In the last week Universal Music announced that it had signed a long term deal with Big Champagne to get metrics of online music activity.

Now since Universal rarely does anything that doesn't have a pretty direct profit motive, I have to figure that, though they may think that it is useful to have data on downloads, this is not their primary motivation for the deal.

Everyone in Hollywood is absolutely obsessed with making more money. And making the content that people buy is the way that they like to do it. But, as one Universal executive said to me years ago, at the time that my 11 year deal with them was being unwound: “Remember at this company the legal department is a profit centre”.

So there are two things that I would figure Universal wants to achieve from doing their deal with Big Champagne:

1. I would think that this would mark the era of more law suits, in spite of the announcement some months ago that the music industry will not be pursuing individual downloaders, and
2. I would think that Big Champagne is working on a deal that monetizes P2P in some way.

Now to address #1, I would think that the music companies would be eying the amount of damages awarded in a recent case – $675 thousand is not to be sneezed at. In fact it is the kind of profit uptick that the legal department might be looking at and figuring that a couple of wins of that magnitude might drive good bonuses this year.

But I am kind of thinking that #2 is more likely, in spite of the way that Universal approaches legal work. I figure that Big Champagne has got some ideas of how to monetize P2P that they are going to be rolling out over the next few months.

One of those is probably the seeding of content – as referred to in the blog piece that Tom wrote a day ago. We believe that quite a lot of the content that is being shared in P2P networks is being initially placed there by content companies who want to create visibility in the marketplace. So wouldn't it be logical to use a bunch of smart geeks, which Big Champagne has an abundance of, to build that visibility, ironically by doing exactly that which Universal is suing people for.

It actually makes perfect sense when you think about it, doesn't it?

Get a company, that is not associated with you, to perform some work, which is technically challenging, and is therefore not properly understood by your employees, and therefore there is plausible deniability.

Perhaps even ensure that there is specific hidden metadata or drm in the files so that there is an even better possibility of providing a fingerprinting of the content, and then get it out there, build the visibility, get the record to the top of the charts, and then sue the bejesus out of the customers who helped you get it there…

Now that, sounds to me like the music business.

And they wonder why people don't care whether they steal content or not. It is simple. The public has adopted the morality of the content industry.

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Posted in Economics Main Page by Chris Gilbey No Comments Yet