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.

Filed Under: access, experience, music, music business models, rio caraeff
Companies: universal music

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  1. identicon
    Dave, 24 Mar 2009 @ 1:19pm

    Re: Re: Trust is the real issue

    That's part of it, but there is another factor. The music industry and film industry want to move to the licensed content idea like the software industry did.

    they don't want to have to invent a new format to make you repurchase your music. They just want multiple revenue points for the same product. That's not an industry that's trustworthy (much like the software industry) as at any time, they can change the rules and force you to re-purchase that what you thought you would have eternal access too

    As long as that's the case, any model that removes my right to have a physical (or digital) copy of my media that I have full control of isn't one that's going to work in the long run.

    Like it or not, iTunes works because you have control of the file. And, if iTunes vanishes one night, and your AAC+ files are locked, there will be lots who can help you re-access the music. That won't work if the cloud closes and you've paid for a year's access.

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