There May Be Hope For The Recording Industry, Yet

from the let's-wait-and-see... dept

As noted, I'm at the Leadership Music Digital Summit to give a keynote talk tomorrow. Today's keynote is from Rio Caraeff, the executive VP of the eLabs group of Universal Music Group. Listening to his talk, it's impressive to see that it appears someone within Universal Music Group actually seems to understand what's going on. That may seem a bit dismissive of Universal Music Group, but it's not my assessment, but what the CEO of Universal Music Group flat out said just a couple of years ago, in noting that he had absolutely no clue about digital music and didn't even know how to hire the right people.

Caraeff, however, seems focused on all the right things. He talked about how access to music is more important than possession. He talks about how it's the experience that has always made music valuable, noting "you can't steal experience." In fact, he points out that the concept of the album is dead, but that UMG (and others) need to build a true "living album" that goes beyond the music: adding a full experience that can update over time, that allows fans to access the music however they want, and that enables interaction with that music -- including fan participation and user-generated content associated with the music. And he wants it all built on open standards, to avoid a situation like the Blu-ray consortium where only a few companies have control of the system.
"How do we compete with piracy? It's creating a unique experience that can't be easily replicated through file sharing."
He then goes on to say that the business of "licensing music" is a dead end because it's just not scalable (whoo hoo!) noting that it's killing innovation. Even saying that they need to acknowledge that they need to enable letting a thousand innovators bloom.

He did admit that the team at UMG is still struggling to figure out the best way to make money in this new world -- but he recognizes this is where things are going:
"I'd rather have access to all my music, tv shows and movies anywhere on any device, rather than "own" 100 files. This is going to be a swift transition. It's taken us less than 10 years to go from plastic discs to digital files. It will take 5 years or less to go from digital files to cloud-based services, which will make the music even more valuable."
This is all good news. It's someone who clearly recognizes the shift that needs to be made by a major record label. But, the real question is how much influence he actually has at Universal Music Group. We've seen similar recognition among employees at other record labels, including Warner Music and EMI -- but the "top management" at both of those firms has continued to go in the opposite direction, focusing on stomping out innovation, rather than encouraging it.

Unfortunately, this may be a real issue. He did admit:
"Universal Music is a big company and not everyone there is on the same page, but I was put into this job to make these changes. Turning a big ship around is slow. It's not a lack of desire, but it's a question of when not if. A lot of what I do is talk and evangelize to others within UMG to try to raise the consciousness level about where our business is going, to bring us to a path to growth again. It's not about how do we stop the decline of our business, but to find another billion dollar business for us. I'm not interested in how to I sell more MP3s on Amazon or to create new competitors to iTunes. That's important, but that's not going to transform our business. It's difficult in the day-to-day grind to turn a big company around, but it starts with passion. Passion sells. This is how it works."
It's great to see some optimism coming from within one of the major labels, recognizing all of the opportunities out there. Hopefully, it actually leads to something useful.

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  1. icon
    Geoffrey Kidd (profile), 24 Mar 2009 @ 11:23am

    Trust is the real issue

    1. Music companies have traditionally ripped off both the musicians and the customer by "cradle to grave" control of the music. They don't trust either of them not to steal their rice bowl.

    2. Both musicians and the public have returned the favor.

    Let me express this as an example from my own life. I'm currently trying to thin out the physical artifacts of my life: cassettes (remember them?), DVDs, VHS tapes(remember them?), etc. etc. It would be very nice indeed if several terabytes of data were somebody else's professional headache for storage/backup/safety etc. and all I need is a couple of portable gadgets (or a desktop and a PDA, both replaceable at whim with new gadgets)plus the network, in order to have my video/audio/book library with me wherever/whenever I want it.

    Given guaranteed access to the contents of those artifacts, do I really need to care where they are or what form they take, as long as I can listen to/read/watch whatever I've paid for when I want to and where I want to and how I want to with pretty much the same reliability we take for granted with power, gas, and water supplies for our homes. The bottom line is, the user must have a sense of control over the above when/what/how, or they cannot claim "ownership" of any of it.

    However, as things are, unless you have in your possession and control a physical artifact(cassette/CD/DVD/flash drive/hard drive) that access is not guaranteed.

    Now, unless I can trust the entertainment industry to provide that level of access, no such thing is possible. But as far as I can tell, trust requires two conditions to exist:

    First, you must be able to verify the results of trusting. For example, if I loan my lawnmower to a neighbor, I can check whether and when he brings it back, and just what condition it's in when it's returned.

    Second, the relationship in which trust is expressed must be (reasonably) symmetric, in the sense that if trust is violated, the two parties involved have reasonably equal measures to punish or deter that violation.

    Now I can verify whether or not I have access to "my" content. But does anybody have any suggestions for just how one individual can hale the MAFIAA into court and expect that a demand for justice will get answered without being eaten alive by $1000/hour sharks?

    Right now, books/DVDs etc are "pay once, access always." Trust was unnecessary for them because you pay for the artifact and it's yours. Nobody has any idea as to how to duplicate that with network-based content.

    Until the conditions above are met, the MAFIAA will continue down the path of war on their customers, and we the customers will return the favor.


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