Music exec says business model is 'done'

Rick Rubin, the man who coaxed some of the best studio performances out of the Beastie Boys, L.L. Cool J and the Red Hot Chili Peppers, threw the curtain open on the music industry this weekend. What was exposed was perhaps more uncertainty and frustration than many may have expected.

A celebrated record producer who was recently named co-chairman of Columbia Records, Rubin made startlingly candid statements in Sunday's edition of The New York Times Magazine about the effects of the iPod, digital downloads and piracy on the music industry.

"Columbia is stuck in the dark ages," Rubin told the Times. "I have great confidence that we will have the best record company in the industry, but the reality is, in today's world, we might have the best dinosaur. Until a new model is agreed upon and rolling, we can be the best at the existing paradigm, but until the paradigm shifts, it's going to be a declining business. This model is done."

I repeat: the man making these statements is co-chairman of Columbia Records. He's kicking dirt on the music industry's business model before the industry has come up with a replacement. His statement couldn't have been more shocking had he picked up a bugle during the interview and blew "Taps."

What this means is that Rubin doesn't think the record business can survive unless it reinvents itself into....into what exactly?

Rubin spoke about an industry-saving technology that will render the iPod obsolete by allowing people to hear their digital music from cars, TV sets, cell phones--almost anything--for a $20 monthly subscription fee.

Sounds like a music locker to me or some version of the so-called jukebox in the sky. This is an idea that several companies have been pushing for a while--including Michael Robertson and his MP3tunes, which lets people store songs on the company's servers and then access them from any Web-enabled device.

Somebody should tell Rubin that the public has largely ignored such offers.

Another jaw-dropping revelation in the piece is that Columbia is flirting with the idea of asking artists to cut the label in on as much as 50 percent of their touring, merchandise and Internet revenue. Performers have typically been allowed to pocket concert and T-shirt money. As for revenue generated from digital downloads, I did a story recently about how a growing number of artists and music publishers want a larger share of Internet profits, not less, and are girding for a fight.

I cringed at some of Rubin's quotes. I appreciated his honesty but I'm guessing the suits at Columbia will probably castigate him for going public with his doubts. While it's no secret that CD sales are falling and Internet revenue isn't making up the difference, his statements won't do much for morale at Columbia.

Rubin's interview also underscored the music industry's determination to reduce its dependence on Apple and iTunes. The good news for Apple CEO Steve Jobs, judging from Rubin's comments, is that the record labels appear clueless as to how to make that happen.