Why Would Google Offer $1B For Music Rights? Because The Return Could Be Much Bigger

from the you-can't-put-a-price-on-freedom dept

Fri, May 18th 2012 12:31pm — Leigh Beadon

It's no secret that Google's music locker service is struggling, but the company still seems committed to making it a success. To do so, they'll need to do big things, and break through the barriers that the record industry places in their path. Music columnist Wayne Rosso reports that an unnamed source told him Google is making bold overtures in that direction, and has offered at least one major record label a $1-billion contract for blanket worldwide rights to their entire catalog (thanks to Colin for sending this in). It's still unconfirmed, but it echos something Glyn wrote last year (which Rosso also refers to) about the possibility of Google or a consortium of internet companies simply buying out the record industry (and noting that Larry Page, Serge Brin and Eric Schmidt could afford to do so with their personal fortunes).

Rosso's source, however, isn't exactly sanguine about the idea:

What, one may ask, is Google thinking? “Who knows,” said the source. “It really doesn’t matter because they would screw it up anyway (referring to the fact that Google’s music service has been less than dazzling). Evidently they have a big content group and they have to have something to do to justify their existence.”

So how have the labels responded? “They’re just shrugging and stringing Google along, trying to keep milking cash out of them”, says the source. “They want the money but on the other hand they hate Google. It really sticks in their craw that Google continues to present links to pirated content at the top of their search results.”

I think that, if true, this says something much different. Google is not trying to "justify" anything—they know that there is tremendous opportunity in the field of online music services if only the labels will loosen the reins a bit. And they are willing to bet billions on that belief. The problem with online music offerings is that the people who design them simply don't think the same way the recording industry does. They want to make cool, useful, engaging services full of both common sense features and innovative ones, deployed on multiple platforms all over the world, fully leveraging the technology that is available—but licensing restrictions interfere with every single step of that process. Design and development are inextricably linked with tedious contract negotiations and the fear of lawsuits. It's extremely difficult to get a good product as a result—and if you do, the labels clamp down to see where they can extract more money from it. If Google is trying to buy blanket licenses with no restrictions at a high price tag, it's because they want to escape that cycle. They want a clear and open playing field on which to build services the way they want to build them, without having to beg the labels for permission at every turn. In a market that has only scratched the surface of the economic possibilities of digital music, such a playing field would be well worth the money.

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Filed Under: licensing, music lockers, wayne rosso
Companies: google

48 Comments

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Anonymous Coward, 18 May 2012 @ 12:40pm

$1-billion to labels?
Don't labels already have enough money for blow and hookers?

Seriously, sounds stupid. It doesn't compensate the actual musicians, many of which are dead. All it does is give record executives and 'producers' more money for making nothing. And later on they'll still sue google for whatever the legal department can find loopholes in.
Google would be walking into a trap. The labels would just keep draining them for more and more money until they die, and then they'll scavenge the corpse for what is left. The same thing they do to musicians.
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Ima Fish (profile), 18 May 2012 @ 12:48pm

Can you fricken imagine if Google bought a couple labels and started making money via music by giving customers value as opposed to relying on stronger and harsher laws?!

The RIAA would be greatly weakened. And that'd leave the MPAA weakened too because whenever they cry about some new technology that the government has to stop, they always team up with the music industry to drag us back a few decades.

Basically, the whole copyright lobby would have much less influence. And who knows, maybe our Congress could start passing copyright laws that actually make sense in the real world.
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Anonymous Coward, 18 May 2012 @ 12:49pm

The problem with buying out the entire music industry catalog: artists terminating their transfers/assignments of copyright.

A lot of those rights they would be buying are only going to last another few years, at which point they would engage in constant renegotiation as the next batch of works hits the 35-year-from-assignment mark.

This is assuming they are not deemed works made for hire.
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Anonymous Coward, 18 May 2012 @ 12:50pm

I'd rather they spend that money fighting it out in court that storing something you paid for is legal.

