Labels aren't as Clueless as We Think

25 March 2009

universal logo The Leadership Music Digital Summit is winding up today at Belmont University in Nashville.  This Ipper had the good fortune to attend many of the panel sessions.  Obviously, two days of digital music discussions produces lots of bloggable material, but today we'll discuss only one thing, the most encouraging part of Tuesday: the Keynote address by Rio Caraeff of Universal Music Group.

When we hear about record labels, especially the big four, we hear the same things over and over again: they're clueless, they can't keep up with the technology changes, they don't understand their audiences, they're evil, etc.  Today, Mr. Caraeff showed us just how wrong those statements are.  (Well, except the last one, jury's still out on that.) 

Caraeff is the head of eLabs at Universal, a team that focus on all aspects of digital development and music: cell phones, downloads, streams, videos, you name it.  They are not focused on content, but on the context.  Music used to be an experience, now it is data.  To Caraeff and Universal, this is a problem.  Where's the value if the product you buy is exactly the same as the product you can download for free?

So, they're working, and they're working hard, to bring back the experiential aspects of music.  The traditional album, with all its neat cover packaging and fancy inserts, is dead.  But, Caraeff explained, Universal's eLabs is working on creating a new type of packaging for digital downloads (and they aren't talking DRM).  Packaging that connects the listener to the music like the old album covers used to do.  And, one of the best parts, they are focused on using open technology, no proprietary software.

Caraeff didn't go into exactly what this new packaging will look like.  They might not even know yet.   But, that doesn't matter.  The encouraging part here is that Universal recognizes the changes in the industry; they're working on solutions; they are innovating, and innovating with a focus on the fans.  They know that access is now more important to consumers than possession.  (Caraeff expects music to be all cloud-source in about 5 years, rather than mp3 downloads.) 

Universal is not sitting back and relying on RIAA lawsuits, or simply trying to hold out until all their artists are signed under 360-deals.  As Caraeff put it, both the artist and the fans are the customers.  Universal's eLabs is focused on creating a new model that benefits all their customers.  And the simple fact that they're trying, that puts a smile on my face.

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Michael Scott said...

That's great!!! In 1995 I made the same points at the Digital Hollywood conference. We had learned a similar lesson in the software industry -- easy to copy the code, but not other value-added elements that users want -- manual, training, support, upgrades. The message at that time was put value in things that users want that cannot be easily duplicated. Record industry lawyers in the audience said I was "naive" and that advice made no sense.

After 14 years and the virtual destruction of the record industry, glad to see that someone "gets it."

March 25, 2009 at 3:51:00 PM PDT
goldenrail said...

Michael: The software industry is a great comparison. As you said, easy to copy the 0s and 1s, but not the support or tangible parts. Let's hope the record industry keeps exploring these new areas instead of freaking out again.

March 28, 2009 at 7:01:00 AM PDT