New Music Locker Startup Looks More Like Sucker's Bet To Transfer Cash From Investors To Music Labels
from the do-the-math dept
A few weeks ago, at the Digital Music Forum East event, right before I went on stage to interview Gary Shapiro from CEA, there was a presentation from a new music startup I'd never heard of, called Beyond Oblivion. The presentation (which is embedded below) was interesting, if incredibly vague. It looks like they're trying to create a music locker of sorts, but to avoid the various legal woes of other such music lockers by throwing a ton of cash at the labels. It's basically "don't sue us" money. Literally, the company has promised to pay $500 million to labels. It claims that it will monitor digital locker usage and any use of a song -- whether it was legally obtained or not -- will result in payment to the copyright holders. The presentation certainly created some buzz, but I couldn't figure out how the model made any sense at all. Apparently some investors are willing to give it a shot. Based on not much of anything in terms of proof that this will work, the company has raised an astounding $77 million, much of which you have to assume will just be handed over to record labels. Of course, as Hypebot notes, how much of that actually goes to artists appears to be an open question.But really, the whole thing is head-scratching. How does the company make money? By charging device makers to pre-install its software. But why will device makers agree to pay to install this software? Yeah, that's the big question mark in the quest to the "profit" stage in the game plan. I'm sure the record labels will gladly take the cash that the investors just handed over to Beyond Oblivion, but that hardly makes this an offering that is likely to gain any traction in the marketplace.
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Filed Under: business models, investment, music, music locker
Companies: beyond oblivion
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~Thomas Tusser
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"Hi, I'm a complete nerd that knows nothing about the music business. I like to make sweeping generalizations about how all transactions between musicians and record labels occur. I know so little about how things work, that I assume artists never choose to sign with a record label to further their career, but that a gun was held to their head while the label rep whispered "I'm taking all your money and your Aunt Bertha's too".
I've never seen a royalty statement from a successful band on an indie label, but I'll just go ahead and state that the artist only made 1% of the profit. I think that the employee list at record labels is comprised of animatrons, not people that believe passionately in an artist. I think it's better if an artist just uses the internet to gain recognition, and ignore all the professional workers that are already skilled at bringing interest to an artist via multiple outlets.
Oh, and btw, I'm tone deaf and couldn't capably play a musical instrument even if you paid me a million dollars to do so.
Please do as I say. You'll be famous in music."
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Bass Ackward
Now maybe Im looking at this the wrong way, but this seems to be completely BACKWARD. The music industry should be paying this service a license to use their technology and then collecting the projected profits for themselves.
Promising the labels half a billion dollars to avoid a lawsuit is like giving a bunch of crack addicts a big bag of crack and saying "You can have this big bag of crack right now if you promise to give up your addiction." What do you think the response will be????? The labels will just suck the well dry and when the money runs out they will sue for whatever is left of the dried up well, claiming that the service is just another form of piracy.
Personally, I think the idea is a good one, but it should be implemented by the labels and they should license the technology. If it doesn't work out, at least they tried a new business model.
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Re:
If you can see this from your overly-tall horse, I'd suggest you read it to see exactly how the artists are talked into screwing themselves with a major label contract:
http://www.negativland.com/albini.html
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The labels will be able to tell everyone "see? they are paying us, so everyone else should pay us too."
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1.Publishing deal: 70 to him 30 to us, no money - we walked out
2. Management (v well known): he pushed the papers over the desk we said we thought we should have a lawyer look over it, he said fine 'here's my lawyer' - his lawyer walked in. We walked out.
3. Record Deal (v well known label): 'the same that Suede got - a few hundred quid and a big bag of coke' We walked out.
So, yes it was all pretty shoddy especially at the 'indie' end of the market. its probably great if you come out of Brit School.
So, on the whole i would say that ye
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Obvious Business Model Is Obvious
It’s a wonder the record labels still keep their faith in human nature and don’t become completely cynical, the number of times they’ve been stiffed like this. Still, good on them on being willing to keep trying.
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If I were a musician I would rather be advised about business models by someone who knows economics and business than by another musician.
If I were a dog I would rather be operated on by a vet then by another dog.
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~Will Rogers
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-friendly neighborhood typo officer
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You do know, unless you are part of the record labels, they will bleed you dry. It will follow this path ...
1) wanting to partner with you or become investors.
2) a law suit to be used to force you to capitulate to their terms.
3) you taking their terms.
4) the eventual failure of your business.
That is if this isn't a quasi-legal scam to rip off investors.
Now some questions....
1) Will this be free to the end user?
If not it is destined to fail. With 5 million bands on MySpace and FaceBook you have massive competition for the labels dollars. The economics of free (FMA, CC, etc) will bleed the labels dry over time.
2) will you be paying independant artists directly? or through some colletion society where they will never see a dime?
3) how will indies register for payment?
4) will the monies paid out be based on negotiated contracts with the labels? or real life "whats stored in the file locker" data?
if it is contracts with the labels then you are boned (see 5 below)
5) have you read any of the CC licenses?
You can get nailed for copyright infringement and soon felony infringement (COICA) if you pay out against certain CC licenses.
thats it for now.
David
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