Besides, the labels will see the $1 billion as a lowball offer anyway.
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Anonymous Coward, 18 May 2012 @ 12:51pm

Re: $1-billion to labels?
It may be walking into a trap, but I think the original artists would be best positioned to spring that trap, since they can terminate their copyright transfers after 35 years.
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Ninja (profile), 18 May 2012 @ 12:51pm

Much like the oil industry was dragged into the future through other applications of their products (including the once ignored natural gas) the music industry is being dragged to the future by the ones outside them and ironically the ones they hate the most. I do hope the MAFIAA doesn't emerge as some industry moguls with broad power like the petrol companies did though...
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Leigh Beadon (profile), 18 May 2012 @ 12:52pm

Re: $1-billion to labels?
Well, details are scarce (and it's not even confirmed) but it sounds like what Google is looking for is a genuine blanket license - the sort of contract that says they can do anything they want with the entire catalogue. No additional royalties, no specific rates for different kinds of rights - just everything.

Imagine the possibilities. Imagine a truly comprehensive music catalog that is genuinely integrated with all aspects of google. So any time you search something related to music, or someone emails you something about music, or you save a doc about music - you can pull up an instantly streamable version of the track. That's the kind of vision Google has for Google Music, but there are only two ways to accomplish it: fight to create it, inch by inch, by extracting better terms from the stubborn labels over time - or seal a mindblowing deal for a crazy sum of money that just opens the floodgates and lets them do whatever they want. I for one would love to see what would happen if it worked.
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GMacGuffin (profile), 18 May 2012 @ 12:52pm

Google Music Rocks, so pay away if you have to. Won't mean diddly to me. I refuse to enter Apple's cloistered world, so when it came out integrated with everything else I do, I immediately uploaded the first 8k songs at hand. I've bought one album on it, but care little about the offerings. I want the player; I get my music anywhere, and still get to stay in open-source Android land.
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Anonymous Coward, 18 May 2012 @ 12:53pm

seems like google could just but the labels cheaper....
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Anonymous Coward, 18 May 2012 @ 12:53pm

dont see how there can possibly be any money to be made from an on-line music service. after all, if there were such a possibility, the music industry itself would be all over it, wouldn't it? (sarc)
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Ima Fish (profile), 18 May 2012 @ 12:56pm

Re: $1-billion to labels?
I agree with your trap argument. If Google is gonna do this, it should buy the labels outright. If they remain in bed with the labels, they're gonna get screwed. And not in a good way, either.
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Anonymous Coward, 18 May 2012 @ 1:06pm

Re: Re: $1-billion to labels?
I would rather they they just send an invite for all non-label owned musicians and music, and promote those. There's far more independent musicians, and small label ones out there by comparison to the RIAA owned ones.

I'd rather listen to Amanda Palmer then a new label drone anyway.
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Anonymous Coward, 18 May 2012 @ 1:19pm

Why doesn't Google just invest its money into starting its own record label.
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Anonymous Coward, 18 May 2012 @ 1:28pm

Re: $1-billion to labels?
I completely agree, Google should either buy and own the labels or not invest a dime in it. These labels deserve to go out of business.
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Topper, 18 May 2012 @ 1:28pm

Google should start its own music publishing like Amazon has its own book publishing. Start with a few indies and whatever big name it can get. As old copyrights revert to original sign them up. And if possible fund an lawyer or 2 for artists to fight to regain their own copyright after 35 yrs. In time an artist would have a choice between new way , Google, or old way , old publishers.
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Anonymous Coward, 18 May 2012 @ 1:29pm

I would rather they they just send an invite for all non-label owned musicians and music, and promote those. There's far more independent musicians, and small label ones out there by comparison to the RIAA owned ones.

I agree 100%. The old industry is dying - so let them die and take their aged almost-dead cash-cows (their so-called artists - seriously - does anyone want to hear another fucking word from 68 year old Mick liver-lips fucking Jagger and his backing band of old men?) with them. They can all rot in hell together.

