Warner Music Continues The Trend: No Innovation Unless It Owns A Piece Of It

from the chilling-effects dept

Thu, Jan 15th 2009 2:27pm — Mike Masnick

Warner Music has a rather long history of being first in line to sue pretty much any new and innovative online music service out there. While it doesn't get nearly as much attention, we've heard repeatedly from people that Warner offers many of those sites a deal: give us a big chunk of the company and we'll drop the lawsuit. The lawsuit is merely a big stick used in the "negotiation" to get a piece of the company. So, when you see a lawsuit and then a settlement, involving Warner Music, often the reason is because the other company agreed to hand over a hefty chunk of equity. It's difficult to think of any major online music service that Warner hasn't threatened, sued or received an equity chunk from.

According to TechCrunch, that activity on Warner Music's part has now killed off an attempt by Facebook to open up its own music service. The company had been working for nearly a year on such a service, but Warner simply wouldn't allow it -- especially since it already had ownership stakes from a bunch of other players, and didn't want the competition. This is exactly the sort of chilling effect on innovation that we're consistently talking about. It's rather ridiculous that one company can hold up new and useful ways of listening to and sharing music. When things like the DMCA and other copyright extensions came out, the RIAA insisted that it would never try to block any new devices or services, but its members -- and Warner Music, in particular -- have never lived up to that agreement. Warner Music especially overvalues the music, and undervalues any service that makes that music more valuable -- and thus needs to block or kill off any such service that it can't own in some way. That's not the intention of copyright law, at all. In fact, it's a drastic abuse of copyright law.

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Filed Under: chilling effects, innovation, lawsuits, music
Companies: facebook, warner music group

18 Comments

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Anonymous Poster, 15 Jan 2009 @ 3:15pm

In before a Warner shill pops up in the comments and claims this move isn't "harming innovation", but it's "protecting the artists" or it's "helping to discover a better way to innovate" or some other bullshit company line that no one outside of the most gullible idiots will swallow.
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Amateur Lawyer, 15 Jan 2009 @ 3:25pm

antitrust?
Hmmm, using your monopoly position (the monopoly granted by copyright) to limit competition....sounds like a violation of the Sherman Antitrust Act to me.
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teknosapien, 15 Jan 2009 @ 3:32pm

"It's difficult to think of any major online music service that Warner hasn't threatened, sued or received an equity chunk from."

Archive.org
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Ryan, 15 Jan 2009 @ 3:48pm

Faith in Government
I'm not sure why everybody, while agreeing that such laws (or the interpretations and enforcement of such laws) as the DMCA, copyrights, trademarks, etc. need to be changed, they insist on waiting for government to change them. Government is controlled by special interests, which means that many times techdirt seems to mistake malice for ignorance (perhas knowlingly).

It was explicitly stated by the framers of the Declaration of Independence and the Constitution that when the existing government fails to uphold its contract with the people, it is the latter's right and duty to rebel against it--this was the entire justification for the American Revolution.

As has been pointed out before, music sales are not being particularly hit hard by file sharing. Rather than attempting to initiate change via government and legal action, a grassroots movement of civil disobedience needs to be made to force it. Do not buy anything owned by Warner music. Make it so difficult for them to profit that they are forced to either sue everybody or give up. In retrospect, everybody agrees that such ideas were noble for racial equality and gender equality--there's no reason why similar actions cannot be taken now, much more easily with less risk of punishment.
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eleete, 15 Jan 2009 @ 4:24pm

Re: Faith in Government
right and duty to rebel
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Rick, 15 Jan 2009 @ 6:50pm

Re: Faith in Government
Unfortunately, The Declaration of Independence has absolutely NO LEGAL WEIGHT. In fact, the Constitution was specifically written to ignore parts of the Declaration of Independence.

Personally, I'd love to see the Declaration of Independence written into law in some way.
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Tghu Verd, 15 Jan 2009 @ 7:30pm

Big Brother is alive and well...perhaps
I'm not a "Warner shill" but the assertion that "It's difficult to think of any major online music service that Warner hasn't threatened, sued or received an equity chunk from" needs to be substantiated for it to have any credence.

As a listed entity, Warner needs to disclose activities that materially impact it's operations.

Likewise any listed entity that Warner sues.

Which means this becomes public domain information - and private companies are not going to take threats to their livelyhood lying down, they would go PR on Warner ASAP the threat came in.

So if you are going to claim that "often...the other company agreed to hand over a hefty chunk of equity" it should be pretty easy to point to the evidence.

