Perhaps this is relevant to a current thread.
Carrol
-------- Original Message --------
Subject: Howie Klein: How To Destroy A Profitable Industry In Just A Few
EasySteps
Date: Thu, 29 Nov 2007 09:35:31 -0500 (EST)
From: [EMAIL PROTECTED]
To: [EMAIL PROTECTED]
How To Destroy A Profitable Industry In Just A Few Easy Steps by Howie
Klein
Posted November 26, 2007 | 06:39 PM (EST) huffingtonpost.c
New York's "Vulture" section comes to the correct conclusion about the
music biz -- but for the wrong reason. In commenting on the Wired
profile of "Universal Music Group CEO/supervillain Doug Morris," the
folks at "Vulture" have a yuck-fest over Morris' inability to come to
grips with modern technology. I only had one real talk with Morris in my
life. The Warners Music Group was in complete turmoil, beginning a
really ugly death spiral that he insisted I buy into by going to work
for a lackey of his. I refused and Morris was coincidentally fired soon
after -- the lackey not long after that. Instead I wound up as president
of Reprise Records.
When AOL bought TimeWarner I was one of the only happy campers at the
company. Naively, I thought AOL was a visionary technology company which
would help us grapple with the problems and opportunities inherent in
file sharing. And Steve Case and his cronies were visionaries, but the
vision wasn't grappling with anything except how to drain TimeWarner of
as much of its value as they could get away with. He got away with a
lot.
Meanwhile, some of us at Warner Bros decided to take matters into our
own hands and look for our own solution. "Vulture" quotes Morris, who
went from heading the Warner Music Group to heading Universal Music,
lamely explaining why the music business failed to take advantage of the
new technology that was leveling so many music business playing fields.
At the time most record company bigwigs had contempt, fear and disdain
for computers. Many of my colleagues told me they had never touched one
-- the way Judge Judy and Larry King were bragging the other day how
they still haven't done so -- and one major record group chairman said a
computer is just a newfangled typewriter and that's what secretaries are
for.
Years earlier one of my promotion men had helped me out at my little
indie label by teaching me the DOS system and showing me how computers
could make my life easier. By the mid-90s he was running Reprise's and
then Warner Bros Records internet initiatives. He built the first label
driven web development team and server farm promoting our artists, which
later also led traffic stats for all of Warner's online properties. The
Chairman of Warner Bros and I sat down with him and went over what we
thought needed to happen to make the Internet a real part of our
marketing and promotion strategy. He came up with a system which we
brought to our corporate overseers. Here's where the Doug Morris quote
comes in:
"There's no one in the record industry that's a technologist," Morris
explains. "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?"
Personally, I would hire a vet. But to Morris, even that wasn't an
option. "We didn't know who to hire," he says, becoming more agitated.
"I wouldn't be able to recognize a good technology person -- anyone with
a good bullshit story would have gotten past me."
Morris may not have known what was going on, but at Warners we clearly
understood the value and opportunity of the internet as a marketing
vehicle to connect directly with music fans, circumventing the
"gatekeepers," particularly MTV and increasingly expensive and corrupt
corporate radio. As we were realizing and taking advantage of the huge
efficiency and power of this medium, we also clearly observed the
beginnings of illegal music file trading and distribution by fans -- and
the ramping up of the demand for music delivered over the internet.
We viewed this "threat" as an opportunity. Not an opportunity to sue
teenagers and/or their parents, but a new opportunity to let people
purchase their music the same way they do at record stores. We didn't
assume everyone wanted to be pirates, crooks or wanted to rip off their
favorite bands -- we just assumed that fans of new music would be hip to
new technologies -- it's kind of inevitable and luddites always lose in
the end anyway; people crave convenience.
We proposed to our corporate masters that we sell "unprotected" MP3
singles at a reasonable price-- $1/$1.50. We wanted to experiment and
see if this model would stick.
Why unprotected? Because we were already in a vastly successful business
of selling unprotected digital files: CDs. If people wanted to get them
on the internet -- they should be coming from us... that would be the
future of the business: an evolution of the day's success.
The short term test was to give people a choice -- an alternative to
piracy.
Our proposal, after lots of corporate headscratching, hummimg and
hawing, was denied. The technology people Morris was complaining about
said it was "elegant" but that they were "unprepared to set any
precedents."
The corporate "expert's" recommendations:
- All digital content needed to be locked down with DRM so people
couldn't pirate it. (This made no real sense because the mass-produced
digital content on CDs were all out there-- and paying all our the
salaries.)
- We needed to wait and try to develop a secure proprietary solution.
One that didn't exist yet; one that didn't allow music fans to burn CDs
they could listen to on audio equipment; one that talked only to DRM
portable devices that didn't exist (or at least have the slightest
consumer interest).
- If we did this we would resell the catalog and squash piracy moving
forward.
So what happened?
They aggressively sued music fans.
They didn't give connected music consumers any alternative to piracy.
www.rockrap.com
