Universal Music Group vs. Warner Music Group Corp.: a battle between two companies with very different ideas when it comes to online music with the college-beloved sites MySpace.com and YouTube.com caught right in the middle.
Universal speaks of MySpace and YouTube in words that could have been lifted from a Recording Industry Association of America press release. According to the Associated Press, Universal accuses MySpace and YouTube of copyright infringement valued in the millions of dollars.
“We believe these new businesses are copyright infringers and owe us tens of millions of dollars,” Universal CEO Doug Morris said to a group of investors last Wednesday. “How we deal with these two companies will be revealed shortly.”
Certainly Morris is trained in the fine art of the subtle threat. Doubtless, he is implying that Universal plans legal action. It’s a predictable move, especially when considering that Universal had to slash the prices of its compact discs by 30 percent in Sept. 2003. Even then, Universal blamed illegal file-sharing for having to make the move, citing all of the usual arguments: copyright protection infringement, billions of dollars lost, etc.
Of course, Universal didn’t say anything about online music being a superior product which is more cost-effective, increasingly popular and profitable. Universal was mistaken to merely lower its prices to sell the same old stuff – companies that have faith in their products don’t have to slash prices. Good products sell without incentives.
Warner Music Group seems to understand that concept better than Universal. Only four days after it was reported that Universal’s Morris threatened YouTube and MySpace, the AP reported that Warner Music Group had agreed to make its music available on YouTube legally.
According to an AP report, “Warner Music has agreed to transfer thousands of its music videos and interviews to YouTube,” who will make them available under the terms of a revenue-sharing deal it has reached with Warner.
It may be an accepted business strategy to own an intellectual property – a song, for instance – and sue anyone who wishes to distribute it without legal right. It may also be frankly dishonest for people to steal music. However, business phenomena do not exist in a vacuum. YouTube and MySpace are popular for a reason, and Universal’s prosecutorial tactics won’t work. They haven’t ever worked, in fact. Napster, for example, may be dead, but people still steal music.
Universal needs to come up with a better solution. They could take a hint from Warner’s playbook, for a start.