[This was a recently published guest column on GigaOm]
Despite all of the issues plaguing the music industry these days,
there is plenty of innovation in digital music to be found from a range
of startups out there. Many of these startups require content from the
labels, yet choose to plow ahead with their product marketing without
getting licenses. This irks the labels, of course, but it’s of their
own doing — it is generally much easier to beg forgiveness than ask
Given all the hoops that need to be jumped through — technical,
financial and legal, to name a few — negotiating content licensing
deals with labels can take months. And that’s if they’ll do a deal with
you at a price you’re willing to pay. Of course, the labels have sound
business reasons for making companies jump through such hoops.
But from a practical perspective, a cash-strapped startup typically
won’t have the patience, expertise or resources to ‘ask permission’ as
such. Instead, they calculate that it’s better to move forward with
bringing their product to market and deal with the consequences if and
when they gain traction (because if they don’t gain traction, no one
will come after them and it will all be moot anyway).
The founder of one innovative service (with good traction) whom I
recently spoke to said his backers encouraged him to follow the ‘beg
forgiveness’ route rather than negotiate directly with the labels. On
the other hand, I know of another startup that has tried to negotiate
direct deals with the labels over the past couple of years, holding up
its full launch in the process. Traction for them? Not so much.
While the original Napster is one example where begging forgiveness
didn’t pay off, more recent examples abound of successful startups that
begged forgiveness once they had traction: iMeem, YouTube and MySpace immediately come to mind. I also know that some labels look askance at Last.fm and its $275 million acquisition price and, given the license fees it paid, are determined not to let that happen again.
It’s understandable that the labels want to capture more of the
value that they feel their content creates. But in order to do so,
they’ll need to not only increase the cost of begging forgiveness, but
make it quicker and cheaper for sites to license their content.
Finally, I think the labels recognize this and want to do something
about it (full disclosure: my company, Brightcove, is working with some
of them in this area)…but the quicker they do so, the better off