Universal Music has a screw loose

It is absolutely amazing how blatantly idiotic the higher ups of a company can be when they let their emotions drive them instead of basic business sense or perhaps even just common sense.

Reading this article on Business Week's web site demonstrates this perfectly.

Just to quickly summarize the stupidity of Universal Music:

• UM doesn't want to renew with Apple on iTunes.
• UM thinks Apple getting 29 cents for every 99 cents is too much. (That's 30% markup.)
• UM doesn't like making a "paltry" 70 cents (yes, 70%) on every single sold on iTunes.
• UM thinks making yet another music store is necessary for some reason.
• UM thinks no one really wants to own their own music and that subscriptions are best for us.
• UM believes that the makers of MP3 players will pay $5/month in royalties to give free music to all of us.

What is with these people?

Let's take this one by one shall we:

UM doesn't want to renew with Apple on iTunes

Why not? Because they are pissed that Steve Jobs really pulled the online music sales thing off and in a big way and UM didn't do it themselves. Emotions are driving this. The best part is that they are doing this not to better serve the customers but because Apple wouldn't let them charge MORE for the very same product they are currently selling.

You'll notice that they are still selling their stuff on iTunes. That's because they reacted emotionally and had no plan. If they had a plan, they would have yanked their stuff immediately and had another option in play at that very moment.

UM thinks Apple getting 29 cents for every 99 cents is too much. (That's 30% markup.)

Since when did a 30% markup become highway robbery? I've got news for them, clothes and jewelry resellers make a lot more than 30%. So do a lot of other businesses. Not so much if you sell electronics goods but Apple is managing the entire front end of this business and probably deserves 30% cut. I don't think 30% is asking too much.

UM doesn't like making a "paltry" 70 cents (yes, 70%) on every single sold on iTunes.

70%! What is so bad about that? Granted, they have to divide this up with the artists but other than that, there isn't a lot of other costs here besides the ones they incur themselves on marketing. There are a lot of other businesses that would love this kind of profit.

UM thinks making yet another music store is necessary for some reason.

Yeah, this makes sense. We need another source for electronic music when there already is a good one out there. Worse yet, since when does selling through one method preclude selling in another? I fail to see why it has to be an all or nothing solution. It isn't like any brick and mortar store has an exclusive. (usually...) Either way, I highly doubt UM has the resources or talent to make something better than what is already out there.

One thing you have to wonder and after looking at Amazon's MP3 Store, is what happened to all the higher priced music that UM wanted? There is a lot of their stuff at 89 and 99 cents still. How is that any different than what Apple wanted in the first place? What they are doing is pushing the Amazon store to dig into iTunes market share and then guess what, they'll pull a fast one and up the prices if they can do any measurable damage. Let us not forget that they want to do this on a trial basis too. I think they originally said they'd test DRM free music until the end of the year or early next year.

UM thinks no one really wants to own their own music and that subscriptions are best for us.

What makes them think I want to pay forever for music? I tend to like certain things and like to keep them around. Plus, if I ever dislike the service I'm on, I want to make sure I can at least still use the music. You could argue this point with iTunes I suppose but I can burn those tracks to CD and I'll have them to use forever.

UM believes that the makers of MP3 players will pay $5/month in royalties to give free music to all of us.

I'm betting the MP3 vendors are just laughing hysterically at this one. These MP3 units cost next to nothing now and then the vendor is going to just chew through revenue on the back end?? It'll never happen. No sane executive of an MP3 manufacturer is going to give away money like this. Even if they did, do you think this will encourage them to make a long lasting durable product? Oops, my MP3 player died after a year, surprise surprise. I'll need to buy another. This idea is by far the stupidest thing I've ever heard of from a business standpoint. Can you think of a way this would actually work? I can't.

Am I wrong here?

Someone needs to drill some sense into the head of Universal Music and soon. I didn't even mention the artists in this but the article says UM has the support their support? Right. Sure they do.