IMHO this drivel adds nothing to a reasoned debate around music services (or indeed, our duty to rebel).
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Lawrence D'Oliveiro, 15 Jan 2009 @ 7:57pm

“Protect”
Any time a company uses the word “protect”, it always seems to be code for “stifle competition”.
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What is fair to music, 15 Jan 2009 @ 8:34pm

What is fair to the industry is allowing artists to collect what is theirs. I personally like the ad funded solutions. Look what advertisers allowed the tv and radio industry to become in a few short years. This is the future whether it is a pay to play option ( not much different than digital tv) or 100% free. Companies like Qtrax will change this industry as we know it. The sad part is Warmer knows this already they are just throwing in a few more bags of money before the whole ship sinks.
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Anonymous Coward, 15 Jan 2009 @ 9:35pm

Warner Music especially overvalues the music, and undervalues any service that makes that music more valuable

This is techdirt's opinion. Perhaps in the interest of a give and take discussion WMG should be presented the opportunity to present its side of the story. This only seems fair.
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Sandy, 15 Jan 2009 @ 10:43pm

The problem with Warner, and the other majors, has been building for at least the last twenty years. Well before the digital age came to be. They stopped nurturing artists and started looking for the quickest way to make money by selling substandard music to the consumers. And by consumers I mean 12-17 year olds. Add to that their dominating the airwaves with pay-for-play scams and getting into cahoots with major retailers to fix prices. They created a whole class of music fans who really don't care about the effect their actions have on the labels and artists. The along came the internet and gave those fans a means to circumvent the industry all together.

The problem is that most of the majors are run by suits who are more concerned about whether they'll get that new Mercedes or be able to make the payment on their mansion and aren't thinking about how best to operate in the changing market. There most definitely are people on the internet who are parasites and taking advantage, but I would venture to guess that there are a lot more who are willing to work with the labels and offer them something in return for access. But the majors aren't interested unless they can monopolize the market. I do giggle with glee when I see a major take a hit, because they've created a market where it's hard for an honest label to make a living. But then again, I also know of a few labels who are keeping their heads way above water by adapting.
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PaulT (profile), 16 Jan 2009 @ 2:25am

Re: Big Brother is alive and well...perhaps
"Warner needs to disclose activities that materially impact it's operations."

Nobody doubts that. What people are complaining about here is that Warner seems to be very good at shutting down activities that would *positively* impact its operations. That fact that this makes no sense is the core of these discussions.
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Anonymous Coward, 16 Jan 2009 @ 3:15am

Society may give an exclusive right to the profits arising from them, as an encouragement to men to pursue ideas which may produce utility, but this may or may not be done, according to the will and convenience of the society, without claim or complaint from anybody. Accordingly, it is a fact, as far as I am informed, that England was, until we copied her, the only country on earth which ever, by a general law, gave a legal right to the exclusive use of an idea. In some other countries it is sometimes done, in a great case, and by a special and personal act, but, generally speaking, other nations have thought that these monopolies produce more embarrassment than advantage to society; and it may be observed that the nations which refuse monopolies of invention, are as fruitful as England in new and useful devices.
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Mike (profile), 16 Jan 2009 @ 3:25am

Re:

This is techdirt's opinion. Perhaps in the interest of a give and take discussion WMG should be presented the opportunity to present its side of the story. This only seems fair.

Representatives from Warner Music are *well aware* that they are free to respond in this forum whenever they would like. They have chosen not to do so, explicitly.
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Mike (profile), 16 Jan 2009 @ 3:29am

Re: Big Brother is alive and well...perhaps
Which means this becomes public domain information - and private companies are not going to take threats to their livelyhood lying down, they would go PR on Warner ASAP the threat came in.

Not so. Look at both Muxtape and Mixwit -- both of which shut down without any lawsuit being filed, but both were threatened.

But, as for active lawsuits, WMG has sued a bunch... including (off the top of my head): iMeem, Project Playlist, Seeqpod. It also took a stake in both iMeem and Lala.
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Tony, 16 Jan 2009 @ 10:12am

Re: Faith in Government
And how, exactly, do you plan to make all this happen on a scale that will make any difference?
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Pro Warner, 21 Jan 2009 @ 8:55am

warner owns the music, as much as todays society feels that music should be free it is still property bought and paid for. Why should they give it away for anything less than they feel it is worth.
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interval, 26 Jan 2009 @ 1:37pm

Re:
Because the reality is that consumers don't need WMG or any record label to get music anymore, regardless of how the laws are positioned? How's that reality grab ya?

You can also sell nitrogen, and make a decent living from farmers. But when you start accusing anyone who grows vegetables of stealing your nitrogen, regardless (or in lieu) of any facts, demanding a tax from everyone (farmer or not) and just generally throwing your weight around just becuase you can legally (and lets face it, if you have enough money, you can almost decide what's legal), does that mean we should just throw our hands up and say "Well, they have a legal right..."
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