updated 04:40 pm EST, Tue November 27, 2007
Universal on Music, Apple
Universal Music Group has been slow to acknowledge technological change and has been ensnared by the "golden handcuffs" of Apple's music efforts as a result, says the music label's chief Doug Morris in a newly published interview with Wired. The executive observes that Apple approached Universal for signing on to 2003's iTunes Music Store at a time when the latter was desperate to find a successful online music sale model and was willing to take a risk on the iTunes operator, which promised minimal damage due to its small computer marketshare and the lack of a monopoly on digital music players at the time.
But by insisting on copy protection and then allowing Apple to use a proprietary format, Universal inadvertently became dependent on iTunes for success, Morris says. The music provider cannot pull its tracks from Apple's catalog without losing a large portion of its revenue, particularly in the US.
"There's no one in the record company that's a technologist," he states. "They just didn't know what to do... We were just grateful that someone was selling online. The problem is, [Apple chief Steve Jobs] became a gatekeeper... We would hate to give up that income."
This largely confirms beliefs that many of Universal's recent moves in online music sales have been an attempt to reduce the label's dependence on Apple and re-balance online music's marketshare, giving Universal greater leverage over prices and special deals. The company in recent months has dropped its long-term contracts with Apple in favor of month-by-month services and is allegedly developing an experimental service called Total Music that will build music fees into phone subscriptions and music player purchases, providing content from multiple major labels entirely outside of the iTunes and iPod ecosystems.
Microsoft's agreement to pay a $1 royalty to Universal for every Zune sold is an early example of the business model in action, according to the interview.
Written, edited and compiled by Jeff Smith.