us for every penny they can. It’s even more difficult to feel sorry for these companies that own and control the rights to artists like Jimi Hendrix, Bob Marley, Pink Floyd, Miles Davis, and timeless artists that sell with or without marketing.

Doug Morris started out as a producer and a songwriter. Considering his roots, it’s surprising that he has such scorn for the future of music, and the satisfaction of audiences.

If the CEO of the largest record company on the planet is only interested in a fast buck, and is indifferent to the long term future of the music industry, what hope do the Big Four have?

The article concludes with a picture of Doug Morris’ frustration. Hhe considers his job to be developing new talent, not providing convenience for audiences, or adapting his company to the current environment. The CEO of Universal Music Group doesn’t want to be bothered with the transformation of the music industry. And that is the culture of major record labels. They don’t care whether we enjoy the music we have, or that it’s delivered to us in a format that works. They are merely interested in a fiscal bottom line for this quarter, and controlling the media we have access to.

Now that the Big Four can’t even count on multi-platinum talent to stay with them, the end is near. I’m not sure why Doug Morris allowed himself to be profiled. This article is a clear picture of how major labels have destroyed their own credibility, their business model, and their future.

A special thank you is in order to Wired Magazine and Seth Mnookin for this fantastic article. You have allowed us see the man behind the curtain, and he’s everything we’d expect him to be.

Speak Clearly (Jargon on a Tangent)

Published on December 12, 2006 in Blog. 0 Comments Tags: , , , , , , , , , , , , , , , , , , , , , , , .

Spotted on: New York Times, Globe and Mail
As the end of the year statistics for the music industry are released, I keep noticing a common tone of these articles. They all seem to be written about the six major record labels, and iTunes. As an artist and independent label owner (ergo, part of the music industry), these articles seem counter-intuitive to the way my peers and I conduct ourselves.

“Yet the industry as a whole still remains uncertain” is my favorite quote from this article. What is uncertain about the industry? People continue to buy music they enjoy, and more of them are buying it online. This has made it easier for anyone with ambition to get into the game. The only unclear thing I see is the fate of these transnational conglomerates.

So the major labels finally accept we don’t want to pay more than ten bucks for CDs, and we don’t like DRM. Somehow, no matter how much money these huge companies make, they are continually complaining about what they are losing. If they focus on what’s missing and wrong with their model, it takes the attention off why their model used to work. The NYT article states that ‘some estimates’ put the annual economy of music at around $75 billion. So what does that number really mean?

The music economy is vast, and a huge chunk of it rests in the hands of a few companies. These are the same companies that built their empire by taking the creative ownership over music in an unclear way, or by inventing a myriad of operating fees and loans to assess to artists like student loans. It’s a similar story to how Europeans ‘bought’ Manhattan. You offer someone a gift, or a show of support, and you ask for something. Instead of explaining what you are going to take, you smile and get them to agree to it. Once they sign a piece of paper, you force them to agree to your interpretation of the words through litigation, or worse. In the latter case, it was genocide, in the former, it is the complete monopolization of the music that we listen to.

Musicians have been getting this treatment since the phonograph was invented. Look at the story of the Funk Brothers (for those who don’t know, they were the Motown backup band from 1959-1972). This group of musicians played on more hit albums than any band in music history, and no one even knows who they are (Motown is now owned by Universal, btw). Like so many other extraordinary musicians, fame and success was pushed out of their reach, as the music they created went on to make a fortune.

So where is all that money? If this NYT article is any indicator, the only ones talking are the major labels. Do you think they’re going to present an unbiased opinion? These major corporations are complaining about how much content we aren’t paying for, and how their sales are down, and the whole time they are becoming more valuable companies.
According to a recent Globe and Mail article, there have been about 20 songs sold for every iPod bought. In fact, iPod users are not buying massive amounts of music like people did when CD Players were first introduced. The main source of the article is Josh Bernoff, a well known media and entertainment analyst. In fact, Mr. Bentoff notes that there is a huge slump in music sales in the second half of 2006. People are converting their CDs for use on other platforms. It would seem that people (known as consumers by these corporate monoliths) only want to buy the same product once. And who can blame us?

