Record Labels Continue 'Negotiating Through Lawsuit'

from the it's-why-they're-so-lovable dept

Thu, Jun 18th 2009 1:09pm — Mike Masnick

We've noted in the past that the record labels have a pretty well established operating procedure when it comes to "negotiating" with startups that are actually doing the innovative things in the music delivery and promotion space. They open "negotiations" with these startups... and then after a certain point, they file a lawsuit. It's purely a negotiating tactic (and a way for record label lawyers to keep busy), that makes the "negotiation" a lot more antagonistic, and often ends with the startup agreeing to give up way too much. Warner Music perfected this trick, such as when it sued iMeem only to then invest in the company as part of the settlement. Of course, because iMeem had no choice but to cave in order to deal with the lawsuit, the terms of the deal were so onerous that iMeem nearly went out of business -- until Warner Music wrote off the investment and recently renegotiated.

As unbelievable as it may be, the major record labels apparently don't recognize that "deals" negotiated at the end of the barrel of a gun tend not to work out very well in the long run. They're certainly not mutually beneficial.

And yet... the process continues. While Warner Music has done a bunch of these sue-to-negotiate deals, EMI seems to be involved in many of the more recent lawsuits of this nature. Its latest target is GrooveShark, one of a bunch of sites that lets you listen to streaming music online. Apparently the two companies had been negotiating terms... and then suddenly EMI sued. Par for the course. In the meantime, if you're a music startup hoping to do a licensing deal with a major label, make sure you have some litigators on your legal team. You're going to need them.

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Filed Under: licensing, music, negotiations, streaming
Companies: emi, grooveshark

8 Comments

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Ima Fish (profile), 18 Jun 2009 @ 1:19pm

"They're certainly not mutually beneficial."

The music industry does not enter into these "deals" for the mutual benefit of the parties. It sues and enters into these deals for two reasons.

First, to destroy any music related business model which could interfere or compete with their business model.

Second, in case the new business model somehow succeeds, the music industry gets a cut for doing nothing.

Either way, the current music industry succeeds, even as they are circling the drain.
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barren waste, 18 Jun 2009 @ 1:33pm

irony
When I did stuff like that in my younger days, the courts called it extortion......
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bob, 18 Jun 2009 @ 3:46pm

Overseas
Have you servers in Antigua.
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- Anonymous Coward, 18 Jun 2009 @ 5:49pm
  
  Re: Overseas
  Doesn't matter where your servers are... it's where YOU are. You only get that dodge if you move to that remote jurisdiction and NEVER come back - you can get served any time you are in the US.
  
  Dodging means you have something to hide, anyway.
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  - Fsm, 18 Jun 2009 @ 6:04pm
    
    Re: Re: Overseas
    "Those aren't MY servers, your honor. They belong to a local Antiguan!"
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    - Anonymous Coward, 18 Jun 2009 @ 6:22pm
      
      Re: Re: Re: Overseas
      "interesting sir, and how come you are listed as the main person on every blog post, on every entry, and that you make your living off those servers".
      
      Oldest dodge in the book, and it doesn't work (ask the gambling folks).
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Killer_Tofu (profile), 19 Jun 2009 @ 6:11am

EMI
And EMI was supposed to be under new leadership and going in a new direction.
Just more of the same junk from the same old evil labels.

As one AC used to say a lot:
Not one cent!
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Sammie Houston (profile), 19 Jun 2009 @ 3:08pm

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