Larry Kenswil Title: President, E-Commerce and Advanced Technology Company: Universal Music Group Born: Boston, 1951 Education: Cornell University, bachelor’s degree in theater arts; Boston University, master’s degree in communications; Georgetown University, law degree Personal: Married, two sons By JENNIFER NETHERBY Staff Reporter A year ago, Larry Kenswil was given the task of leading Universal Music into the vast unknown of e-commerce. At the time, the Recording Industry Association of America was warning that the Internet could mean Armageddon for the music business, which was all but paralyzed by fears about the threat of piracy in providing online digital music. But rather than trying to bar digital downloads, Kenswil pushed Universal to embrace the format. In May, he broke ranks with the rest of the industry, announcing that Universal would begin selling digital music online by Christmas. A month earlier, Universal and BMG Entertainment launched GetMusic, an e-commerce site with online music channels, allowing fans to buy CDs directly from the label. Question: How did you get into the music business? Answer: I got involved in college radio as a disc jockey/programmer. I think most of us in the music business, even on the business side, do it because we love music. We’re either frustrated musicians or frustrated music lovers. Q: After graduating from law school, did you try going the more traditional route of working for a law firm? A: I was a lawyer for three years after graduating and looked for ways not to be a lawyer not in a law firm, at least. I was stuck in litigation. I didn’t like it and subsequently wasn’t good at it. But the firm I worked at had a music practice, and as a result I got involved with cases covering music and made contacts. Q: Previously you headed Universal’s legal affairs department. How did you go from that to head of e-commerce? A: I sort of invented it. (The position) didn’t exist before I started it. We had dabbled before in the Internet, basically looking for a market related to CD-ROMs and decided there wasn’t really one. (New technology) was under the radar. We kept it low-key and learned more and more about it. We started plans for electronic distribution in earnest three to four years ago. When we bought Polygram, part of the analysis involved new technology, since we were looking into expanding markets. Then it became a matter of execution. Q: What does your job entail? A: It’s a new division of the music group with three functional areas. Basically, we scout, shape and proliferate new media and technology. We scout for business and technology properties that might be helpful. We’re starting with music, but with an eye toward video and motion pictures in the future. Q: How would you describe the transformations taking place in the music business as a result of the Internet? A: The main change is one of direct connection between the music consumer and music seller, in our case as a record label. In the past, record companies went through middlemen (the retailers). There was very little contact directly with consumers. Now we’re finding out what the consumer is interested in and can narrowly focus marketing and production to them with the future promise of distributing a vast catalog. Q: How do you chart a course in something as new as e-commerce? A: There’s a lot of making it up as you go along. We’re trailblazing. We really are inventing a business model. We look for technology flexible enough to accommodate many different models. No one here claims to know what works best. The consumers tell us that. Q: What changes do you see e-commerce bringing to the recording industry and to Universal? A: You have to distinguish between catalog and new material. For catalog material there is a vast upside. In our catalog we own half-a-million to one million sound recordings. A small percentage of those are in release and a small percent of that is in retail. For one, we’ll be able sell a lot more material. We’ll also be able to sell to people who are not going into record stores, either because they’re too busy or just not going. For new releases, we’ll be able to get information about who’s buying the music. It will allow us to market in a way we were not able to do in the past. One astounding statistic is that more than half of the people who buy albums never know when a follow up (album) is released. We’ll be able to at least let them know an album is available. We can introduce them to similar artists. We’ll have communities based around music a great way, musically, to find people. Now, with music in niches and certain genres, we think twice about releasing recordings. With digital music, we can better find people who like it. Q: How far along is the music industry in terms of becoming an e-commerce-based marketplace? A: There are too many structural issues first. Broadband, of course (is needed). Most people can go to a record store, come home, go to a movie, come home and an album still won’t be done (downloading from the Web). We need speed. We also need to get the content ready. That takes a lot of work in terms of encoding, compressing, putting it on the server. Once the infrastructure is in place, it becomes part of the release problem. Q: What do you think the music industry landscape will look like in five to 10 years? A: In five years, the Internet will still be a relatively small percentage of sales, mainly additive. But between five and 10 years, it will really explode. A new technology system takes five years to get to a point that (the public accepts it) and then explodes. DVD video is breaking faster than other formats have in the past, but that’s not as much of a paradigm shift as electronic distribution. In the next three years it will pick up steam. By the fifth year it will come into its own. The formats we create will mean a difference in the way music is released. Rather than release an album every year or so, an artist can release a song each month, or maybe release the same song with changes. There will be subscription models that allow consumers to subscribe to a volume of music or even certain artists. Maybe there will not be individual albums released as there are now.