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How Universal Music lost touch with their customers

There's a good read in this month's issue (15.12) of Wired Magazine about chairman and CEO of Universal Music Group, Doug Morris.

Wired Issue 15.12 cover

There's a good read in this month's issue (15.12) of Wired Magazine about chairman and CEO of Universal Music Group, Doug Morris.

Universal's CEO Once Called iPod Users Thieves. Now He's Giving Songs Away pretty much paints Morris as a technology luddite who's lost grip of what his customers want. Now he's crying about missed opportunities and taking every opportunity to bury Apple.

He publicly blasted MP3 players as "repositories for stolen music" and moans "an album that someone worked on for two years — is that worth only $9, $10, when people pay two bucks for coffee in Starbucks?"

He dreams about simpler days when customers gobbled up super-profitable CD and complains about how technology left them behind.

Morris insists there wasn't a thing he or anyone else could have done differently. "There's no one in the record company 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?"

The author, Seth Mnookin, then has his best line in the article:

Personally, I would hire a vet.

Going on...

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' almost willful cluelessness is telling.

Morris is clearly no boob.

The August issue of Blender magazine ranked him fourth on its Powergeek 25 mostly because of Universal Music's successes, including:

  • Selling select MP3s DRM-free but watermarked (via Amazon, Best Buy and Wal-Mart, natch)
  • Licensing deals with Yahoo and YouTube
  • Exacting a dollar-a-Zune ransom from Microsoft
  • Success in selling ringtones, and
  • Developing a new music subscription service called Total Music.

Realizing that he and the rest of the music labels missed the boat on the golden opportunity that is digital music, he's determined to unseat Apple and iTunes.

In July, reports surfaced that Universal would not renew its sweeping contract with Apple. From now on, Morris said, UMG labels would selectively choose which songs (or albums or artists) were sold on iTunes, rather than granting blanket access to the entire catalog. Then, in August, he announced the plan to offer DRM-free tracks through non-Apple retailers. Finally, in October, details about Total Music started to trickle out.

Morris and the greedy music labels are grasping at straws and his attempt at entering the digital age of music seem almost desperate. If Total Music gets traction and Universal and company can convince the hardware manufacturers to pony up the cost of the music subscription (like he envisions) he may be onto something. "After all, why buy an iPod if a Zune will give you songs for free?"

Total Music is another reason that Apple would be foolish not to be developing a music subscription service.