Infernal Industry Insight: Don’t Go To Court. Extort!
Good day mortals. I have many names. Lucifer, Satan, Beelzebub, Mephistopheles, and The Prince of Darkness (which Ozzy admittedly holds a non-exclusive license to use) to name a few, but on Disqus I simply go by “The Devil.”
Before getting started, I’d like to congratulate each and every one of you mortals (and Mr. Thrashnkill in particular) for taking the initiative to free yourselves from the monotonous doldrums of other metal news sites to establish this brave new toilet of the metal community. I am most pleased.
Given that I’ve seen the entire history of recorded music since the days of the gramophone, I’m in a unique position to provide insight on some of the business and legal trends going on in the sinking ship more commonly referred to as “the music industry.” So from time to time, I’ll be posting content updating you on events of significance or making observations that you might find useful (or at the very least amusing) relating to the state of the industry and metal’s insignificant place within it. After all, I am, contrary to popular belief, all about empowering mankind to reach its full potential, and particularly the metal community which I am so fond of.
Bloomberg is reporting that Soundcloud (yes, the very same site that many of you have uploaded your shitty demos to) is close to a deal with the “Big 3” major record labels (Universal, Sony, and Warner) for these labels to acquire an equity share in Soundcloud. Of course, this isn’t the first time major labels have acquired equity share in an internet start up (See, e.g., Youtube, Spotify, and Beats Music).
What makes this deal interesting is that the driving force behind it is the Big 3’s underlying threat that they’ll simply sue the shit out of Soundcloud for copyright infringement if a deal acceptable to them cannot be reached. In this regard, they’ve approached Soundcloud with “an offer you can’t refuse.” And it’s a rather brilliant move that I expect will reflect the way the industry responds to similarly situated start ups.
Why look like the bad guy by filing a lawsuit against an “innovative start up” when you can just use the fact that it could never afford years of protracted litigation in Federal Court to leverage a deal to acquire equity once a start up demonstrates the potential for long term viability? Even better, why share any profits incidentally generated from the infringing material hosted by the start up with your artists when you can simply acquire an equity share in those profits to keep for yourself instead?
The HUGE upside in all of this is that there’s a demonstrated pattern of the bigger corporate fish out there vastly overpaying to acquire these start ups once they see that major record labels have a stake in them (i.e. Google’s acquisition of Youtube and Apple’s recent acquisition of Beats Music).
Assuming the Soundcloud deal goes through (which it probably will), the only question that really remains is who is going to pay a billion dollars or something absurd like that to acquire Soundcloud. Really that situation is a win-win for both the labels as well as the Soundcloud founders and preferred stock holders, but probably won’t work out so well for the Soundcloud employees they’ll likely fire when that happens due to “redundancies.”
My crystal ball has been broken for decades now, so I can’t say what internet media start up is going to be the next big thing among you fickle mortals. But rest assured that if and when the next big thing becomes successful, the Big 3 will be all over it, and if it hosts any modicum of infringing material, it will receive the same “offer you can’t refuse” they delivered to Soundcloud.
Do you have questions, comments, insults, or offers to sell your soul to deliver to The Devil? E-mail him at email@example.com and you might be featured, exploited, and/or ridiculed in the next Infernal Industry Insights post.