Welcome, Guest [Sign In]

February 2008 - Strategy Magazine
Biz

Word from the corner office
Reinventing the music biz: Universal Music Canada's Randy Lennox

by Mary Dickie
page 13

Universal Music Canada is testing every conceivable new market model to stay on top of a tumultuous industry - experimenting with subscription-based and ad-supported solutions and spinoff consumer products to offset sinking CD sales

Over the past decade, the music industry has been grappling with the biggest challenges in its history. Shaken out of complacency and panicked by their inability to control (and profit from) downloading and file-sharing, record labels are faced with an uphill battle: how to get on top of fast-changing music-delivery technology and make a profit without alienating their customers?

Randy Lennox, president/CEO of Universal Music Canada (UMC), calls the recent upheavals "the perfect storm," and indeed, 2007 was another rocky year for his industry. Layoffs were announced at several labels as 2008 began - including UMC, which sent 19 employees packing. (UMC declined to provide financial results for this story.) Still, while album sales were down by 7% in Canada, digital album sales were up a robust 93%, indicating that obituaries for the music industry are premature.

The industry's challenge now is to reprogram consumers to see music as something worth paying for when they've been getting it for free. That task has been made more difficult by the lack of an easy-to-use, reasonably priced, across-the-board paid-download service, not to mention a combative environment in which the U.S. record industry has actually sued its own customers for downloading music.

That has not been possible here, as consumers compensate copyright holders with a levy on blank CDs and tapes, but the relationship is strained. Last year, Universal offered consumers an olive branch in the form of DRM-free downloads, which can be copied and played on various devices. But in the company's new Comes With Music plan with Nokia - which builds the cost of a year of music downloads into the price of a handset - the tracks will reportedly be playable only on the Nokia device, which means it will likely meet with consumer resistance.

Still, demand for music is as strong as ever, and companies smart enough to let go of outdated models and develop workable new ones will prosper. Lennox is convinced that the answer is coming, and in the meantime he and his company are trying to stay on top of the game by diversifying UMC's business, developing new revenue streams, experimenting with everything going and leveraging its dominant position in the market to establish myriad new partnerships and marketing efforts. Sears, Imeem, CTV and Frito Lay are just a few of the partners UMC is working with to develop new sales and marketing models.

The country's largest record label, Universal has existed in Canada since 1918, and is involved in producing, manufacturing, marketing, selling and distributing music. As a division of Paris-based Vivendi Universal, it represents international artists including Elton John, Gwen Stefani and Sting as well as Canadians Nelly Furtado, Shania Twain and Diana Krall. The company has helped develop platinum-plus careers for The Tragically Hip, Bryan Adams and Sam Roberts, and dominates the urban market with artists like 50 Cent, Kanye West, Mary J. Blige and Toronto's Jully Black. And it's capitalizing on that impressive roster to sell music in different ways, from ringtones to licensing deals for TV and film and custom CDs for retailers.

Quick Search