April 22, 2003
Innovation Investments: Risky... Sketchy... Non-Existant for the Music Biz?

Universal and EMI are suing Hummer Winblad, the venture capitalists, for "perpetuating global piracy through its $13 million investment in the controversial file-swapping service." Even though Napster filed for bankruptcy last June, ending the copyright infringement suits, record labels want compensation for losses they say resulted from Napster's prolonged life, which came because of investments by Hummer, as well as the $90 million Bertelsmann invested (see that lawsuit asking for $17 billion in damages). Although Hummer is expected to say that the investment they made in April 2000 happened when no court had ruled on the legality of P2P file sharing and Napster.

Suits like this, the threat of suits and the uncertain economy make investing in innovative technologies even more sketchy. Take a look at Cory Doctorow's notes from the Emerging Technologies conference happening now in Santa Clara.

In the meantime (thanks Frank!), Slashdot is discussing "All the Rave: The Rise and Fall of Shawn Fanning's Napster." Favorite comment: "My grandfather told me about how when he was a kid, they traded files on Napster, and how it got in trouble for something about "copyright." I'm not exactly sure what that is, but apparently, information wasn't free back then. I'm glad things have changed." It's not that copyright needs to go away; it's very important, but can we alter our arrangement for digital music business models enough so that statements like these aren't funny, they are just there? So that it's not about draconian all or nothing copyright?

Here is bit from the Salon review on the new Napster bio: "The story of Napster has to be seen, in the end, as a tragedy of wasted potential. Here was a system that improved everything about the way we listened to music, but nobody it touched was better off for it...."

Things seem to be reaching new levels of shrillness, between students at Penn State cut-off from networks or at Annapolis, students sued for writing google-like applications, or suing VC's who invested in something that at the time wasn't deemed illegal. Can we please consider some alternative to these measures, like the compulsory licensing, flat fee schemes we've been discussing, or anything else that will reframe the situation to a more rational tenor? I really don't think the Nancy Reagan "just-say-no" thing works. Not that music is equivalent to illicit drugs, but the abstinence argument definitely doesn't work for music, especially in the digital (media) world. There are alternatives to just suing everyone you can get your hands on for the sake of trying to get your old business model back, after it's been napsterized to smithereens. And there are alternatives to stealing, however, since the record companies and trade associations have most of the control, I think after 5 years of this mess, they need to get the memo: work with people, not against them.

Posted by Mary Hodder at April 22, 2003 01:42 PM
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