Warner Music CEO Says War With Consumers Was Wrong

l2718 writes "Edgar Bronfman, CEO of the Warner Music Group, has publicly framed the music industry's failure to accommodate file-sharing as an 'inadvertent' war on consumers. I'm left wondering how you can file a series of lawsuits inadvertently. 'We expected our business would remain blissfully unaffected even as the world of interactivity, constant connection and file sharing was exploding ... By ... moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find and as a result of course, consumers won.'"

Comments

Put your money where your mouth is, Ed.

[croddy]

Put you money where your mouth is, Eddie boy. If these lawsuits offend you as you claim, dissolve your membership in the conspiracy that organizes them. As long as you're still a member of the RIAA, and as long as the lawsuits keep coming, your comments are just as dishonest as your corrput business model.

So please... don't beat me with both fists while apologizing between blows. The beating still hurts and your "apology" just adds insult to injury.

Re:Put your money where your mouth is, Ed.

[east coast]

You're drinking his kool-aid. You're making the same mistake I've seen in tons of other posts on this matter: Thinking that the RIAA is just some autonomous organization. They fact is that they're the customers of the labels too. Maybe early on the RIAA could have sold them a false bill of goods but to act like they're [the record labels] unwitting gimps this late in the game is an insult to those who know what the true relationship between these entities is.

Maybe if they can keep you pointing the fingers at the RIAA they think they're going to buy time and customer loyalty.

Re: Put your money where your mouth is, Ed.

[sm62704]

Is this Eddie the Shipboard Computer, or Eddie Munster? At any rate, here's a message to Eddie:

Look, dude, you're glass. We see right through you and we're going to break you if you don't get the hell out of our way, and if you don't break yourself first.

We know you know that MP3s should be advertising for CDs. We also know that what you're afraid of isn't people downloading Lars and Gene's stuff, it's downloading your independant competitors' stuff. You control the FREE radio and you know it. You can't control the internet and you know it.

You're shaking in your boots over Radiohead. I'm afraid it's too late; you're cracked. It's too late, but I'll tell you what you should have done.

When Napster, the old Napster you bozos sued out of existance came along, you should have embraced it. You should have flooded it with 56k samples of every tune in your inventory, and gone on a PR blitz telling everyone how superior the CD was to MP3. It worked against vinyl when the CD first came out, despite the fact that there are pros and cons to CD and vinyl (each has its shortcomings), it would surely work with CD vs. MP3 and CD's vastly superior sound.

You blew it.

You no longer matter. A musician no longer needs an expensive studio and even more expensive factory, he can rent a studio even in a small city like Springfield, which has several. He can get his CD professionally mastered and copied with insert and jewell case for a couple thousand bucks, less than the price of a decent drum kit.

Now your only recourse to stay alive is to be a hitmaker.

You're stupid, Eddie, and I'll be glad when your twitching corpse stops kicking over the china and bleeding all over my government. Die, damn you, die, you worthles scumbag!

-mcgrew

Truthfully

[Macthorpe]

Two words sum this up:

consumers won If consumers got what they wanted at your expense, it does seem fairly logical that you buggered the whole thing up.

Re:Truthfully

[jawtheshark]

You know what pissed me off? That we're called "consumers"... It's degrading. I'm a customer, damnit!

Disposable income not piracy is behind falls.

[Ckwop]

How can you ever win a war against your own customers? If you fight them, they don't pay you and you die. How did they ever expect to win?

I think the reason they haven't made as much money recently has little to do with piracy and everything to do with the changing perception of value. Personally, I think that the value per pound spent on an album compared to something like Halo 3 is vastly different. Halo 3 at the £40 it costs is at least ten times the value to me than the equivalent number of albums I could buy for that price.

There is only a limited number of areas I can spend my disposable income. Between, Halo, the X-box 360 to play it, the iPod, iPhone there just isn't room for such an overpriced product.

And that's why I haven't bought a single CD since 1999 - and I imagine I'm not alone. That's why the music industry is shrinking. They expect to be paid rather than realising they're competing for our money just like everyone else.

Simon.

Re:Disposable income not piracy is behind falls.

[MightyMartian]

I agree. I think, in part, the record industry has so saturated the popular music market with crap that the talented new artists simply sink into a sea of unmitigated mediocrity. People get upset when I wax nostalgic about the 1960s and the 1970s, but let's face it, a very large part of the music we consider classic rock and pop was recorded during that period. Even into the 1980s you had hit makers like Michael Jackson who had real talent. Compare that with the vaguely homoerotic boy bands and way-too-sexualized teen female acts like Britney Spears that started showing up in the late 1990s, and you have to conclude that somewhere in that period the music industry lost its way, and become a classic economics widget manufacturer, run by people who didn't care about music, bet everything on marketing deals and focus groups (isn't the various Idol shows to be found in North America and abroad the ultimate expression of that). You get the feeling that these guys don't listen to the music they're foisting on the public.

