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Universal CEO to Independent Record Stores: Suck It

Posted by on Jul 23, 2010 | Comments (2)

Jim Urie is the President and CEO of Universal Music Group, which has spent the last two decades buying up every label it possibly can to become the world’s largest music conglomerate. Like all record company CEOs, Jim Urie is trying to curb illegal downloading. Also like all record company CEOs, he’s not having much luck. So he’s begging you to help him out by signing this handy online form letter to representatives in Washington, D.C. which claims that illegal downloading is destroying American music.

Urie gave a real whiz-bang presentation about all this in front of other industry honchos at the NARM convention earlier this year, and got so fired up at the response that he created a Facebook page called Music Rights Now as a “call to action.” He recently asked the folks who champion independent record stores under the banner of Record Store Day to promote his Music Rights Now page, and they obliged with a click-through banner on their site.

He also asked them to distribute to independent record stores this statement he wrote, which reads in full:

I’ve received hundreds of e-mails enthusiastically reacting to my “call to action” at the National Association of Recording Merchandisers convention last month. The music business is facing huge challenges from piracy and theft. Never before in American history has an entire industry been so decimated by illegal behavior. Yet the government has not responded in a meaningful way to help us address the crisis. My call to action is for all of us to become more aggressive in lobbying our government, more outspoken in drawing attention to the problems caused by piracy and more actively engaged. We cannot win this fight alone.

Governments outside the U.S. are legislating, regulating and playing a prominent role in discussions with ISPs (Internet Service Providers). Sales have dramatically improved in these countries. How is it that the U.S.—with the most successful music community in the world—is not keeping up with places like South Korea, France, the UK and New Zealand?

As I said in my speech, I hope that the industry can negotiate a voluntary deal with the ISPs. We need our government representatives to encourage this. But whether or not we reach a deal with the ISPs, our government needs to know that we’ve got a piracy problem and we need real solutions. To accomplish this, our government needs to hear from all of us, so they know that their constituents are out here. Join me in calling on our elected officials to fight piracy. Please help by forwarding this email to your colleagues, friends—everyone who loves music. And consider enlisting your entire company to help in this fight. Then by clicking on the link below, a message will be sent to your representatives in Washington. Help us launch a viral campaign to cut off access to the online sites that are used to steal our music, our property and our jobs. It only takes a second, but it can make a tremendous impact.

You might think: A valiant crusader in the fight for justice! Except as a supporter of the ideals behind Record Store Day, and as one who thinks hometown record stores are just as important as gigantic conglomerates (Universal Music Group owns the catalogs of Motown, Def Jam, Island, Interscope, Geffen, A&M, MCA, Mercury, Verve, Lost Highway, Polydor, Decca, Hip-O, Prestige, Riverside, and lots of others), I say let’s look at this Urie guy a little closer.

Here’s the thing. In March this year, Urie announced a new $10.00 suggested retail price on most titles for Universal’s new releases. (The Roots’ How I Got Over and M.I.A.’s ///Y/ are the first that come to mind.) Which seems like great news, right? Consumers have been asking for cheaper CD prices forever! Everyone knows how little it costs to make a CD by now, and most people justifiably feel like charging $19.99 is outrageous.

But when Universal rolled out the new pricing structure, they conveniently forgot to mention who’s making up the margin. It’s not Universal. Instead, Urie is shifting the burden onto record stores—and in particular, independent record stores.

Let’s look at the M.I.A. record as an example. Big-box stores order so much quantity and so little variety that they’re able to get concessionary wholesale pricing from labels on new releases, but independent stores order nearly all new releases from distributors called one-stops. Under the old pricing tier, an independent store would have ordered a copy of ///Y/ for $10.99 from a one-stop, sold it for $15.99 and made five bucks.

Under Universal’s current “Velocity” program, the suggested retail price for ///Y/ is only $10.00, a fact touted clearly to customers on the overwrap sticker on top of the CD:

But how much does that CD cost the store? Below is a screen grab from the B2B ordering site at AEC, one of the country’s largest one-stop distributors to independent stores, and I swear it’s not Photoshopped. The first figure on the bottom line is the suggested retail price. The second is the wholesale cost to stores.

$10 MSRP, $9.99 wholesale. That’s right: The independent record store makes a one-cent profit. Essentially, Jim Urie is telling record stores to fuck themselves. Who could possibly be happy earning one measly penny per sale while making Urie’s company look like saviors for lowering prices?

The end result is that independent stores are threatened anew not by illegal downloading but by Urie himself, who apparently only wants to sell CDs at loss-leader outlets like Wal-Mart, Best Buy and Target—retail behemoths that continue to drive independent stores out of business. Urie doesn’t care; he’s shifted the burden to store owners, so he’s still making money. How the indie-loving people behind Record Store Day could even speak to the guy, let alone promote his agenda, is totally beyond me.


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2 comments

  1. Preston
    July 23, 2010

    Nice article. I think this a good example of why this blog is winning awards, this is a pretty epic little piece of journalism for a local newspapers music blog.

    Word Gabe, keep up the good fight.

    Reply
  2. Falco DellaPolla
    August 1, 2010

    Holy Crap! I had no clue about this guy. I’ll keep that in mind..

    Reply

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