Is Universal next?

Dow Jones sold out to Rupert Murdoch because it didn't have an adequate
plan for the future. No way to compete with the behemoths on the Web.
Oh, they had a pay site, with little reach, in a world where YouTube
goes from obscurity to ubiquity overnight. Where MySpace garners
millions of views and instant profitability with a Google ad deal. All the
brass at the "Journal" could do was turn out a damn fine newspaper, in
an era when newspapers are dying.

It's not a secret. Advertising is falling precipitously. Youngsters
are getting their news online. In our lifetimes, there will be no
physical paper delivered to the door. It's as inefficient as shipping CDs
to retail outlets and schlepping same around to listen to. We want our
news all the time, with us, just like we want our music. A concept
that the music industry is still wrestling with.

The "Wall Street Journal" was worth more to Murdoch than the Bancrofts.
How long until Universal Music is worth more to a third party than
Vivendi? Not long.

Oh, it would be great if Universal, which rules the business with an
iron fist, figured out a way to monetize online delivery. But for now
they're just insisting on copy-protected tracks and refusing to authorize
file trading. You had to buy the paper to read it, but now anybody
can visit a Website. The potential audience for what Dow Jones offers is
gargantuan. But oppressed by an antiquated vision, the stewards of
the company just couldn't adapt to this new paradigm. As their brethren
at Universal have to.

And it is all about money. And the value of record labels is not going
up, rather down. Checked Warner's stock price recently? How long
until some financier grabs Universal at a fire sale price and uses its
assets as a component in selling something else? If you're Chevron
Texaco, you don't need to charge for music, you can just give it away as a
premium with overpriced gasoline, you can use it to build market share.
Or the next competitor to Google. Maybe MSN. How could it leverage
Universal's assets to compete with the search behemoth? Microsoft's got
the money. And it understands the landscape better than Doug Morris or
Zach Horowitz. As for Jimmy Iovine, he's just an employee, not an
owner. A star reporter, not a man with game. His fortune is a pittance
compared with that of the corporate titans. And money rules. Even
Jimmy knows this.

It's not only the "Wall Street Journal". The "Los Angeles Times" is a
shadow of its former self, cutting sections seemingly every month.
Even the vaunted "New York Times" has financial problems. There are
rumblings in the financial community that the family has to give up control,
before it's too late.

Is it too late in music?

Warner has been cut to the bone. EMI has consolidated and is now being
sold. Columbia is being rebuilt, seemingly from scratch. And what is
the plan? To get more rights from the acts to make the numbers work,
while offering less in return? It would be one thing if you got a
better deal for giving up a piece of your road income, but that's not the
case. You're just being raped by an industry in the throes of death.

The major labels made music free. Not the consumer. The major labels
refused to license the original Napster. They sued their customers and
new P2P operations to keep their business model. As Wal-Mart stocked
fewer SKUs and indie retail shops kept going out of business. And got
angry with Steve Jobs for coming up with a way to make some money
online. They're like the high school faculty, scolding the student
population, which is soon going to graduate and inherit the earth.

We've got a music television network that doesn't play music. We've
got a consolidated radio world that sees the tunes as subsidiary to
commercials. Satellite radio has been mismanaged, is too expensive and
doesn't work as well as an iPod. And the labels want to kill their
saviors, like Web radio. Isn't that an axiom of the business? People have to
hear music in order to gain the desire to buy it?

There's no way out of this without revolution. A complete rethinking
of the way music is created, sold and marketed. The business props up
the album, as if it's sacrosanct, while teenagers only desire the good
stuff, which they want to pick and choose. The transaction must reflect
reality. A lot, easily acquired, for a little. Growing a larger pot
overall. Make it even easier than P2P to get it. And have everybody
own it. Where are those solutions?

Oh, blame the publishing companies.

But suddenly, the labels have become the publishing companies. That's
what supposedly makes Universal dominant. But it just makes it a
better takeover target. Guaranteed, low overhead income.

Dow Jones' value stagnated for years. To the point where its owners
were ripe for a preemptive offer. Can you say Universal?

Just call Vivendi. You'll find the lines are open.


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"We've got a music television network that doesn't play music. We've
got a consolidated radio world that sees the tunes as subsidiary to
commercials. Satellite radio has been mismanaged, is too expensive and
doesn't work as well as an iPod. And the labels want to kill their
saviors, like Web radio. Isn't that an axiom of the business? People have to
hear music in order to gain the desire to buy it?"

This is a great paragraph that sums up the current corporate music world quite nicely.

P.S. - Hope I don't get sued for reproducing that for the context of my comment