With A Choice Between $100 Million In Cash & Fantasyland, The Labels Choose Fantasyland

I keep having the same conversation over and over again with people in the recording industry. A few days ago, I met with the head of a record label that is doing all sorts of cool and innovative experiments (both on the business model and with technology) and he still kept saying “but we gotta stop people from stealing.” The problem, as always, is that they seem so focused on infringement that they miss the bigger picture: What does it actually mean for revenue? These are two separate questions, and the labels seem to prioritize the wrong one. They want to stomp out infringement at any cost, even if the net benefit is minimal.

If record labels were given a choice whereby they could support a new revenue stream that would bring in, say, $100 million without them having to do anything… vs. getting no such revenue and playing whac-a-mole with a few more “pirate sites,” just making them move elsewhere and not actually get anyone to buy anything, they’d have to be crazy to not go with the $100 million option.

It appears they’re crazy.

Google was clear, when it launched its Google Music, that it wanted to do much, much more, but that the things it wanted to do required licenses from the labels. However, the terms the labels offered were completely unacceptable. Now it’s being reported that Google offered $100 million to the labels, and a key sticking point was that the labels wanted Google to wave a magic wand, figure out who was “pirating” music, and stop it. In other words, $100 million vs. Fantasyland. And the labels went with Fantasyland.

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