Why Google Should Buy the Music Industry | Hacker News Reader

Why Google Should Buy the Music Industry

opendotdotdot.blogspot.com

78 pointsgammarator42 comments

A few things, and I'm speaking as a (now former) major label executive:

Google should not buy a label or a music company. It wouldn't make sense at all. The friction going on right now is because Google views music as something that the labels don't. They view it as data that makes their device better. The music industry views it as intellectual property.

I side with Google on this, depending on WHAT Google wants to do with the data. If they are common carrier, locker in the sky. Great. But as soon as they use it as a means of advertising/marketing (a la Youtube) they are stepping into waters that the RIAA has nothing to do with. It's just normal, silly US copyright law and the contracts that our heroes the artists signed.

On the other side, imagine if the labels went to Google and demanded all their source code so they could setup their own internal Google and make them some money that way, to add value to their technology. Just as silly.

The other thing: don't conflate the "Music industry" with the big 4. They are not one and the same. The Music Industry is a HUGE thing that uses and represents the most long lasting of culture artifacts in terms of marketability. It includes Spotify, Soundcloud, Songkick, Hypemachine, Big Champagne, CrowdSurge, Apple, Google (through YouTube right now), Amazon, etc. Then the management companies: The Firm, The Collective, QPrime, Red Light. A vast space.

Some operate on the infrastructure level, some license content, some fill voids and some you've never heard of.

That being said, the future of the music INDUSTRY is the disintermediation of the big 4 by means of a restructuring of what they do. Artists don't need them if they don't want them, and certainly the companies that make up the industry know this (see Fanbridge, TopSpin, etc).

The industry in the last two years has diversified substantially. The real power is transferring to management companies, startups, distribution, artist services, open-source technology and API based business development.

What will happen to the big 4, and starting with 2 (WMG and EMI) is new owners, and hopefully an entrepreneurial sensibility informing their restructuring. They need to be nimble, technology forward, representing their artists using technology and manning up when it comes to the value of their content (because there is value, and "free" is value if done correctly).

Anyhow, blog posts for another day.

What do you think about Steve Albini's rant on the music industry? Has the distribution of who gets what changed much in the last 20 years?

http://www.negativland.com/albini.html

To a degree the broad points are still valid. However the economics are a lot more complicated now because of 360 deals.

A while ago, labels realized that if they were investing a lot into a band on things like art, tour support, promotions and marketing, it was silly when other third party companies made the money, often with worse splits with the band.

360 or all-rights deals mean that the label helps with all aspects of the band from Fanclub to touring and publishing, and splits profits, usually 50/50 on all but recorded music (which has different splits)

So basically the band an label are in a agency/client model. This is great if the label can deliver on the promise of the deal. That is why I was brought into a label, for in house tech. Not happening as much right now but that can change.

This is a similar way CAA and William Morris work. Shared risk/reward and if done properly on both sides can leads to more incremental gains earlier and with less upfront spending.

Any idea when the RIAA and the music industry lobby will be killed?

When it is no longer necessary. Which to me means when music labels (or what every they will be at this point) no longer feel the need to cooperate and instead act as a retail/service business.

What conditions need to exist in order for it not to be necessary? Or perhaps I should ask: what value are record companies adding today? 30 Years ago, it was clear that record companies were necessary. Making and distributing music was relatively capital intensive. That's no longer the case; recording has become a lot cheaper and distributing music is theoretically free. Record companies still have a role in promoting artists but what else are they needed for nowadays?

Informative post...

So essentially you are saying that the major labels are the tip-of-the-iceberg in terms of how the money circulates?

Owning a major label wouldn't really get Google that much since it wouldn't allow it to change the business model since that is dictated by multiple interlocked contracts between different players, including of course, the artists.

Owning a label would be like Google buying CAA. They wouldn't know what to do with it. Amazing how many people chastise Google for killing acquisitions but seriously think they should represent people as crazy as artists?

I wish Google would find a way to undermine the music industry instead. Actually Amazon may be better positioned for such a move.

I am not an expert but it seems the basic trade the music industry offers artists is, recording, publishing, distribution, and promotion in return for ownership of the artist's work and a huge cut of the revenues.

