MediaFuturist: Breaking the Law To Get a Break (via Washingtonpost.com) - Sonific's challenge of making it work with 'legal' HIT content

March 21, 2008

Breaking the Law To Get a Break (via Washingtonpost.com) - Sonific's challenge of making it work with 'legal' HIT content

Link: Breaking the Law To Get a Break - washingtonpost.com.

"...For many other start-ups, it's a tough trade-off to become legitimate. Like Imeem, Sonific, an online service that allows users to stream music to blogs or personal Web pages, is trying to strike licensing deals with large record labels to expand its music library, which now has about 250,000 tracks from smaller, independent labels. But Gerd Leonhard, the site's founder, said it cannot get the interest of labels because of its relatively small pool of 100,000 users. "Our major hurdle is that we're trying to do it legally," he said. "You're either forced to use the music without the proper permission or you just don't get your audience."

Nice to see that that Kim Hart (the Post writer) got this right. I have written about this a few times before: right now law-abiding startups like Sonific are essentially penalized and severely handicapped by the lack of clear licensing procedures and the major labels' outmoded business strategies.

Here are some more thoughts on this:

While there are countless startups providing any and all music catalogs under some 'fig-leaf' licenses or without any permission whatsoever (whether using streaming widgets or other means... nope, sorry, no names here;) the major record labels still manage to choke any intention to license their catalogs by demanding exceedingly large cash advances, insisting on fixed per-stream payments, asking for ‘free’ company equity to get deals done, and on top of it all want to impose bizarre usage restrictions. Mission impossible.

Clearly, they seem to prefer this turf to remain unlicensed rather than to allow workable market-based solutions to emerge. This behavior is killing a very powerful newly emerging ecosystem because one cannot operate a music-based service with just the 'longtail' content - a dog without a head simply does not walk, yet.

A startup such as Sonific that wants to provide interactive streaming 'music widget' services - and that will clearly need a large audience to be relevant - must either a) live with being constantly criticized by the users for the lack of hit content, and therefore not attain a sufficient audience b) proceed to use music without the required licenses, and therefore be at the total mercy of the record labels at some point in time, i.e. when they feel like dropping the ‘copyright infringement’ hammer c) build a huge audience very quickly, based on having all content available - permission or not -, and then quickly sell themselves to a large company that will take care of placating the labels while the money is plenty and the pockets are deep.

I don't know about you, out there, but none of these choices sound good to me.

Almost a billion people now use music to stream on their blogs, social network pages, home-pages and user profiles – this is indeed a veritable gold mine for music marketing. Yet, the established players in the music industry are still looking to simply squeeze 'permission fees' from companies that want to serve this market, instead of building a new market together.

So... what do you think? Feel free to comment below!

PS: as far as some labels go there are notable exceptions to this behavior - check out Natasha Beddingfield on Sonific

Posted by Gerd Leonhard on March 21, 2008 at 10:34 PM in Sonific | Permalink

Comments

Link: Breaking the Law To Get a Break - washingtonpost.com.

"...For many other start-ups, it's a tough trade-off to become legitimate. Like Imeem, Sonific, an online service that allows users to stream music to blogs or personal Web pages, is trying to strike licensing deals with large record labels to expand its music library, which now has about 250,000 tracks from smaller, independent labels. But Gerd Leonhard, the site's founder, said it cannot get the interest of labels because of its relatively small pool of 100,000 users. "Our major hurdle is that we're trying to do it legally," he said. "You're either forced to use the music without the proper permission or you just don't get your audience."

Nice to see that that Kim Hart (the Post writer) got this right. I have written about this a few times before: right now law-abiding startups like Sonific are essentially penalized and severely handicapped by the lack of clear licensing procedures and the major labels' outmoded business strategies.

Here are some more thoughts on this:

While there are countless startups providing any and all music catalogs under some 'fig-leaf' licenses or without any permission whatsoever (whether using streaming widgets or other means... nope, sorry, no names here;) the major record labels still manage to choke any intention to license their catalogs by demanding exceedingly large cash advances, insisting on fixed per-stream payments, asking for ‘free’ company equity to get deals done, and on top of it all want to impose bizarre usage restrictions. Mission impossible.

Clearly, they seem to prefer this turf to remain unlicensed rather than to allow workable market-based solutions to emerge. This behavior is killing a very powerful newly emerging ecosystem because one cannot operate a music-based service with just the 'longtail' content - a dog without a head simply does not walk, yet.

A startup such as Sonific that wants to provide interactive streaming 'music widget' services - and that will clearly need a large audience to be relevant - must either a) live with being constantly criticized by the users for the lack of hit content, and therefore not attain a sufficient audience b) proceed to use music without the required licenses, and therefore be at the total mercy of the record labels at some point in time, i.e. when they feel like dropping the ‘copyright infringement’ hammer c) build a huge audience very quickly, based on having all content available - permission or not -, and then quickly sell themselves to a large company that will take care of placating the labels while the money is plenty and the pockets are deep.

I don't know about you, out there, but none of these choices sound good to me.

Almost a billion people now use music to stream on their blogs, social network pages, home-pages and user profiles – this is indeed a veritable gold mine for music marketing. Yet, the established players in the music industry are still looking to simply squeeze 'permission fees' from companies that want to serve this market, instead of building a new market together.

So... what do you think? Feel free to comment below!

PS: as far as some labels go there are notable exceptions to this behavior - check out Natasha Beddingfield on Sonific