Which brings us back to the major labels, and the NYT article. The article points out that major labels are now asking for a cut of artist’s tour and merchandise revenue. Apparently, this has become a standard practice in major label deals. So on one side of their face, the major labels are crying poverty, and saying they need to take more from their artists. Yet in the same article, there are admissions that the companies are growing in value. Can you say cognitive dissonance?

Freedom of choice in music is infectious, and the supply has truly outpaced the demand. The days of an album sitting at number one are gone, and this a great thing for those of us who do not have access to mainstream press and media outlets. People buy more CDs when they are reasonably priced, and artists are still selling albums at the ridiculous prices. The major labels cry that they have to protect their interests with DRM, when their customers mostly use more than one format for listening to music. Music is a form of expression that is meant to be shared, not kept to oneself. The technicalities of software licensing and piracy are not applicable to music, and DRM is another way of saying we’re not buying art, we’re buying a product. And worse, that a CD album is different thing that an MP3 album, or even a .wma album. People aren’t that easily fooled, though. Sales reflect it.

Clearly, lots of people are buying music, and most of it is going to the huge companies to dole out as they please. People don’t buy music because it’s on the radio, or plastered in magazines, they buy it because it moves them. Major labels use record spins and downloads as a measure of success, when they are paying for the spins and driving downloads with ubiquitousness rather than genuine interest. Their multi platinum artists bounce up and down their charts like a basketball, and they refuse to see that’s how we want it. They want to tell us what a CD is worth, and tell us how we can listen to our music. These business practices only work when you have a strangelhold. In most other industries, a company is required to respond to their customers needs to stay in business. When your business model is based on dictating people’s choices, it’s no wonder that freedom of choice is such a threat. The means of production continue to only grow, and our choices with them. The 21st century king of the hill is not the only choice, it is the one the customer enjoys the most.

Music doesn’t seem to speak for itself anymore in their eyes. These companies view artistic output in the same way they view the final result: as a product. Their industry trends are an academic discussion that has completely left the real world. They could have conducted an informal phone poll to come up with the conclusion that CDs are overpriced. Record shoppes are paying more than the iTunes price for an album in some cases. The real issue is what people are willing to pay for, and to deal with that, you must listen, not dictate.
2006 is coming to a close, and the very foundations of how music is distributed and sold began a major transformation this year. According to Josh Bernoff, we’ll all be going digital by 2010. The major labels are slicing up the pie already, but in the age of choice, they may end up with empty plates.

If Content is King, Who Gets the Treasury?

Published on November 20, 2006 in Blog. 2 Comments Tags: , , , , , , , , , , , , , , , .

Spotted on: Digital Music News

Universal Music filed a lawsuit against MySpace at the end of the day on Friday.? The lawsuit claims that Myspace is allowing their users to violate copyrights, in order to make a profit off of it. The suit also claims that MySpace encouraged copyright infingement. The suit even goes as far as suggesting that MySpace owes their success to using this same material.

Myspace asserts that they are in full compliance with the Digital Millenium Copyright Act, which protects web sites from the copyright violations of their users, as long as they act fast when a rights-holder complains. Not to mention the fact that Myspace is a social networking site. The same thing accusations were thrown at YouTube shortly before they signed a deal with some of these major rights holders.

All links and cross-references aside, MySpace, YouTube, and even Universal are owned by huge corporations. The thing I find most interesting about the lawsuit is the part that says “UMG owns copyrights in thousands of sound recordings, including many of the most popular and well-known sound recordings in the world.”

So the soap opera continues, and somehow, the more I read, the less it all makes sense, or even seems to matter. How can a few dozen companies appear to own all of this fantastic music, movies and TV shows, and pass back and forth billions of dollars? Perhaps the real question to be asked is how just a few companies can own and make all the money off of this huge catalog of popular art.

Art, and especially music, are powerful because of the emotions they evoke, and have different values to different people. As the value of music continues to tank, these major music companies seem to striking more and more deals where major media corporations and websites are paying huge lumps of sum to each other. Money flows from Google to YouTube to Sony BMG to Viacom and around and around. Where exactly are the rest of us in all of this? Where is all this money going? If Universal won $400 million dollars from MySpace, how much would they pay to the artists?

To put it more simply, huge amounts of these catalogs were created by people who have left this world, or who are getting pennies out of billions of dollars that changes hands. The day of the post-major label is finally dawning. The age of the distributor.? Long Live D.I.Y.

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