Slouching Towards La Brea

According to legend, technology giant Bob Metcalfe was once reportedly asked whether the old monopoly telephone companies were evil or just stupid. Metcalfe’s response: “Why can’t they be both?”

Metcalfe’s riposte could clearly apply to the lumbering dinosaurs of the old record companies. Get a load of this interview with Vivendi Universal’s CEO, Jean-Bernard Levy, who first opens fire the record cartel’s only serious source of income in the digital realm:

The split between Apple and (music) producers is indecent … Our contracts give too good a share to Apple.”

Hmm, well, Steve Jobs does have a reputation for driving a hard bargain. Maybe he just doesn’t allow the poor old record suits to keep enough of the income from iTunes sales. Say, just how much is that split worth, anyway?

At present, UMG, the world’s largest record company, gets 0.70 euro ($0.99) out of the 0.99 euro retail price charged by iTunes, Vivendi said.

So, let me get this straight, Jean-Bernard. You’re on the heavy end of a 70-30 spilt with the one company that keeps your products on the Internet from being 100% pirated, and you think you’re getting a bad deal? Where did you learn how to do business? Elementary school?

Oh, wait, I forgot. He’s French. But let’s resume:

Fleshing out UMG’s strategy, Levy said it planned to focus on better exploiting the “monetization of an artist’s image” which included branded clothes and TV shows.

“This is what we hope will revive our business,” Levy said. “People indulge in piracy but spend a lot of money on many other things that are linked to an artist.”

Stop and read that again. Go ahead, I’ll wait.

Back now? Good. Now think for a minute about just which “artists” are going to agree to be “monetized” by record companies. You got it–talentless bubblegum pop stars, and that’s the future strategy of one of the biggest media conglomerates in the world: market craptacular American Idolware from no-talent pin-ups to thirteen-year-old girls.

Music? Forget about it. You guys and gals who’ve spent all that time actually learning how to play instruments and write songs? Sorry, not monetizable. We don’t get a big enough cut to worry about selling music. We’re in the t-shirt business now–but we’ll still flatter ourselves by pretending that we promote “artists.”

Stupid. And pretty evil, too.

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5 Responses to “Slouching Towards La Brea”

  1. Stephen Green Says:

    Levy’s honesty is almost refreshing — and would be, if he weren’t simply admitting what’s been an open secret for the last eight or nine years.

    When Britney came along — around the same time as Napster — the record companies stopped making albums. Find someone pretty and a good producer to jack up a couple of tracks. Then make eight or nine filler (ie, crap) songs, and, presto, you’ve got an album.

    Problem was, consumers didn’t want to pay $15 bucks for mostly-crap. But we’d sure as hell take a song or two for free off of Napster.

    The iTunes Store could prove to be the music industry’s salvation, but only if they’d learn to stop crapping all over Apple, their own artists, and most importantly, us.

    Odds of that happening? About the same slim chances of Ms. Spears making another comeback.

  2. NukemHill Says:

    Oh, Brittany will make her come back. The record companies growing up? Eh. Not so much.

    I’ve been an Apple fan since the Apple II, way back when in the dark ages of computing. It’s been an extraordinary roller coaster ride, especially of late. Watching Jobs play multiple industries like a well-tuned fiddle has been simply delightful. But, unfortunately, I think the industry bigwigs are feeling played. Even though Jobs really has been thinking long-term and working to open an industry up that desperately needs his leadership and vision.

    Many people have been complaining about the restrictive rights on purchased songs and videos from the iTunes Store, or about the lack of high-def quality video, etc. The thing is, he’s doing everything he can. He ultimately can only offer what is made available to him in the first place, and the industry execs are terrified of him. And justifiably. If he gets his way, they’re dead.

    My biggest concern (from a purely selfish, stock owing perspective), is that more of the record companies are going to walk away from the iTS, and Apple’s going to lose some major leverage. I think that would be a serious (though not fatal) blow to Apple. But ultimately, it will be a bigger blow to users.

  3. rbj Says:

    “Levy said it planned to focus on better exploiting the “monetization of an artist’s image” which included branded clothes and TV shows.

    “This is what we hope will revive our business,” Levy said.”

    Monetization will revive the business? Wow. I would have thought that focusing on good music would be the highest priority. I am willing to pay for good music even if I could pirate it for free. What I don’t like are mouth breathers like Levy here, who basically are parasites living off of the actual artists.

    Now, not all parasites are bad, and bands do need managers, perhaps a PR person etc. But the focus has to be on music, not branding clothes.

  4. Brant DeBow Says:

    You guys forget to mention the most disturbing part of “monetization of an artist’s image” – the fact that the record company will now be making artists sign over yet another piece of money making. Sign with them and they own your songs, they own your albums, and now they even own your identity. True, as pointed out, this will mostly be bubblegum pop artists, but how likely is it that they won’t be requiring this from normal artists as well?

    All of which raises the question, does the record company bring anywhere near a net positive to the table? It’s not too far off (already here for some) that an artist could forego getting signed and make enough money promoting their own work while retaining all the rights to it. I’ve long expected Apple to open up iTMS to allow any artist to sell over it, and once they do, who needs a record company?

  5. Will Collier Says:

    I got a good laugh a few weeks back when one of the record company suits floated the idea of performers signing over half their live performance money to the labels.

    Yeah, THAT’ll happen. About the same time the artists get accurate sales accounting from the labels.

    The record companies are doomed. It’s just too easy to self-publish now.

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