Last month, Wired (15.12) published an article about Doug Morris, the CEO of Universal Music Group. Universal is on the of the largest record companies in the world. They focused on the challenges Universal faced in adapting to the digital world.
The focus was that Morris doesn't get it. While Universal works on new methods of distributing music on line, Morris still approaches the whole business with an Us against Them mentality. This may be the only industry where customer are viewed not only with derision, but as the enemy.
It's an interesting, if disjointed article, that you can read here.
Here's what I found most interesting:
This year, 22 percent of all music sold in the US will move through iTunes. "If iTunes gets up to 40 or 50 percent, they'll have too much power for anyone else to enter the business," says James McQuivey, who analyzes the digital music industry for Forrester Research. If the labels want out, they have two choices: Find a way to unseat the iPod or allow iTunes' competitors to sell unprotected files that can play on Apple's ubiquitous device.
I knew iTunes was big, but I had no clue that more than 1/5 of all music sold this year went through iTunes. More than 1/5 of music sold was electronic -- no CD to burn, no label to print, and no jewel case to crack.
I buy some TV shows though iTunes, but I still prefer to get my music on CDs. I do rip my CDs to MP3, but I like having the original media.
But apparently, there are more people who are willing to forgo physical ownership than I expected.
While this is terribly frightening for the record companies, it does bode well for on demand movies and TVs.
For several years, we've been hearing about the potential of on demand movies that download to your cable box. While most digital cable companies offer the technology, it seems very few people take advantage of it. Meanwhile, people are still buying DVDs in record numbers.
I expected that true on demand entertainment would still be several decades off, because people like owning DVDs. They like to physically put them on the shelf and have the library content right there.
But with more than 22% of music being sold without physical media, I may need to reconsider that position.