New music will continue to flow forth from new talent as it has for millennia. What Google needs to do is tie up the new talent supply so that the old greedy bastards can't sign anything new. Slowly, but surely, the old industry will just shrivel up and die. Problem solved, game set and match.
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Rich Kulawiec, 18 May 2012 @ 1:37pm

Re: Re: Re: $1-billion to labels?
I'm absolutely on board with this idea. Rather than spending $1B to buy a dying catalog, why not spend $100M to buy a thriving one? Invest in the future, not the past.
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Anonymous Coward, 18 May 2012 @ 1:50pm

Re: Re: $1-billion to labels?
(and after buying the record labels, it should outright fire all of its executives).
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The eejit (profile), 18 May 2012 @ 2:24pm

Re: Re: Re: Re: $1-billion to labels?
Or, why not spend $1.1bn to do both, get full blanket licensing deals with everyone else, and have a truly sharing culture where everyone can win and everything is available wherever you wish?
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The eejit (profile), 18 May 2012 @ 2:25pm

Re:
Even so, leveraging those for a few years, and attempting to give the artists the ability to gain back their copyright (with some exceptions, on account of them haveing a bad case of the deadsies). That can be leveraged to add value to the content.
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The eejit (profile), 18 May 2012 @ 2:28pm

Re:
A small subscription for unlimited access, anywhere, anytime, like $3-4/mo or $35/yr, which can be added on to a contract or used on PAYG, over Wi-Fi and through your consoles. And not a bit of it has to be saved.

Imagine a fully-functional Netflix streaming service with all the options of Google.
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Anonymous Coward, 18 May 2012 @ 2:35pm

Re: Re:
I'd be willing to bet that most artists would be willing to share their copywrite licenses with Google for a significantly larger piece of the royalty pie.

After all, Google will have the service and the promotional muscle to continue selling those old catalog songs at a higher rate than an individual artist could, and if the artist gets a majority stake in the profits, it would be a good thing for both parties involved.
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Anonymous Coward, 18 May 2012 @ 2:39pm

Re:
So instead of buying them out, strangle them out of the market. I like it.
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Farrell McGovern (profile), 18 May 2012 @ 2:54pm

Sony is having financial difficulty
I am sure that Google and/or it's owners could afford to pick up Sony...they have one of the larger catalogues too!
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Anonymous Coward, 18 May 2012 @ 3:07pm

Re: Re:
What? I honestly have no idea what you're saying.
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Rich Kulawiec, 18 May 2012 @ 3:16pm

Re: Re: Re: Re: Re: $1-billion to labels?
Well, because the $1B purchase is going to come with a lot of strings: legal hassles, licensing issues, all kinds of leftovers from everything that the record companies come in the past. The $100M purchase, if handled properly, could be largely free of those.

So why not leave the existing record companies holding the bag? They get stuck with the old, and with all the expenses involved with it, while Google picks up the new -- and is an instant hero to everyone who hates the RIAA et.al.
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Anonymous Coward, 18 May 2012 @ 3:18pm

Re: Re: Re:
If I, as a copywrite holder of a catalog song(s), terminate copywrite from a label, why wouldn't I license it to a company like Google who already has the resources and system in place to promote and sell my songs, giving me a bigger royalty check then I'd ever get from the labels?

Artists want to sell their songs, they want to be paid for the songs that they sell. Google would have a system in place to do that at no added effort on the artists part, with a much better payment plan for the artist, and the artist getting to retain their copywrite and ability to sell it to other distributors too.

It's a win/win for both the Artist and Google.
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Anonymous Coward, 18 May 2012 @ 4:04pm

Re: Re: Re: Re:
First, it's copyright.

Second, labels generally don't own the copyrights in songs (i.e., musical compositions). They own the copyrights in recordings. That alone makes all this very difficult.

An artist who terminates his transfer of copyright to a label may very well wish to assign it or license it to Google.

My point is that there is not really a good possibility for a massive "buyout" of the industry (i.e., along the lines of purchasing rights from all the labels to create a near-comprehensive catalog), because the labels do not own perpetual rights in the songs.
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Suzanne Lainson (profile), 18 May 2012 @ 4:21pm

Re: Re: $1-billion to labels?
If Google is gonna do this, it should buy the labels outright.