As to Gene Simmons bitching on another /. article today, well, he's one of the creators of the music marketing machine we see now. His descendants aren't guys like Metallica or Nirvana, but Hillary Duff and the Spice Girls.

Re:Disposable income not piracy is behind falls.

[kebes]

I think the reason they haven't made as much money recently has little to do with piracy and everything to do with the changing perception of value. Quite right. Like it or not, most music gets "consumed" in a very off-hand kind of way. For instance, people want some "tunes" for driving, working out, or while they are doing something else. They may download a song, and never listen to it (or listen to it once and decide they don't like it). As a result, the value one can place on such incidental usage is necessarily low.

Some people will indeed obtain music in order to really enjoy it, and listen to every nuance. But they are the minority (in a marketing sense anyway), and in any case they are the ones most likely to pay in various ways (CDs, merchandise, going to shows, donating money, etc.), so they are certainly not the "problem" when it comes to this "decreasing apparent value of music."

As you said, video games are a good comparison. For $30-40, you can get a Nintendo DS game that will provide you with hours and hours of focused entertainment. As such, the $/hour cost of that entertainment is low (and most people pay it without worry). On the other hand, buying an album for ~$20, when you may only listen to the tracks a few times (and listen to them "incidentally" at that) becomes ridiculous (it may end up being on the order of $/minute of entertainment).

Whether it's "right" or "wrong" is irrelevant. The fact is that people will subconsciously make these value assessments, and will not feel bad about circumventing legitimate channels if those are too expensive.

The solution, of course, is brutally simple... and totally unappealing to the music industry. If you sold music at very low cost (pennies per track, or a monthly fee that provided unlimited download of a comprehensive catalog), then people would pay for it without a second thought. But this is a scary proposition because it is tantamount to admitting that what you are selling is not some exceedingly rare and valuable product, but rather a commodity service. The industry fears that this will mean lower profits, though that is debatable.

In the meantime, people are naturally coming up with their own solutions: either ignoring copyright law or seeking legitimate channels where the pricing is more reasonable (e.g. listening to Creative Commons music from places like Jamendo and donating to "worthy" bands).

Re:Disposable income not piracy is behind falls.

[Chosen Reject]

When you watch a movie, that is usually all you are doing (and if not, please don't watch it with me). When you play a game, that is usually all you are doing. However, music is typically background stuff. So you might have played that song 20x, but did you play it 20x doing nothing but pondering its beats and rhythms, mulling over the meaning of the message? Probably not. Most likely it just made your drive to the store not so quiet, or it blocked the noise of your computer while you surfed the web. Perhaps it enhanced the mode during your dinner. As an example, iTunes says that I've listened to Still Alive (from Portal) over 200 times, but I was really paying attention to the code I was writing. Unless at a concert, music is rarely on the center stage of what you are doing.

But even that is missing the underlying point. Time is a really lousy measure of enjoyment. That's saying that any 2 hour movie is just as enjoyable as any other 2 hour movie. If I listen to music for three hours, is that exactly as enjoyable as three hours of a Lord of the Rings movie? Is that as enjoyable as playing through Portal? Maybe, depends on what you find enjoyable. But that is a big dependency.

But even that is missing the underlying point. You pay the amount that both you and the seller agree to. If the seller is smart, he takes into consideration how much of the market is willing to pay what amount and maximizes his profits. If the buyer is smart, he considers how much the seller is selling it and how much it is worth it to him. The music industry in general might not be selling at maximum customers, or even maximum profit, but they've picked a price. If you don't like the price, don't buy it.

Re:Disposable income not piracy is behind falls.

[Dephex Twin]

Good point. Although, at least Metallica was doing something musically talented for a period of time before they decided to sell out far worse than anyone.

Re:Disposable income not piracy is behind falls.

[king-manic]

People get upset when I wax nostalgic about the 1960s and the 1970s, but let's face it, a very large part of the music we consider classic rock and pop was recorded during that period .... Compare that with the vaguely homoerotic boy bands and way-too-sexualized teen female acts like Britney Spears that started showing up in the late 1990s, Your forgetting the legitimately interesting bands like NIN, Smashing pumpkins, Nirvana, Food Fighters, Beck, Timbaland, Kanyewest, No Doubt, Arcade fire, Greenday, etc.. who got their start in the 90's and 00's. Remember who decides what is classic? Mostly well established influential media types who currently mostly grew up in the 60's and 70's. Music didn't lose it's way. It's been 80% suck like it's always been. You've just conveniently forgot about the dreck from the 60's and 70's.

