Labels Concede That File-Sharing Isn't So Bad After All

from the a-little-late dept

Mon, Dec 10th 2007 4:16pm — Timothy Lee

Imeem, a social networking site that was in the recording industry's crosshairs earlier this year for allowing file-sharing on its network, has pulled off an impressive feat. This summer it settled its lawsuit with Warner Music by promising to give Warner a cut of advertising revenues from the site. Now the Wall Street Journal is reporting that it's signed similar deals with all four major labels, meaning that Imeem is now the first website whose users have the music industry's blessing to share music for free. What's especially striking about this is that for the last decade, the fundamental principle of the labels' business strategy is that sharing music without paying for it is stealing. They drove Napster, AudioGalaxy, Grokster, Kazaa, and other peer-to-peer file-sharing services out of business on that basis. As we pointed out way back in 2000, all this accomplished was to drive file-sharing underground where the recording industry couldn't get a cut of the profits. Had they approached Napster in 2000 the way they approached Imeem this year, they could have been collecting ad revenue from every file-sharing transaction over the last seven years. Instead, they wasted a lot of money on lawsuits, angered a lot of their customers, and ultimately still had to concede that music sharing might be OK as long as they get a cut. The only significant difference between Napster and Imeem is that Imeem only allows you to play music on its website, whereas Napster allowed you to download songs to your hard drive. But this isn't as big of a difference as it might appear at first glance. The Imeem website doesn't provide a "download" button, but there's no DRM involved, and it's quite easy to download music files from Imeem using third-party tools. And because Imeem's site doesn't use DRM, Imeem downloading tools are probably legal under the DMCA. So what we have here is the de facto legalization of Napster-like sites, as long as the record labels get a cut of the advertising revenue. It's an exciting development, albeit one that should have happened seven years ago.

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Filed Under: advertising, file sharing, p2p, record labels, riaa
Companies: imeem, napster, riaa, universal

12 Comments

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Anonymous Coward, 10 Dec 2007 @ 4:19pm

Here's why it didn't happen.
As the recent interview of Doug Morris, Universal Music's CEO proved beyond all reasonable doubt, the music/movie industries are run by people who don't understand their customers, don't understand technology, and are too stupid to try and do either.
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Tom The Toe, 10 Dec 2007 @ 4:42pm

What The Music Business Wants
So it's not a matter of paying for the music it's just give us some money and we'll leave you alone. This could hurt their chances in some on going court proceedings. When music execs are exposed for the money grubbing whores they are we will all breath easier. It appears they don't care about music revenue, just revenue. Doesn't matter where it comes from, (ads, kickbacks, graft, etc.) just as long as they get it. This could set a precedent where the radio stations play the music for free but give the record company geezers a cut of ad money instead.
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- Anonymous Coward, 10 Dec 2007 @ 11:39pm
  
  Re: What The Music Business Wants
  uhhhh radio stations do that already.... what rock have you been living under? I don't know about you but my FM radio isn't coin-op.....
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  - Anonymous Coward, 11 Dec 2007 @ 1:46am
    
    Re: Re: What The Music Business Wants
    shhhhhhhhhhh dont put ideas in their heads they are crazy enough to try it.
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Steevo, 10 Dec 2007 @ 5:27pm

Exciting indeed
The best part about this is, if it's actually gone through court and everyone is happy, other sites will be able to point to Imeem and say, "They're doing it, so it should be okay for us to." Now it's just a matter of other sites starting to push the envelope a little bit here and a little bit there to try and get more wiggle room from the precedent.
As much as I'd hate for the labels to get money, I think it'd be a good idea for a flood of people to hit Imeem just to show the idiot's at the top just how good this can be.
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Daz, 10 Dec 2007 @ 5:39pm

And the Artist's cut is...
not likely to be forthcoming
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Glurbie, 10 Dec 2007 @ 6:11pm

Unsigned Artists
I can't tell from the articles if the labels are getting a cut of Imeem's total ad revenue, or just ads shown while thier artist's music is streamed.

If it's from Imeem's total ad revenue, does that mean I can post a clip of myself singing an original song, no matter how badly, then go to SoundExchange to collect my share of the royalties? Or do the labels get to keep all the profits as extortion money?
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tony, 10 Dec 2007 @ 6:17pm

WE WIN!??
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matt, 10 Dec 2007 @ 6:19pm

umm lets get the truth about imeem
haven't you guys looked at imeem or did you fail to realize it is RIAA owned and was part of the reason why mediasentry was so crucified for. Imeem may, at any time, just "magically cancel" and sue everyone who uses it. So I would not touch this site with a 30 million foot pole.

Mediasentry emails showed they were using Imeem among other websites to grab IPs to sue. Not that they've sued anyone other than kazaa folks, but obviously they aren't done yet.
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tom reeves, 10 Dec 2007 @ 7:33pm

IMEEM, Maybe It's Legal Now
Thanks for post this comment. I linked to it on my blog write up on IMEEM. How nice of the labels to halt the withholding of approval .. I mean .. monetizing the value of the copyright. I'm sure that they will pass through a fair, and material percentage of this revenue to the artists. Just like they do with ringtones. Right?
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Clair, 11 Dec 2007 @ 9:39am

Maybe they've been hiding under a rock?
And they still haven't got a clue how things are like these days because of the internet. I think that they don't realize that there are other ways for the music industry to not be harmed by the sites like Imeem, etc.

It certainly doesn't hurt the artists' popularity.
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Khidr, 11 Dec 2007 @ 10:40am

No download button -
That's actually a pretty big deal, and probably goes to the unauthorized copying of copyrighted material. It's not expressly laid out in the Terms of Service on the site, but this is much more like custom slacker stations, or the free parts of rhapsody / etc... the whole idea is that you're stuck on the site, so it's a great place to sample music before you buy it.

And Imeem does have a download button, which will take you to your choice of itunes or amazon.com, so clearly they're not intending for you to circumvent their embedding by grabbing the mp3s out of the flash files.

Otherwise, I definitely agree with your article, this is a step in the right direction. The prospect of Google paying content owners to free up their users is looking pretty promising too.
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