Universal CEO: The new Shmoo

Rewriting history is usually a matter for the victors, so it's a little surprising to see Universal CEO Doug Morris being given a chance to try to address the perception that the record industry didn't see digital coming.

He tells Wired that the music industry knew what was about to happen, it just didn't know what to do:

Morris insists there wasn't a thing he or anyone else could have done differently. "There's no one in the record company that's a technologist," Morris explains. "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?"

Personally, I would hire a vet. But to Morris, even that wasn't an option. "We didn't know who to hire," he says, becoming more agitated. "I wouldn't be able to recognize a good technology person — anyone with a good bullshit story would have gotten past me."

The mental image - of a bunch of guys in suits gathered round a boardroom, hearing the sound of the future but afraid to do anything about it because they didn't have anyone with the skills to help, and incapable of even developing a strategy which could find someone who had those skills.

Seriously, this man is meant to be in charge of a major international company, and he's asking for sympathy that he felt incapable of popping an advert in a newspaper to hire someone to look at their digital strategy? Are we to assume that the secretarial services at Universal are still provided using Remingtons, card files and carbon paper because - you know - those computer guys could be offering "a good bullshit story."

Morris is doing the rounds to try and promote Total Music - the desperate attempt to break iTunes' growing dominance in the US music retail scene by 'persuading' mp3 player and phone manufacturers to bundle a prepaid subscription with their product. Morris only wants to see the artists paid, you understand:

"Our strategy is to have the people who create great music be paid properly," he says. "We need to protect the music. I know that."

He doesn't actually mean artists, though. He means the men in the boardrooms.

Morris believes his industry has become something of a... well, a Shmoo:

"There was a cartoon character years ago called the Shmoo," he says in a raspy tenor. "It was in Li'l Abner. The Shmoo was a nice animal, a nice fella, but if you were hungry, you cut off a piece of him and put onions on it, and if you wanted to play football you just made him like a football. You could do anything to him. That's what was happening to the music business. Everyone was treating the music business like it was a Shmoo."

The music business is, indeed, like the Shmoo. The Shmoo last appeared in 1977 and has been a fading memory ever since.

But that's not what he means:

"It was only a couple of years ago that we said, What's going on here?' Really, an album that someone worked on for two years — is that worth only $9, $10, when people pay two bucks for coffee in Starbucks?"

Now, there's an interesting question - the answer, sadly for Morris, is 'probably, yes, even more so now'.

Coffee is a product which you can only sell once - you grow a bunch of beans, you grind them, you sell the coffee - having first shipped the beans halfway around the world. Starbucks also runs a huge chain of coffee shops, with all the costs that that implies, and with - pretty much - only the sales of coffee to make the cash back on.

When you make a record, you do the work once, and can sell the results over and over again. CDs are sold in stores where they're - most often - not the main product being sold and so don't have to bear the weight of the retail network.

Looking at it from the other side, there was some research a few years back which showed the average CD in the US got played less than once. Even if we assume that things have got better, and lets say each CD is played twice before being discarded, a large coffee from Starbucks will give probably about half an hour of enjoyment; a new CD possibly a couple of hours. That seems to suggest that coffee drinkers are paying $4 an hour for pleasure; CD purchasers $4.50-$5. Seems fair to us.

But Morris doesn't just deal in coffee metaphors - oh no:

All the sharing of the music, right? Is it correct that people share their music, fill up these devices with music they haven't paid for? If you had Coca-Cola coming through the faucet in your kitchen, how much would you be willing to pay for Coca-Cola? There you go," he says. "That's what happened to the record business."

A chilling image. The trouble is, of course, that people get water coming through their taps, and yet the bottled water industry is worth $5 billion in the US alone. A large chunk of it - funnily enough - sold by the Coca-Cola Company. You can sell a product that people have on stream, providing it's delivered in a form which offers convenience and a pleasant experience. Perhaps if Morris spent more time thinking about how the Coca-Cola company has built a sizeable business selling something that people can get for free from their taps, and learned the lessons, he wouldn't be watching his company go down the plughole.

[Thanks to Michael M for the link]