MTV in Music Battle With Apple

NEW YORK –- MTV’s got an urge to upend the music industry’s business model. And why not take Apple’s iTunes Music Store along for the ride?

Launched today, Urge is a digital music store that competes with Apple’s iTunes Music Store. It will sell individual songs for $0.99. But unlike iTunes, Urge will also offer unlimited access for $9.95 per month.

Jason Hirschhorn, chief digital officer at Urge, said the company will promote its own roster of
stars in order to break the hegemony of record labels and change how costs
and revenues are distributed in the music industry.

“People are listening to more music than ever before in the history of the
world, but the revenue model is screwed up,” he told a group of online music
mavens at a meeting held at the NYU Stern School of Business here.

Hirschhorn said he intends to use the clout of the MTV brand and parent
company Viacom’s deep pockets to alter the shape of the music industry from
within.

Digital rights management (DRM) , proprietary systems such as iTunes, and the music industry’s legacy revenue model were all in his crosshairs.

He noted that the music industry has not recognized fundamental changes to
the cost structure and distribution mechanisms of music, and predicted that
Urge and other Web sites would be able to sell music more inexpensively and
pay artists a larger portion of revenues.

To that end, he said, Urge would seek to promote musicians who are not tied
to record labels.

“All it would take is for one star to come over, and the whole thing will
change,” he said.

Hirschhorn admitted that MTV was itself part of a failing legacy, and vowed
that Urge would be a “disruptive force” in the music industry.

“Urge is about getting our music credibility back,” he said. “We’re going to use our clout to change the way the music business is run.”

Hirschhorn also said that the music industry had made a historic mistake in
seeking to block users from downloading music files as often as they want,
and from sharing as much as they want.

He said that the music industry has
tried to lock customers in and manage file sharing because it failed to keep
up with changes wrought by the Internet. But rather than protecting
intellectual property, he said, DRM is encouraging the
very kind of theft that it is trying to prevent.

DRM is, he said, “the antithesis of what the Internet
is about.”

“It’s the media companies’ fault that piracy is happening,” he added. “I’d
like to see the successful business model where you sue your customers.”

That type of defensive posture might succeed in the short term, he
added, but it will ruin it in the longer run.

“You need to be smart and course-correct, and not try to put the genie back
in the bottle,” he said. “Some of the worst business people you’ve ever seen are in the music industry. They don’t respect the consumer.”

Hirschhorn also attacked Apple CEO Steve Jobs for perpetuating customer
lock-in and a business model that he said is dooming the music industry.

“I would love to work with iPods,” said Hirschhorn, “but Steve only wants
you to shop at his store. I met with him several times, and he basically
gave me the finger.”

Urge will use a Microsoft platform that Hirschhorn characterized as “an
improved version of Windows Media Player.”