Wednesday, August 24, 2011

The Music Industry Loses A Big One

gavel image from Bobby Owsinski's Music 3.0 blog
The "music industry" (also known as the major record labels and publishers) needs revenue. Everywhere they look the income pie is shrinking, and they're desperately trying to staunch the financial bleeding. One way they had hoped that would happen is to have the owners of the so-called "digital music lockers" pay them a license fee when a user uploads their music to the locker (also called "the cloud").

But neither Amazon nor Google went for that proposition, taking the bold step to wait and see what would happen in a test case of EMI (and 14 music publishers) versus MP3tunes is the brainchild of Michael Robertson, the creator of the original thorn in the side of the music business -, one of the companies that started the digital revolution in the first place. The site beat Amazon and Google into the music locker business, allowing the user to store all of their songs in their own virtual locker in the cloud so he/she could stream the music to any of their digital music devices at any time and not have to have all of their songs stored on that device.

In a lawsuit that has major industry ramifications, EMI wanted to get paid if any of their songs were loaded onto MP3tunes. What's more, they asked that MP3tunes effectively police their users to determine if any of the songs were stolen, then make them take them down.

In a ruling yesterday (August 23, 2011), Manhattan district judge William Pauley ruled that MP3tunes (and as a result, any other music locker) is not responsible for what their users upload, clearing the way for people to mix songs they have bought with those that have been offered for free on the internet without worry of having to pay a license fee.

The one stipulation in the ruling is that if a copyright holder finds that a user has uploaded pirated content, the locker company must take down those songs if they're notified.

OK, let's look at the winners and losers here.

The Winners
MP3tunes, Amazon, Google Music, any digital music locker - They don't have to pay a license fee to the labels, and they don't have to police their customers.

The user - They can store their music in the cloud without having to worry about being asked to pay a fee for music they can't prove they own.

The Losers
Music Publishers/Record Labels - They lost a potential major income stream.

Songwriters - Likewise.

Artists - They were bound to make something from that income stream, although probably a pittance of the total amount.

We all seem to leap for joy when the middle man takes a beating, but usually that also means that the creators are taking one too. Virtual music lockers threaten to become the next big thing in music and we'll see if that actually comes to pass by the end of the year or so, but that won't mean much for the real people that need the help - the ones that make the music.
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wabaus said...

Here's a great interview with Michael Robertson back in April.

He mentions this law suit, explains de-duping, discusses his new & previous ventures, the history of online music, as well as his meetings with the major labels.

@ 24m58s
"The music industry is incredibly litigious. And they were threatened by so they sued us. Later, the company that sued us, Universal Music, actually bought us. And when each other, there's usually something called a closing dinner, where you go out to a big steak dinner celebrating the transaction. And I sat next to Edgar Bronfman, who was the CEO of Universal Music...He sat next to me. And we're eating this wonderful steak dinner, and right in the middle of dinner he looks at me and goes, 'Michael, do you know why we sued you?' And I said 'No.' And I was really shocked that he even asked the question, because normally at the closing dinner you're all buddies, right? He says, 'We thought you were getting too powerful. We didn't want you to take over the music industry. So we sued you.'"

@ 27m25s
"[W]hen it comes to copyright lawsuits, don't assume that the law suit is about right and wrong. Don't assume that there's somebody who's immoral and broke the rules. Because quire often, it's not about right and wrong. It's purely about business. It's one guy deciding, 'You know what, I think I can put some pressure on this guy by going to court.' In my case, Universal Music got up in front of the judge and said, 'Your honor, this guy is lawless. He doesn't care about the law. He's a renegade.' And then we would break, and they would say, 'Hey, man, um, are we gonna do business or what?' It was an amazing contrast. And that's why, don't assume just because someone is involved in a lawsuit that they did wrong, because it may or may not be true."

Rob Sommerfeldt Recording Ideas said...

We need real cloud services with the artists paid from subscription and advertising dollars. Storage locker services don't help.

Rob Sommerfeldt Recording Ideas said...

We need real cloud services with the artists paid from subscription and advertising dollars. Storage locker services don't help.


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