Overseeing not only Universal Music Group (UMG), but also France’s 2nd largest mobile operator SFR, ‘World of Warcraft’ publisher VUG, TV group Canal+, NBC Universal and ISP Neuf Cegetel gives Lévy a commanding view of the rapidly-converging entertainment industry. Read on for our exclusive interview…
Why did you agree to keynote the MidemNet Forum? What key messages do you plan to put across, and why?
I am delighted to participate in MidemNet. Over the years, it has evolved into one of the world’s leading digital meetings, bringing together many of the industry’s key players to unveil innovation, share and exchange ideas, promote new business ventures and get a real sense of where the digital market for music is heading. My message will simply be that Vivendi remains committed to the music industry, and will continue to work with Doug Morris (chairman/CEO, Universal Music Group) and his management team to expand the scope of the company in the digital space, in as many new areas as possible.
Universal is currently testing sales of DRM-free digital music. Is this recognition at last that DRM hinders the digital market rather than helps it (cf. the increase in Pink Floyd sales after the introduction of iTunes Plus)?
Since no quantitative data on the sale of DRM-free music exists yet, UMG has created an extensive testing programme in North America. For us, the ‘smart business’ way of approaching the availability of DRM-free music is to first assess its viability in the marketplace. We want to explore whether a move to open mp3s could open up the market by stimulating more online music sales. Moreover, we are also testing DRM-free music to establish the likely effect on piracy. Regardless of the outcome of these tests, however, UMG will continue to support innovative digital models such as subscription and ad-supported services, which rely on DRM as an enabling technology.
Is the piracy problem at its heart more of a mentality issue?
How do you get people to pay for content when they’ve become so used to getting it for free?
Some people download music for free, yet pay $50-$200 for a concert ticket. So they know that music is not for free. Piracy is not a victimless crime. It hurts the artists, those people we love hearing and watching. It hurts the music, TV and movie industries, which as a result, have less resources to develop new projects and talent. Piracy also has resulted in thousands of people losing their jobs, not just at the music companies, but in the retail and manufacturing sectors as well. Nowadays, pirates know that they are stealing and they know the risks of their acts. And thanks to the cooperation of local governments around the world, we are continuing to work on this issue.
What do you see as the next big thing in mobile music, now ringtones seem to be less successful?
As the mobile music business has seen explosive growth, it has also started to diversify into several different experiences which are giving consumers more choice as to entertainment on-the-go, as well as personalisation and self-expression. Mastertones are still a growing business for UMG, but we are seeing tremendous growth – about 300% in fact – in our ringback tone business, in addition to sales of full length music sold over-the-air. Streaming and downloading music videos wirelessly to the mobile phone is also starting to take off; we expect continued growth in this field in years to come.
As a content company, how worried are you about hardware manufacturers like Apple & Nokia ramping up their own content offerings?
As a content company, we are in mutually beneficial relationships with the hardware industry. We don’t make hardware and they don’t make music. We are not worried; in fact, we are encouraged by the entry of hardware companies like Nokia, Sony Ericsson, Microsoft Zune, Apple and others into the music retailing businesses. They are not creating their own content, but they are focused on making our music available to all consumers. The integrated experiences that are possible when hardware and software are joined have proven to be a winning formula that is good for the
consumer and drives an increased enjoyment of recorded music.
What has Vivendi learned from the phenomenal success of World of Warcraft? To what extent do you think such online communities are the future of entertainment?
The phenomenal success of Blizzard’s ‘World of Warcraft’ demonstrates Vivendi’s ability to create and develop new successful businesses and invent new business models. ‘World of Warcraft’ has taken the genre of massively multiplayer online role-playing games (MMORPG) to a whole new level. Today, with more than 9.5 million subscribers in North America, Europe and Asia, ‘World of Warcraft’ is one of the most important and active global communities on the worldwide web. As in the the music industry, talent development and creation are the keys to success in videogames.