p2pnet - rss feed: New music start-ups: equity or innovation?
p2pnet news | Music:- Online music startups have two options in the race to profitability, says Eliot Van Buskirk on Wired.
“They can get permission from all relevant copyright holders before uploading a single song, or they can rely on a combination of luck and the Digital Millennium Copyright Act until they are either acquired or earn enough to pay for proper licensing,” he says, continuing:
“Copyright holders occasionally sue new businesses into the ground or, as is growing more commonplace, use legal pressure to force maturing startups into surrendering an equity stake.”
But why go through the heartache? - he wonder. “This lengthy, complicated process is scary for startups, clumsy for copyright holders, and tends to leave indie bands and labels out of the equation.”
With that in mind, “Will Page, chief economist for the MCPS-PRS Alliance (a U.K. royalty-collection group), and David Touve, a Ph.D. student at Vanderbilt and former Lycos/Sony/AOL employee, have proposed a novel solution to the problem,” says Wired.
A music license, “specifically designed for startups that would give copyright holders an equity stake in the businesses”.
Says Andrew Dubber on Music Think Tank >>>
It’s an interesting idea designed to get past the dilemma that music startups either ignore copyright (and live in fear of lawsuits) in their early stages, or they are entirely crippled by it.
The purpose of copyright is to incentivise creativity
Fear of lawsuits is a disincentive for creative tech companies. Royalties that exceed income - also a disincentive.
But giving away a chunk of a company that you’ve put your body, heart and soul into to someone who has done no work in, on or for that company, but whose work could eventually benefit greatly from its inclusion - also a strong disincentive.
And he, too, has an idea, namely >>>
1. New online music startups can register to innovate competitively.
2. All registered startups are exempt from all copyright payments for the first two years of their operation, in order to facilitate and incentivise rapid growth.
3. The best and most successful startup gets a ten million dollar cash prize from the record industry.
What kinds of things, do you have in mind when you say “innovate competitively”? - p2pnet asked him.
“I don’t have anything specific in mind,” he replied. “In fact, the innovations should be surprising. In a way, all online startups are innovating competitively.
“The challenge would be to come up with the best, most sustainable, most novel and most helpful idea in order to compete for the prize money.
“It should gather the support of its community, but also be measured on profitability, creativity, perhaps the extent to which this was an untapped area of value for musicians and copyright holders… that sort of thing.”
But a new store or social network wouldn’t do it, says Dubber.
That would be, “way too pedestrian”.
Stay tuned.
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.Stumble It!
Wired - Should Music Startups Give Equity to Copyright Holders?, May 22, 2008
Music Think Tank - The Record Industry Innovation Prize 2009, May 24, 2008
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