The Spitz looks into subscription licenses

For those who know anything about subscription license deals, I will assume that they, like me, figured it was only a matter of time before someone outside the system thought it appropriate to take a look around. Everyone is talking about the Most-Favored-Nation clause.. which when you think about it, if every big label gets an MFN clause, then no one is really most-favored.

Justification for the clauses came in this little blurb from the LA Times:

“The music industry wanted to establish the online marketplace as quickly as possible, but we didn’t want to get bogged down in debates over prices,” one executive said. “These clauses let us create a viable marketplace quickly, and then make sure all musical artists are equally compensated.”

Let’s think about this… An industry that is now pushing for variable pricing, purposed to the fact that all music and artists are not equal, is pumping the PR that their desire is for all musical artists to be equally compensated. Which story is it?

I guess who ever made this claim will have to be comfortable with it in the long run. There are other clauses in these contracts that make this story even more interesting. Each one designed to reduce the risk of the rightsholder in such a way that the claim for creating a “viable marketplace” is misleading. MFN’s hard-code a trend in pricing that passes the risk from the labels to the providers. The marketplace becomes viable for one side, and unviable for the other.

Every day, in every market around the world, someone wants to get a market off the ground. Imagine the stock market if the early prices of the day had MFN clauses over the latter prices. Or your new home purchase if the prior owner had an MFN clause on subsequent sales of the home.

There are other clauses in there, that the Spitz might find interesting. It might finally be time to create private, but still open, market for the trading of copyrights.

There are many things you “can” do, or would really like to do in business. That doesn’t mean these things are appropriate to do. Power and position have a rather compelling ability to cloud our vision. None of us is above it, but each of us ends up taking responsibility for it.


Why the Grokster decision may hurt the entertainment industry

Amidst all the rejoicing over the Grokster decision, now old news, the entertainment industry may have overlooked an issue… and issue that should now be staring them boldly in the face. Control.

Online media networks will grow to a scale that will make traditional music and video outlets look like decent-sized corner stores. Apple iTunes is just the beginning, as one outlet apparently accounts for 70% of digital download sales. Complaints are made about ClearChannel today… what if ClearChannel reached 250 million ears each day?,,The wide spread of media to which the consumer wants access will be so diverse, the differentiation among products so minimal, and the margins so thin, that portals will happily ding a demanding supplier, or simply push access to their content to the far reaches of the navigation interface. Remember, the copyright holder is the already legislated monopoly provider- most favored nation clauses will face some heat.

The ability to filter the content available through peer networks, one one hand, sounds like a noble cause. People should not be able to share copyrighted works without the permission of the copyright holder. But stop and think for a minute… if I can filter out works you don’t want me to share, I can also filter out works you want me to share. I can limit your access to my network of customers, legally. As a web portal or peer network, I hold no monopoly and no obligation for access. I can quite easiliy begin to limit what content is available and that which is not, at an impressive scale.

Unfiltered, decentralized P2P networks provide the entertainment industry with a distribution platform sans gatekeeper, sans distribution fees, and sans social limitations. While the threat of piracy is high, so is the potential for unfettered access to customers. Music and film would trade at a lower unit price, but a great volume more would be sold. Most importantly, music and film would flow upon the platform of social interaction – a less expensive and more powerful means by which to sell media products.