Beating Apple requires big thinking, but not this big

Doug Morris, head of Universal Music, the most powerful of the four major record-label groups, thinks he has a plan to reclaim the music industry from Apple, maker of the iPod and iTunes. There are scant details and the plan is in flux, but the basic idea, dubbed Total Music, is this: All of the studios will pool their content for online distribution and share in the revenue. The service will be a subscription subsidized by any form of provider: device manufacturers, music stores, cellphone carriers, whomever. The consumer doesn't have to pay for a music service because it's baked in, the music industry finally gets the revenue stream that they've been missing. But we're skeptical.


Not because Apple's position is unassailable. Not because the music studios are lethargic and notoriously bad at building technology — never mind technology that can reach every platform and device and properly share revenue amongst all artists and labels involved. There are more fundamental problems.

The first problem is thinking that consumers will see this as free and embrace it. Cell-phone carriers, Internet providers, and gadgetmakers are expected to bake the subsidy into the cost of what they are providing. The users, who haven't taken to paying for their own music subscriptions, will see this for what it is. Devices keep getting cheaper. Consumers won't pay extra for an MP3 player, particularly if they only want to play the music they already own. A $5 increase to a monthly cell-phone bill will clearly come across as an additional charge. Users are also likely to have more than one device or service with these additional fees attached. Won't they, inevitably, see this as the music industry double- or triple-dipping?

Secondly, the entire cost burden is placed on the providers. Morris hopes they'll happily accept this arrangement because they'll see the benefit of increased sales. But if every device and service can provide the offering, why would any one player see increased sales? They won't — just increased costs. Morris has proposed tacking on an extra $90 to the cost of a gadget. Microsoft may have caved to a smaller subsidy for its Zune, but no one will accept a $90 subsidy that gains them no advantage.

Morris's Total Music plan sounds like the all-encompassing strategy that the music industry should have had before Napster emerged nearly a decade ago. With a venture called Pressplay, now owned (ironically) by the reborn Napster, Universal has already tried its hand at digital music and failed. Morris has come up with a plan that benefits his industry, not the consumer and not the technology business. By thinking big, he's just made it clear how small his company's role in digital music is doomed to be.