It's easy....

[pablo_max]

"I'm left wondering how you can file a series of lawsuits inadvertently."

Easy...just like our government inadvertently took away ever more of our freedom with the patriot act ;)

Who won?

[AlHunt]

>as a result of course, consumers won.

Really? What do I get? Have all the lawsuits been dropped and all the judgements and settlements been refunded and consumers reimbursed for their legal fees? Did I miss something?

I'm still boycotting new music purchases.

Re:Who won?

[harrkev]

I'm still boycotting new music purchases.

Don't do that. Jusy boycott the big labels (the ones that support the RIAA). There are still lots if indie labels out there that are consumer friendly.

I also happen to find that the music is better, too.

first end the war

[spune]

You should end the war on consumers before you start talking about how it was a mistake.

Turn of the tide

[AmVidia HQ]

With studies showing correlation of downloaders also buying CDs, and example set by Radiohead/Magnatune that patronage model of the arts can still mean good business. And with lawsuits against students and moms failing. A testament that not even megacorps can always buy/use laws against the people.

This is when Big Media have to start looking at the internet differently. The same way the studios did when they looked at Betamax/the VCR.

it's not the lawsuits

[l2718]

Ah, but he's not apologizing for the lawsuits -- he's apologizing for not releasing DRM-riddled restrictively-licensed music fast enough, which he thinks is what forced consumers to share music illegally. He's still behind the lawsuits (except when his own kids share music -- then it's a "family matter" best punished by the parents). He's warning the cell-phone companies that unless they allow limited sharing, consumers will find their own solutions, and not talking about tactics. The content industry (music, film etc) still seems to have no idea what the consumers want, or that the offering people what they want is usually much better than coercing them to buy what you want them to buy.

Re:it's not the lawsuits

[Shakrai]

still seems to have no idea what the consumers want

That's easy. Consumers want the ability to buy content and use it on any device of their choosing. Personally, I want to be able to take my music and load it onto my mp3 player, play it on my car stereo, play it on my home stereo and listen to it on my computer. I don't want to have to buy it for each of these formats. I don't want to have to pay for it on a monthly basis with subscriptions.

Subscriptions may prove profitable for videos (Netflix is proof of this), but people generally want to own their music and be able to do whatever they want with it. This isn't rocket science people.....

Re:it's not the lawsuits

[Admiral Ag]

This is a fair comment. But, while not letting him off and continuing to remain eternally vigilant, perhaps we should salute him for admitting he was wrong, or at least beginning to admit he was wrong. Lord knows it's hard to get any of these people to do it. Barracking them unmercifully may give one a sense of self-righteous please (I know I feel that way), but it probably won't make things better and might make them worse.

If he's prepared to admit that the industry was wrong in this case, then perhaps there will be DRM free music in the near future. Apple is already selling a ton of it, and customers need to encourage the other majors to get on board (and to offer more flexible formats as well). It's been obvious to thinking people from the beginning that DRM was a dead end.

The music labels are slowly waking up to what the rest of us know. That is that it is worth tolerating a certain amount of illegal file sharing in order to give legitimate customers more reason to buy their products. I could have pirated the thousand bucks worth of music I've bought from iTunes (most of it now DRM free), but it was easier and cheaper just to pay Apple for it a bit at a time. And I haven't stopped buying CDs at all.

Re:it's not the lawsuits

[ajs]

The content industry (music, film etc) still seems to have no idea what the consumers want No... they know exactly what the consumers want, what the consumers say they want and what the analysts say the consumers say they want. They even know that all three of those are different things.

What they also know is that they're sitting on top of the world's most rigged market with stockholders demanding increasing profits. They're literally staring down the gun-barrel at their own extinction and trying desperately to figure out how they can dodge the bullet. They can't. They know they can't. That makes them desperate.

Now perhaps bizarre DRM and rootkits will start to make sense to you. They don't think these are reasonable actions that come without gobs of risk. They're just out of options.

Re:Perhaps

[Penguinisto]

If they had some sort of clue as to how to accurately and correctly identify illegal filesharers (you know, instead of issuing blanket subpoenas, suing dead people and obvious technophobes, et al)... most of us wouldn't have much problem with it. If they actually used some common sense in choosing folks who passed around pirated files ...that weren't children, there would be even less of a problem. If they finally restricted their targets to people who were obviously making money from it (you know, like the real physical media bootleggers do), there would've be zero problems at all.

