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Is working outside the bounds of copyright, then settling the inevitable infringement lawsuits from major labels that follow the discovery of said flagrancy, the only way that digital-music startups can get a foothold in the business these days? That’s the contention of some executives who are at the Digital Music Forum this week, and who are pointing to sites like the streaming-music service imeem–which, they claim, built up its userbase thanks to giving users access to a bunch of music it hadn’t licensed, only to strike deals with Warner Music and Universal Music Group after the big guys threatened legal action–to bear out their theory. (For its part, imeem says it started slowly, making deals with smaller labels while it built its userbase and eventually attracted Warner’s attention; however, one can’t ignore the fact that they were trafficking in content that they didn’t exactly have the rights to before WMG’s hammer came crashing down.)
And once the majors do come calling, the payouts that they demand may be too much of a strain on the companies’ resources–once again, let’s point to imeem, which entered into an agreement with Universal that cost them a lot of money up front, and even more with each stream. Digital Music News talked to a few executives who say that the labels’ demands for payouts are strangling their business.
Majors frequently demand massive upfront costs for the rights to their catalogs, as well as lopsided percentage payouts. “There’s too much squeeze up front, and companies can’t survive five, seven years,” explained David Del Beccaro, president and founder of Music Choice. “This is a ten-year transition.”
Indeed, promising startups are frequently forced into economic turmoil, thanks in part to immense licensing overhead. Ted Cohen, founder of digital consultancy TAG Strategic, jokingly noted that labels are squeezing “the money parents donated to a startup,” though downtrodden entrepreneurs can sadly relate.
Then again, no one is forcing startups to sign the dotted line, or enter the treacherous digital music business in the first place. “It’s not unreasonable for us to want to get paid for our content,” said a less sympathetic Ted Mico, head of digital at Interscope Geffen A&M.
One might say that there’s a difference between “getting paid for content” and “imposing terms that make the relationship between labels and their licensees seem like one between a payday loaner and the guy down the block who will never, ever get current on his 99%-APR loan,” but I didn’t study business so I might just be showing my naivete slip. (And given that this post is illustrated with a decidedly unauthorized version of that Judas Priest clip that’s been up for months now, is the game of whack-a-mole/loansharking that the majors are tirelessly engaging in really worth all the trouble, not to mention the lawyers’ billable hours?)
Is Breaking The Law the Secret to Success in Digital Music? [Post I.T.]
Entrepreneurs Lash Out Against Lopsided Major Label Deals [Digital Music News]
If only the power of metal really could open bank vaults. I would be unstoppable.
I wouldn’t worry about it.
These are the last gasps of a dying grotesque giant, the last bullying action of a middleman nobody needs any more. Market forces will dictate that, despite their best efforts, the traditional record company will no longer be a viable business in the years ahead.
As I see it, we’re in the earliest stages of online music distribution overshadowing traditional album based forms (as different from the rampant illegal downloading of albums, which is another thoroughly interesting subject).
I’m thinking artists like Major Seven and the Minors, who present their material on their home page as a “collection of songs”, with no physical media involved at any stage. First of all, this requires a shift in thinking for audiences, especially audiences weaned on albums, conditioned into expecting music presented in a certain standard format.
The kids, as ever, learn faster.
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Now, I think that the primordial soup of an anarchic internet is not going to last, indeed, I don’t think anybody reasonably believes it will. This happens to be a very special time when the traditional industry – swooning from its inability to maintain scarcity and command prices – has been entirely unable to get in at the ground floor.
However, like in all random systems, things eventually nucleate.
A blog which I’ve cadged some good recommendations off is a blog I’ll visit again and recommend to others. Nobody can trawl the vast, disorganised, fragmented network on their own. There is a demand for tastemakers, and tastemakers will surely come into existence.
Blogs are the new DJs.
Some of this will, in time, turn into a new industry. You can see how a blog with a substantial readership might expect some amount of money in return for the service. It probably won’t be in the form of regular payments, but it might be something like a PayPal donation system, in line with the emergent internet ethics that seem to be working so well for such highly successful services as Wikipedia, which, by its very open nature and anarchic, organic approach to growth, has now beaten into oblivion the traditional models such as Encarta – and here’s the rub – done so in spite of poorer quality control.
Radiohead have famously begun to explore such options, and while they aren’t a good example because they’ve earned their fame in the “old idiom”, so to speak, it would still be interesting to observe how well they fare.
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Couple this with the fact that the home computer is slowly becoming the one-stop source of all entertainment, and there is an entirely unpredictable new set of natural laws to deal with.
This is a weird and wonderful time in the history of music distribution and consumption. The outcome of these processes will dictate how the music of this century will be made in the same way that LPs changed the way music was made in the last century.
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I am looking forward to great things.