Music, The Internet, Business Models, and Freedom

Everything old is new again. Lawsuits regarding music use, confusion over how to make money in the digital age, content and distribution revenue models, all of these issues seem never to go away. They are the chicken or the egg questions for creation and its relationship to making money from creation. Nonetheless, some nuances change as the details change. So let’s being with lawsuits to enforce alleged rights.

The RIAA says it will cease using lawsuits and courts to protect its copyright interests (unless an alleged file sharer is a major user as in 5,000 to 6,000 songs per month). Yeah. The RIAA decides that coordinating with ISPs to monitor individual usage and then have the ISP alert users about questionable usage and possibly cut off a user who fails to respond. (CNET has a copy of the form letter here). BOO! (One problem among many: Imagine a world where one is cut off and tries to get a new provider. That provider asks whether one was cut off, one is denied access and so on).

In other news, Warner Music has pulled out of licensing its music to You Tube. Warner Music seems not to be making money (or enough in its view) whereas Universal Music claims their YouTube deal has generated “tens of millions” of dollars for the company. Universal stands to make close to $100 million from streaming music and video this year and YouTube accounts for a large piece of that income. The problem seems to be that YouTube pays the companies for the content but YouTube is not seeing revenue from that content. So with almost 100 million users a month, YouTube is a great way to reach people. But wait a moment, the music channels are a huge part of YouTube’s content success (just not monetary success):

Universal’s YouTube channel is overwhelmingly the largest on the video site. The record label is the all-time most viewed channel, with nearly 3 billion views. Second-place Sony BMG, the second largest recording company, trails by more than 2 billion views with 485 million total views.
Of the top 10 channels on YouTube, 7 are music related. They include channels from Warner Bros. Records, Soulja Boy, and Disney’s Hollywood Records.

So the old model of using music videos to market music has changed to using the videos as the product.

Speaking of changing models, Andy Samberg and/or his business team is quite shrewd. NBC has pulled content from YouTube and tried to force people to NBC.com or Hulu.com to see what it thinks are the best clips and shows. That means that usually a Saturday Night Live clip featuring Samberg would not and could not appear on YouTube (or at least for very long). But Samberg’s video clip, Jizz in My Pants, is on YouTube and had more than 9.5 million views already (video below). According to CNET Samberg and his production company own the rights to the clip and have a music deal with Universal Music Group. So Samberg chose YouTube as better way to reach people than NBC.com or Hulu.com. Good call. Here’s the best part: NBC is a Universal company. [Correction: Peter Kafka points out “NBC Universal and Universal Music Group are not related companies. UMG’s parent company Vivendi owns a minority stake in NBCU (which is owned by GE). But they’re not related in any other way.” in the comments but I thought that info should be here too. Thanks, Peter] Nonetheless, the two may want to share some notes see if they can learn from each other. Yes, the revenue sharing issues must be sorted but NBC (whose move to Leno five nights a week has twisted my stomach in ways I wish on no one and demonstrate desperation/an admission that they are unable to make profitable television anymore but that is a discussion for another time)… Oh yes NBC should realize that having everything on its sites and choosing those clips is not so intelligent. At least allow people to upload what they want. (last I looked that was not possible) Users will do the work and lend Web credibility to the choices. Worst case NBC has to say no because it needs to clean up some licensing issue. That is better than the clueless model they pursue now.

Here’s the video:

https://youtube.com/watch?v=4pXfHLUlZf4%26%23038%3Bhl%3Den%26%23038%3Bfs%3D1%22%3E%3C