Instead they got all ego-happy and power-hungry. They began doing blatantly stupid things.

I wouldn't be so quick to blame those who made the (very cogent) argument of going only after the actual pirates, you know? There's always at least one right way and numerous wrong ways to implement any given task.

/P

Problem is with the antiquated business model

[deviated_prevert]

The industry missed the fact that consumers are miffed at the "album" way of selling music. 10-15 years ago a different business model should have been launched. If there were music kiosks in stores with the ability to burn disks on demand then there would be no reason for this situation. Consumers are more interested in choice. The consumer could pay less for cheapo compilations of mp3 crap...or more for high quality audio disks, from the same source. There would also be the added benefit of not having to put up with unsold inventory and the distribution nightmares of gazillions of disks.

An easy source for some older classical music recordings would also result in increased sales. If you have an interest in classical music the change that has taken place over the last 10 years is disgusting, there is no longer an easy source for good classical recordings which is my biggest gripe! Edgar is right the industry has no one to blame but themselves for alienating the public.

Re:Death throes of an industry

[bwy]

All these lawsuits are just an outdated industry with an outdated business model trying to stay alive. They want to keep the margins as high as they were when vinyl was being pressed. They're not adapting, they're just kicking and screaming theirselves out of business.

That is really the entire problem in a nutshell. The funny part is, this is almost 2008. The time for the recording industry to be pioneers was back in 1995! Thirteen years ago! They could have become a major player in the digital age been a guiding force. Almost every other industry in this country adapted themselves in some form or another to do business in this new age.

They never learn

[Billosaur]

"We used to fool ourselves,' he said. "We used to think our content was perfect just exactly as it was. We expected our business would remain blissfully unaffected even as the world of interactivity, constant connection and file sharing was exploding.

He should have asked the ice man, the milk man, the telephone operator, etc. They probably thought their industries would never change, until one day they were handed pink slips. When they walked outside, the world had changed. That's the constant -- change. That's a CEO's job -- to anticipate, recognize, and plan for, change. Not only is he a little late in recognizing this (the damage that's been done isn't going to be undone anytime soon), but he hasn't done a very good job doing his job.

It's not just the overlap

[Anonymous Brave Guy]

I'm sure there is some considerable overlap between people who (to some degree) pay for music and people who (to some degree) rip it illegally. But I don't think that's the root cause of the problem (or at least, not the only root cause).

The basic problem is that by attacking the pirates, the megacorps have made their products worse even for 100% legitimate users. I am sick and tired of having to sit through unskippable ads at the start of legally purchased DVDs. I am sick and tired of having to wait several seconds while my legally downloaded music track is checked out by some DRM-checking engine. I'm sick and tired of having to jump through hoops to "activate" my legally installed software. I'm not even going near various new toys (I'm looking at you, HD discs and Windows Vista), in large part because I don't trust them not to break and the companies who took my money to leave me hanging after all the horror stories.

Now, sure, part of their problem is that by doing this they make their legal products relatively worse than the illegally ripped versions, rather than equivalent except in price and legality. This no doubt motivates a significant number of people to rip things just to avoid the crap.

But they also make their products worse in absolute terms. Why on earth would I pay the same amount of my money for something that is less pleasant to use than what I used to get? In fact, why would I pay my money at all, when I can use numerous legal alternatives that come without the headaches, even without resorting to copyright infringement? I have a finite budget, and I can find entertainment from perfectly legal sources that don't line the pockets of big media: live music or recordings by independent artists, OSS for software, etc. Does it really matter that I haven't seen the latest blockbuster movie on HD-DVD, or played the latest DirectX 10-enabled game, as long as I'm entertained by what I spend my leisure budget on?

The short answer is no, it doesn't. If the megacorps want me to spend my hard-earned money on their products rather than someone else's, they need to make the better products. This argument has nothing to do with ripped versions of the same products, and everything to do with more pleasant alternative products becoming more widely available.

and apple won

[circletimessquare]

by filling the void the record companies should have filled. now iTunes dictates to the record companies the terms under which they operate. it's a power vacuum that the record companies should have filled when they had the opportunity, and they failed capitalize on that opportunity

they instead viewed digital content as a threat because they liked their model: $20 per CD, 60 cents to the artist, "only one song i like" to the consumer

now it's belt tightening time, if not outright extinction. artists can distribute online on their own terms. giving away free music with an online tip jar is still better money than the suffocating terms the record companies pay artists. and artists make their names online: who cares if the record company can hype you on mtv or the radio. myspace, facebook, hello?

hard to figure how the old record behemoths matter anynmore. their relevancy shrivels every day. sorry, dinosaurs. must suck to realize you're extinct. guess it's time to sue some more grandmothers out of spite i suppose

nothing but shortsighted assholes and losers. good fucking riddance to the whole lot of them

Warner & Simmons

[scharkalvin]

Let's lock Gene Simmons in the bathroom with Warner's CEO and
see what happens.