I've assumed that is what people have been speculating about. Why not just buy the labels, own the copyrights, and then do what you want with them (of course, they would only own the master copyrights, not necessarily the songwriter copyrights). Make the music free to the world if that's what Google would like to do. Actually, I'd love to see what would happen. If Google owned all the major label music, would they make it available to competing services? They would if they truly want a copyright-free world.
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Suzanne Lainson (profile), 18 May 2012 @ 4:24pm

Re: Re: Re: $1-billion to labels?
I've suggested that to industry people. Why bother with music you have to license? Just deal with musicians who will give it to you for free. However, they tell me that listeners want those major label songs and no service that only deals with unsigned artists will make it.

But I think starting a company where you have to license music is doomed to fail. And I don't feel sorry for those who do and then complain that the major labels and rights organizations are impossible to deal with. They knew what they were getting into.
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Gwiz (profile), 18 May 2012 @ 4:59pm

Re: Re: Re: $1-billion to labels?
Why not just buy the labels, own the copyrights, and then do what you want with them...

If that happens, I wonder where Google will end up on the copyright termination fight.
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Gwiz (profile), 18 May 2012 @ 5:03pm

Re: Re: Re: Re: $1-billion to labels?
Oof. Bad link.

http://www.techdirt.com/blog/?tag=termination+rights
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surfer (profile), 18 May 2012 @ 5:32pm

Re: Re: Re: $1-billion to labels?
I agree, this is where it's going. Google will get a fuck you for the offer, then Google buys out the major labels and their copyrights, ???, profit.

+1 insightful
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surfer (profile), 18 May 2012 @ 5:36pm

Re: Re: Re: Re: $1-billion to labels?
sry, replied to wrong thread,

+1 insightful for Ima Fish as well.
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surfer (profile), 18 May 2012 @ 5:46pm

Re: Re: $1-billion to labels?
I think the entire fear is based on the ability for a customer to have a library large enough that they no longer need to consume any of the new crap. Limits on content, windowing, regioning, DRM, trade restrictions, they all point to the same fear, that the consumer will stop buying what they are peddling. they are relevant in their own minds.

over the last 15 years, I have watched as the file sharing community grew, and grew, and grew, and grew, and grew. where do you think things like grokster, morbius, hotline, kdx sprung from? the inability to distribute flawless copies was resolved 16 years ago.

today we have usenet, bittorrent, file lockers, sftp, vpn, proxies, streaming on-demand media, from a bunch of bored geeks, imagine what could be built if the MAFIAA ceased to exist.
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Anonymous Coward, 18 May 2012 @ 5:47pm

Re: Re: Re: Re: Re: Re: $1-billion to labels?
I would support google starting its own label, and hopefully replace the old out of touch ones

Yeah, i said it

But i dont see it happening, actually, i dont see the old labels "letting it", happen, and im pretty sure google sees it the same way

If,
they do try it, and against all odds, suceed somehow, the day the old labels realize they well and trully.... fucked up.......well, that would be a glorious day

Damn, would'nt it be nice if we could get it on film....*cough....for prosperity's sake......ofcourse

*sigh... zzzZZZzzzzzzzzzz
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Anonymous Coward, 18 May 2012 @ 6:37pm

Re: Re: Re: Re: Re: Re: Re: $1-billion to labels?
"I would support google starting its own label"

but if they did that they might be falsely accused of bogus anti-trust violations.
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Anonymous Coward, 18 May 2012 @ 6:59pm

Can you fricken imagine if Google bought a couple labels and started making money via music by giving customers value as opposed to relying on stronger and harsher laws?!

I can fricken imagine Google having a real interest in all of the elements of SOPA once it's their shit being being monetized by others.

The RIAA would be greatly weakened. And that'd leave the MPAA weakened too because whenever they cry about some new technology that the government has to stop, they always team up with the music industry to drag us back a few decades.

If Google moves to a model where their own content is a major source of their revenue the RIAA, MPAA and other successor entities will be strengthened.

Basically, the whole copyright lobby would have much less influence. And who knows, maybe our Congress could start passing copyright laws that actually make sense in the real world.

