Murdoch/Dow Jones/Universal

Is Universal next?

Dow Jones sold out to Rupert Murdoch because it didn’t have an adequate plan for the future. No way to compete with the behemoths on the Web. Oh, they had a pay site, with little reach, in a world where YouTube goes from obscurity to ubiquity overnight. Where MySpace garners millions of views and instant profitability with a Google ad deal. All the brass at the "Journal" could do was turn out a damn fine newspaper, in an era when newspapers are dying.

It’s not a secret. Advertising is falling precipitously. Youngsters are getting their news online. In our lifetimes, there will be no physical paper delivered to the door. It’s as inefficient as shipping CDs to retail outlets and schlepping same around to listen to. We want our news all the time, with us, just like we want our music. A concept that the music industry is still wrestling with.

The "Wall Street Journal" was worth more to Murdoch than the Bancrofts. How long until Universal Music is worth more to a third party than Vivendi? Not long.

Oh, it would be great if Universal, which rules the business with an iron fist, figured out a way to monetize online delivery. But for now they’re just insisting on copy-protected tracks and refusing to authorize file trading. You had to buy the paper to read it, but now anybody can visit a Website. The potential audience for what Dow Jones offers is gargantuan. But oppressed by an antiquated vision, the stewards of the company just couldn’t adapt to this new paradigm. As their brethren at Universal have to.

And it is all about money. And the value of record labels is not going up, rather down. Checked Warner’s stock price recently? How long until some financier grabs Universal at a fire sale price and uses its assets as a component in selling something else? If you’re Chevron Texaco, you don’t need to charge for music, you can just give it away as a premium with overpriced gasoline, you can use it to build market share. Or the next competitor to Google. Maybe MSN. How could it leverage Universal’s assets to compete with the search behemoth? Microsoft’s got the money. And it understands the landscape better than Doug Morris or Zach Horowitz. As for Jimmy Iovine, he’s just an employee, not an owner. A star reporter, not a man with game. His fortune is a pittance compared with that of the corporate titans. And money rules. Even Jimmy knows this.

It’s not only the "Wall Street Journal". The "Los Angeles Times" is a shadow of its former self, cutting sections seemingly every month. Even the vaunted "New York Times" has financial problems. There are rumblings in the financial community that the family has to give up control, before it’s too late.

Is it too late in music?

Warner has been cut to the bone. EMI has consolidated and is now being sold. Columbia is being rebuilt, seemingly from scratch. And what is the plan? To get more rights from the acts to make the numbers work, while offering less in return? It would be one thing if you got a better deal for giving up a piece of your road income, but that’s not the case. You’re just being raped by an industry in the throes of death.

The major labels made music free. Not the consumer. The major labels refused to license the original Napster. They sued their customers and new P2P operations to keep their business model. As Wal-Mart stocked fewer SKUs and indie retail shops kept going out of business. And got angry with Steve Jobs for coming up with a way to make some money online. They’re like the high school faculty, scolding the student population, which is soon going to graduate and inherit the earth.

We’ve got a music television network that doesn’t play music. We’ve got a consolidated radio world that sees the tunes as subsidiary to commercials. Satellite radio has been mismanaged, is too expensive and doesn’t work as well as an iPod. And the labels want to kill their saviors, like Web radio. Isn’t that an axiom of the business? People have to hear music in order to gain the desire to buy it?

There’s no way out of this without revolution. A complete rethinking of the way music is created, sold and marketed. The business props up the album, as if it’s sacrosanct, while teenagers only desire the good stuff, which they want to pick and choose. The transaction must reflect reality. A lot, easily acquired, for a little. Growing a larger pot overall. Make it even easier than P2P to get it. And have everybody own it. Where are those solutions?

Oh, blame the publishing companies.

But suddenly, the labels have become the publishing companies. That’s what supposedly makes Universal dominant. But it just makes it a better takeover target. Guaranteed, low overhead income.

Dow Jones’ value stagnated for years. To the point where its owners were ripe for a preemptive offer. Can you say Universal?

Just call Vivendi. You’ll find the lines are open.

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