Re:Its called saving face.

[garett_spencley]

Can't say that with the big boys. Once they "sell out" as it were, they all develop "star syndrome", and forget who got them where they are. Loyalties shift, from their art to their profits, and the art shows it.

Just curious. How many "big boys" have you known personally that "sold out" and stopped being your personal friend after they became famous and started releasing poor art ?

Also, as a musician I can tell you that a lot artists' "first album" are collections of songs that had been written and perfected over the many years that they were trying to put something together that's "successful". Then when they get signed they're under contract to put out so many albums over a specific period of time. That might support your theory that business is bad for art, but keep in mind that the bands that don't enter into such contracts end up releasing one album every 5 - 7 years (Esthero and Screaming Trees are two examples that come to mind) and their fans scream just as loudly for not having fresh content as Metallica fans scream loudly about their new stuff being crap.

It's a catch-22. Either bands put out a mediocre album every 1 - 2 years and tour and make enough money to live or they work day jobs and put out an awesome album every 5 - 7 years and don't make nearly enough to live doing what they really want to do. It's a personal choice and no one is in a position to say that one is better than the other.

Re:Perhaps

[nine-times]

If they finally restricted their targets to people who were obviously making money from it (you know, like the real physical media bootleggers do), there would've be zero problems at all.

But you see, the problem is that they don't want/need to go after the bootleggers. It isn't the bootlegging industry that's sharing content on P2P networks. It's college kids, little girls, and the nice couple next door. The whole problem with the situation is that their business model was created by distribution, based on the inability of some random guy to press 10 million vinyl records in his basement and distribute them worldwide for free. However, in the digital age, some random guy can effectively spread millions of MP3s around the work for free (well, you have the cost of a computer and Internet service).

So don't think these lawsuits were an effort to stop bootlegging "pirates" who make money from selling illegal copies. The goal was to protect an outdated business model.

Re:Read this guy's resume.

[Trailer Trash]

He didn't build up Warner Music, or move up within the company, or come to it from success elsewhere. He bought the thing with inherited money, after a long career as a failed executive.

To be brutally honest, it's unlikely that he can do worse than the guys who are running the other RIAA "members".

bummer

[Myopic]

Great. It seems a few people in the industry and just beginning to dawn on the idiocy of their actions.

Bummer it's too god damned late. Sorry guys, you could have delivered musical nirvana in 1996 (musical nirvana, not the music of Nirvana) but instead you refused to take any action, followed by insisting on taking only the action of suing your customers. It's a decade late for you to start saying you 'get it', and the fact is there are only a few of you who get it anyway.

(Musical nirvana would be like Napster except with an inexpensive pay system: all the music ever recorded in high-quality format easily searchable for inexpensive cost. That would have been possible in ~1995, and certainly by 2000 or 2001.)

The music industry was like the drug industry and the RIAA acted like the government: consumers had a demand and the RIAA/government thought that demand was morally bad, so instead of meeting demand in a reasonable, safe, and profitable manner, they stuck their heads up their asses and made the problem worse. In reaction, consumers filled their own needs created by their own demands with their own products and services, cutting the RIAA/government completely out of the equation completely.

If the industry 'gets it' in the next five or six years, it won't matter; if they 'get it' tomorrow, it won't matter. The time to get it was about 1997, maybe 1998, and certainly by 2000. You didn't get it, and you have caused yourself irreparable harm. You will survive, but you will not thrive in the brave new world you allowed to be created without your input or help. And I'm happy enough to see them go. I think they add value to the music culture, but not much.

Show us that we're all on the same side

[Dachannien]

If Bronfman really cared about the customer, he'd read this article and speak out against the RIAA's assault on college financial aid.

Too little, too late

[Legion303]

Your industry went to war with consumers the minute it placed a "piracy tax" on the blank cassettes I used for my own created music, Bronfman. "Winning" isn't good enough for us anymore.

to late, you are irrelevant

[Dan667]

I am so looking forward to the day that the top forty is not shoved down out throat and bands have to make it on talent once again.