Betty,
I got the impression from Fred that we really didn't have ANY competition but that he had to say there is the potential for a competitor (even though I know and you know THERE IS NONE). Now from Webnoize today...
Universal Music Realigns, Establishes Venture Capital Division
In an effort to let its music business "adapt to the changing digital world," Big Five recording company Universal Music Group (UMG) has expanded and realigned its ecommerce initiatives, renaming its Electronic Commerce and Advanced Technologies (eCAT) unit, and establishing a venture capital fund to invest in existing new media properties.
The electronic commerce division has been renamed Universal eLabs. The division will house ecommerce-related research and development efforts, and seek investment opportunities through a business incubation group that develops new businesses internally, to be spun-off as free-standing divisions, or as part of existing operating units.
Global e is a new stand-alone UMG division with a broad mandate to build and manage music businesses. UMG plans to explore all possible sales models for music -- including downloadable sales, subscription sales, customized radio and pay-per-play -- by targeting businesses worldwide that use sales outlets like retail kiosks, PCs, TV set-top boxes and portable devices.
Global e will report to UMG Vice Chairman Bruce Hack, who plans to focus the majority of his time on the division.
"With this organizational change, the company is focusing priority effort on building new music businesses based on new electronic means of communication and distribution," Hack said.
UMG reportedly cancelled because of technology glitches an external trial of a system for vending downloadable music -- called Nigel -- it had been developing with three other companies (AT&T, InterTrust Technologies and Matsushita). Universal's reorganization suggests the beginning of a long-term plan that involves enterprises far more diverse than Nigel.
In fact, Nigel could be done for good. Universal announced earlier this month plans to use technology from RealNetworks to promotes and sell music online [1.7.00 RealNetworks in Digital Deals with Universal Music, Sony].
Nigel was part of an ongoing alliance between Universal and Big Five recording company BMG Entertainment. In April, Universal joined an existing BMG Entertainment online initiative, GetMusic.com, to market CDs online.
But now, amid rumors that BMG wishes to acquire either EMI or Sony Music, Bertelsmann AG's music group has made moves of its own that suggest it is distancing itself from the UMG relationship.
BMG said today that it has formed a digital rights management company all its own, called Digital World Services, a joint venture between three of its existing divisions [see today's news: BMG Moving Away from Universal Alliance].
Still, Nigel and GetMusic are small initiatives in the context of a future music market that includes the sorts of possibilities UMG has detailed as goals of Global e.
"The ecommerce and advanced technology fields offer unprecedented opportunities for growth within all of Seagram's businesses, particularly our music business," said Edgar Bronfman, Jr., president and CEO of UMG's parent, Seagram Company Ltd., in a statement.
"To reach the goals we've set for ourselves, it is imperative that our organization remains dynamic, focused and energized to move at a speed that outpaces that of the changing landscape."
According to a source at Universal that requested anonymity, the realignment comes because "the company can't move fast enough" to enact business models that take advantage of the Internet.
Universal's former organization involved a chain of command that made certain tasks prohibitive, such as approving for use the volume of content the company's new media initiatives needed, according to the source.
Former eCAT president Larry Kenswil will serve as president of Universal eLabs, based in Los Angeles. Universal eLabs will report to UMG President and COO Zach Horowitz.
Former eCAT senior vice president Heather Myers will serve as Global e's executive vice president and general manager. Myers coordinated Universal's 1999 merger with PolyGram.
Further, UMG has appointed its executive vice president, Norman Epstein, to identify ongoing areas within UMG's core operations that require transformation to succeed in the emerging new media industry. Epstein plans most immediately to develop a suite of ecommerce services for UMG artists, and develop consumer databases and business systems.
Universal grabbed headlines in November when it became the first major music company to imitate numerous web sites on the Internet that invite unsigned artists to showcase their music. Jimmy and Doug's Farm Club competes with MP3.com and EMusic's Internet Underground Music Archive, but adds a twist: Universal execs will supposedly scout the site for emerging talent. America Online reportedly was given a 3% stake in the venture, in exchange for providing about $100 million in online promotion.
The announcement was deemed important enough by the company to be made by Bronfman himself, alongside the site's namesakes, producer Jimmy Iovine (U2, Tom Petty) and Universal Music Chairman Doug Morris.
"We expect to sign bands on Farm Club records. We are very competitive with other record companies," said Bronfman at the time.
Universal Music Group owns record companies and music licensees in 59 countries. Its labels include Geffen, Interscope, Island, MCA, Mercury, Motown and Universal.
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