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Universal Music Will Try Novel Approach Against iTunes
Friday, October 12th, 2007 at 3:50 PM - by
Using a novel business model, Universal Music, with the help of Sony BMG and possibly others is planning a new service, Total Music, that will seek to wrest control of the online music market from Apple, according to Business Week.
Doug Morris, chief of Universal Music, is aiming to join forces with Sony BMG and possibly Warner Music to develop a new subscription music service. Those three companies would control about 75 percent of the music sold in the U.S. However, this plan has a new wrinkle.
Business Week reported that the new business model involves the hardware manufacturers or cell carriers absorbing the cost of a US$5/month subscription fee. The customer gets an unlimited subscription service for free and the manufacturers sell more players. "Doug is doing the right thing taking on Steve Jobs," said former MCA Records Chairman Irving Azoff.
At one time, Doug Morris were allies. In time, however, Mr. Morris realized that Apple had gained too much control. According to people who were in a meeting with Mr. Morris, he said, "We got rolled like a bunch of puppies."
With the new Total Music plan, music becomes like a utility. After the buyer purchases one of the players, all the music is free. "You know that it's there, and it costs something," said an executive who saw Mr. Morris' presentation. "But you never write a check for it."
The big problem seems to be whether the music player makers can charge enough for the phone to cover the cost of the [free] subscription. "If the object is to wrest control of the market from Steve Jobs," said Gartner analyst Mike McGuire, "this is a credible way to try it."
Meanwhile, Universal continues to do business with Apple on a month by month basis. Sales need a boost, and they can't afford to drop out.
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