In a week in which Radiohead released non-DRM digital files of its new recording, In Rainbows, for whatever price consumers felt obliged to pay, and Madonna and Nine Inch Nails both announced they were going to release their own music without help from record labels, two of the big four labels had drastically different reactions to the new realities of music distribution.
Universal Music Group (UMG), which discontinued its annual re-registration with Apple's iTunes Store in July and began offering non-DRMed digital downloads through iTunes' competitors, announced that it will offer a music store of its own, Total Music. Total Music would revolve around personal digital players (PDPs) that were Total Music compatible (and presumably not iTunes compatible). The new PDPs would receive "free" subscriptions to all the music they could download.
The trick is that "free." Slipperybrick.com points out that participating Total Music partners would, in reality, roll the cost of Total Music's monthly subscription into the initial cost of the players, projecting that, if one assumes an 18-month lifespan for the player, the price would be boosted by $90 over that of a similar non–Total Music device.
At the moment, other details of UMG's plan are hazy. SonyBMG has committed to participate, but Warner has not—yet. No word on DRM, although if the contract is tied to the player, presumably the files would not be transferable—which leads to other questions, such as whether consumers would still "own" the music if they lost their PDP or it broke.
We'll refrain from judging before hearing all the facts, but we're not sanguine that Total Music was conceived for music consumers—although we'll freely admit that it will be great for the labels.
Industry reaction has been mixed to say the least. At Digital Daily, John Paczkowski opined, "The per-device royalties Universal Music Group receives for every Zune player sold were apparently substantial enough to buy CEO Doug Morris a bigger set of balls, because he’s out drumming up support for an industry-owned subscription service with which he hopes to loosen Apple’s grip on the digital music market." Paczkowski mockingly dubbed the program "Total Panic." Gartner Research analyst Mike McGuire, on the other hand, said, "If the object is to wrest control of the market from [Apple's] Steve Jobs, this is a credible way to try it."
As for Jobs himself, he said, "Doug’s a very special guy. He’s the last of the great music executives who came up through A&R. He’s old school. I like him a lot."
We bet he does—Apple has been very fortunate in its competition.
EMI's reaction was revealed through a leaked memo from CEO Guy Hands to the label's staff. "While some recorded music executives and other firms have expressed shock and dismay at this development, it should have come as no surprise. In a digital world, it was inevitable that a band with the necessary financial resources and consumer recognition to be able to distribute their music directly to their fans would do so. Radiohead is one of the most iconic, original and successful bands in the world, and one of the few with a fan base large and devoted enough to support the costs of such an initiative."
Hands pointed out that unsigned and unknown bands would still need the marketing clout of a label. However, he also said that record labels needed to act more like music publishing companies than dry goods sellers, providing musicians "multiple opportunities for distribution of their product in order to maximize copyright fees and royalties."
Hands concluded the memo: "The recorded music industry, while seeking to develop some of these services, has for too long been dependent on how many CDs can be sold. The industry, rather than embracing digitalization and the opportunities it brings for promotion of product and distribution through multiple channels, has stuck its head in the sand. Radiohead’s actions are a wake-up call which we should all welcome and respond to with creativity and energy."
Did we just hear paradigms shifting?
