Universal Music CEO Still Doesn't Believe In The Promotional Value Of Music

from the how-does-this-guy-stay-in-charge? dept

A year ago, we were fairly shocked at an interview with Universal Music CEO Doug Morris. The guy gleefully explained how clueless he was about technology, and said that he didn't even know enough to hire people who could properly guide him to understanding how technology was impacting the music industry. Furthermore, he displayed an ignorance of basic economics and basic finance at the same time by insisting that any sort of promotion that might pay back tenfold at a later date was bad business because it meant someone was "taking advantage of you." Yes, apparently, the idea of spending a dollar today to make back ten next year makes no sense to the CEO of a large company. We wondered how Universal's shareholders could possibly let someone so gleefully clueless continue to run the company.

Apparently, he's still at it, and still not afraid to open his mouth and expose his ignorance. In Morris' latest interview he insists that the company doesn't believe in promotions, but wants to get paid for every single use of its music:

"We don't look at anything as promotion. Take a look at MTV. It turned out to be a disaster for us. We sold some records, but they built this huge company and we gave them our (music) for nothing, and what did we get?"

If this sounds familiar, it's probably because fellow big record label boss, Edgar Bronfman recently used the same fallacious logic in claiming that video games like Guitar Hero and Rock Band were getting all the benefits from Warner Music's bands, without giving anything in return. In both cases, you have content providers who are significantly overvaluing the content, while significantly undervaluing the way that content is used. In this case, notice that Morris is admitting that MTV actually did help Universal sell more records. So what's the "disaster"? It's that another company, MTV, also got big. As we recently explained, this psychological phenomenon is seen throughout the big record labels. They care less about their own absolute success than they do about their relative success compared to others. They would prefer that they actually bring in less money for shareholders, as long as it means other companies do even worse.

I guess I can understand that, as a record label boss, you might overvalue the content, but to insist that there's no value in promotions -- even when there's increasing economic evidence that such promotions can greatly expand your market (at a time when your old strategy has resulted in a rapidly diminishing market) screams of corporate malfeasance. It makes you wonder what Universal Music's parent company, Vivendi is thinking. Are Morris' bosses just so impressed with the fact that Morris once wrote the song "Sweet Talk Guy" that they let him sweet talk them into letting him continue to run the company into the ground?

22 Comments | Leave a Comment..

Innovation Isn't Dying In Silicon Valley; It's Just Changing

from the change-is-good dept

Apparently Judy Estrin, a well-known Silicon Valley tech entrepreneur and exec, is coming out with a new book warning that the infrastructure needed for innovation in Silicon Valley is going away. The complaint basically appears to be that there's too much emphasis on the short-term, with companies focusing on the quick flip rather than the long haul trends that need to be satisfied to drive real innovation.

I can absolutely understand where this is coming from -- but I think it's wrong. There absolutely are a bunch of folks in Silicon Valley who are focused on the quick flip and the easy cash out. Those folks have been around for a while. They get a lot more attention in the boom years, and during the down cycles you see them fleeing for somewhere else. But that doesn't mean that the overall culture of innovation is in trouble.

In some sense, the argument sounds similar to the complaints we hear from long-time journalists bemoaning bloggers, or professional television producers whining about YouTube. The tools of innovation have changed the marketplace, allowing many more entrants -- and not all of those entrants are all that serious about it, or even that good at it. So, there's a ton of crappy blog content, and millions upon millions of videos that would never, ever show up on a television. Yet, there are also plenty of gems exposed by these systems that would never have come out otherwise.

And the same is true for innovation culture in Silicon Valley.

The "tools" for creating a startup make it easier and cheaper than ever before to simply throw something up and see if it sticks. And, yes, much of it is terrible -- just like plenty of online content is terrible -- but out of that some great stuff evolves. The fact that there are plenty of short term thinkers just throwing stuff quickly at the wall isn't necessarily bad for innovation -- it just means that innovation is taking a slightly different path. There are plenty of folks in Silicon Valley still thinking about the long haul, and looking at the trends and understanding them. But the ability to throw something up and see if it sticks is valuable as well, as it allows a lot more testing of ideas in the real world, without having to make huge initial investments. That isn't to say that short-term thinking is a good thing. It's not. But some folks doing short-term thinking doesn't preclude others from using those lessons to build real long-term innovation.

11 Comments | Leave a Comment..

Rogers Deliberately Disables Notifications Of Roaming Charges

from the how-customer-unfriendly-of-them dept

With the news coming out this week that mobile operator Rogers was finally bringing the iPhone to Canada, almost every Canadian comment on it had something to do with just how badly everyone expected Rogers to rip people off with the iPhone. Apparently, Rogers has quite a reputation -- and it appears to be well deserved. Rob Hyndman points us to a story about the ridiculous roaming charges for those who use a Rogers device outside of Canada. Ridiculously high roaming charges are nothing new, of course. They happen to everyone, unfortunately. What's stunning, though, is that the reporter gets a guy at Rogers to admit that the company demands that all of the mobile devices it offers disable any feature that lets you see how much you've racked up in roaming charges. In other words, they know they're ripping you off -- and they want to make sure you don't realize by how much until it's too late.

If ever there were a short-term strategy, this would be it. This decision most likely "gets" some travelers the first time around (as it got the reporter in the article). However, it then pisses off those users such that they'll never use Rogers mobile phones out of the country ever again. In fact, I'd bet that many start looking at other options entirely. It seems like a plan designed to drive away customers, just for a short one-time ridiculously high charge. There are certainly companies out there that believe an informed customer is a bad customer, but those companies will often find that's not a particularly good plan to stay in business over the long term.

23 Comments | Leave a Comment..