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November 27, 2007

Nothing brings commentary like Universal Music Group's Doug Morris talking about his company's failure to grasp changes in technology. In an interview with Wired's Seth Mnookin, Morris painted a picture of confusion at the onset of the digital age.

"There's no one in the record company that's a technologist. 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? We didn't know who to hire. I wouldn't be able to recognize a good technology person — anyone with a good bullshit story would have gotten past me."

At the Huffington Post, Howie Klein, founder of Reprise Records, countered by recounting how his desires to sell DRM-free music by the track was rebuffed by executives:

"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 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. ...

Our proposal, after lots of corporate headscratching, hummimg and hawing, was denied."

Silicon Valley Insider actually showed some empathy:

"What music label boss did have a working crystal ball in 1999? And while we're waiting for your answer, another request: Please tell us -- which one gets it now? And one more: Say you run one of the major record labels today, so you still make the majority of your money selling compact discs. How do you transition to the digital future, where people buy songs for $1 (if you're lucky) instead of albums for $10?

This last one is most interesting to us, because we've been watching the music business shrivel for 10 years, and we're not sure what other route the major labels could have (realistically) followed."

While acknowledging its mistakes and its failure to follow up legislation and lawsuits with anything of substance, I agree with the "Who had a crystal ball in 1999?" argument. Nobody -- from the biggest to the smallest label, to the book to the movie industry -- would have welcomed Napster with open arms, dropped DRM and overhauled copyright law in a few short years. Not that the industry hasn't shot itself in the foot on occasion, but it was destined to have plenty of mistakes from which everybody could learn.

New York Magazine came in with the worst take: "We give this industry six months to live."

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Posted by Glenn at 8:24 AM | | | Universal Music Group