You are kidding yourself here. Once Google gets addicted to the cash that will be flowing in, they will be indistinguishable from any other company that distributes content for profit. Why people continue to believe the "don't be evil" bullshit is stunning. Google cares about money and power above all. Watch and see what happens. You'll look back longingly for the freedoms you'd have had under SOPA.
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Suzanne Lainson (profile), 18 May 2012 @ 7:03pm

Re: Re: Re: Re: Re: Re: Re: $1-billion to labels?
I would support google starting its own label, and hopefully replace the old out of touch ones

I don't see why anyone would start a label now. Too much work and too little return. That's not a business Google needs to be in. However, it does make sense for Google to just buy the major labels to get those back catalogs to do what it wants with them.
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Suzanne Lainson (profile), 18 May 2012 @ 7:12pm

Re:
I can fricken imagine Google having a real interest in all of the elements of SOPA once it's their shit being being monetized by others. ...

Once Google gets addicted to the cash that will be flowing in, they will be indistinguishable from any other company that distributes content for profit. Why people continue to believe the "don't be evil" bullshit is stunning. Google cares about money and power above all. Watch and see what happens. You'll look back longingly for the freedoms you'd have had under SOPA.

Yes, I'd be curious to see what happens, too. If Google owned most of the world's recorded music, I'm a bit skeptical that it would just release it for free to its competitors and potential competitors. At the very least, I would think it might try to find a way to get a piece of every transaction involving the music. Maybe anyone else hosting the music wouldn't turn up on Google searches, so at the very least you couldn't find the music unless you went through Google. :-)
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PatM (profile), 18 May 2012 @ 8:47pm

Seriously, either independant artists or music labels, should cut out these middle trolls, and service their own Cloud based services.
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PatM (profile), 18 May 2012 @ 8:53pm

So should independant book writers, publishing companies, independant movie makers and actors, and movie distribution companies, etc...in the future world who needs middle trolls to do what they should be doing on their own.
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Anonymous Coward, 19 May 2012 @ 12:05am

Re:
I don't think Google is all saintly, but your suggestion that SOPA would provide you with freedoms is a joke.
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Anonymous Coward, 19 May 2012 @ 5:17am

For a billion Google should simply buy a controlling interest in one of the big three record labels or do a leveraged buyout and then just extened the rights to itself. Why do these tech companies continue to give money to companies that are their enemies in every other respect. It is cheaper to just buy them.
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Josef Anvil (profile), 19 May 2012 @ 5:44am

Re: Thank you for saying it
I think many of us are scratching our heads and thinking the same thing. Why buy the milk when you can afford the whole dairy farm?

Giving lots of money to the people who love to sue you isn't the smartest business model.
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DUMBASS POLITICIANS, 19 May 2012 @ 6:35am

@1 @2 @3 @5 @11 @12 @14&15 @ others
@1 labels buy rights off artists so said artsits that google buys rights form are already supposed to be compensated.

@2 this is what could happen and once its seen to work in music it might spread to tv and movies and even games....

@3 no issue i see artsts rights revert then the artist can go on his own and or pay to advertise his works somewhere....OR use p2p to advertise , failing wishing to do that they can approach google and see if google wishes to buy said rights whats the problem?

@5 read the @3

@11 correct i agree BUY OUT the labels say two major ones leave the other two for faceplant so you dont have anti trust isssues....

@12 also good place to start send out a dual idea for non labelled musicians that google could have a pay per year contract fo rall your music and/or a buy your rights for 10 years ....this way musicians can see how there music is managed and if done badly both sides have an out and the year buy for goggle would not be as bad a try run.

@14@15 that would be what people mean buy buying up or making deals with non labeled musicans....takes a lot of effort and time to reach out.

@others you need to read what was said but i agree a slight shift to outright buy them out means they ahve all those tunes and rights they cna hten say go ahead store your music on our lockers were not suing you....BANG instantly larger and more legit then megaupload....HECK hire dot com to actually help you out and let him run the division BAM
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Anonymous Coward, 31 May 2012 @ 6:07am

Re: Re: Re: $1-billion to labels?
Not fair.
They should keep them on in jobs more suited to their particular talents, assistants to the janitors, doormen in training, those kinds of things.
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DanZee (profile), 31 May 2012 @ 8:12am

Buy them ALL!
This was discussed some months ago, but I agree. I think Google should buy ALL the record companies (I think $10 billion would do it) and make music free on the Internet (but of course sell advertising and marketing data on individuals' likes and dislikes). The result would be totally disruptive and would create a new business model.
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