It's always irked me that artists are forced to sign over the fruit of their labor, talent, and passion. I wonder if there's not an alternative deal where the artist gets the same benefits but also keeps legal ownership of their music, perhaps in exchange for an exclusive license or increased revenue share.

It would be cool to see something like that pull the proverbial rug (the artists) out from under the music industry.

Give me a break. Artists are "forced to sign"? Since when?

Artists with good contracts retain master rights after a period. An artist signs to a major label fully knowing what they are going to get. They do this in exchange for the possibility of attaining something they most likely won't get.

If they don't want that remote chance of stratospheric success, then they sign indie or go at it alone.

Labels are run horribly yes, no mistake about that. They are a 15 year behind method of operating. But don't for a second believe that the culpability doesn't go on both sides. At least until you've read a deal memo or been party to a signing.

> undermine the music industry instead

Digital distribution (aka the internet) has beat them to it. It's just not clear because of the legal distortion field IP lobbyists have created.

> legal distortion field IP lobbyists have created.

Yeah, that's the part I hope there's a way to undermine. Pull the IP rug out from the music industry and they're done.

And what exactly does "they're done" get you? How far do you extend the IP rug pulling?

Google cannot buy the entire music industry because the music industry is more than the so called major labels. That said, Google or even Apple\Microsoft could buy the all the major labels from their respective owners, if they wanted too. Especially EMI and WMG

Please read:

http://www.nytimes.com/2011/04/11/business/media/11warner.ht...

Warner music group is currently for sale and EMI is available if the right offer comes along.

Except that no one company could ever get approved by regulators in the US or EU to purchase ALL the major music companies. It would be extremely unlikely that Google would even get approved to purchase the two that are up for sale already.

But google AND amazon could buy them all.

"...the music industry is economically quite small and unimportant compared to the computer industry."

For some perspective, the largest label groups in the "music industry" are owned by corporations that are bigger than Google. Universal: owned by Vivendi. Sony Music: owned by (guess who). EMI: owned by Citigroup. Not exactly small economic players...

Sony (market cap 29 billion) is bigger than Google (market cap 170 billion)? Google has 35 billion cash in the bank.

So it would take all of Google's cash on hand to buy 1 player (assuming they could even pull it off). It isn't like google's market cap is something they can liquidate or even really make any significant usage of.

Sony bought out their equal partners, Bertelsmann, for 900MM. [1]. That puts Sony Music's valuation at $1.8B in 2008. Global spending on music seems to be around $26B.[2] Although it's difficult to project a valuation from that, it's not unreasonable to assume that any of the tech giants could afford to buy a significant chunk of the industry.

[1]http://articles.latimes.com/2008/oct/14/business/fi-sony14

[2]http://mashable.com/2007/11/14/music-industry-decline/

If you want Sony Music you wouldn't buy all of Sony. Of course, these conglomerates may not be willing to sell off their "money-losing" record labels.

Definitely not Sony. How would they find artists to put onto minidisc/atrac/doomed-technology-de-la-décennie?

That'd be to buy ALL of Sony. Sony Music, Sony Pictures, Sony Computer Entertainment (which is mostly Playstation), and a not entirely incidental consumer electronics business. Sony might be worth more if you buy it and break it up, but this is exceedingly unlikely for a variety of reasons.

outright purchase is much less important than who can win a long legal battle. Don't sue someone who has more cash on hand than your net worth. it's dumb, especially when there's a lot of gray area around what specific license is on a particular song.

With regards to market cap Google is indeed much bigger than Sony, Vivendi and even Citigroup.

Citigroup is selling EMI.

Furthermore, they use the RIAA as a sort of trial balloon to feel out the larger questions of digital rights and intellectual property. That is to say: they will fight with disproportionate resources to protect the comparatively tiny industry, because the implications if they win are far larger than music.

And should they lose, the labels are a minor piece of the pie, and they can send another pawn into the fray with an adjusted argument. (say, their movie or TV units)

Google really doesn't need to attract any more antitrust attention right now.

A better article would be "Why Google should pay to have the music industry killed painfully and slowly".

That I could get behind.

The music industry is pretty good at dying slowly itself... and painfully, for some values of pain, I suppose.

It's a bit too slow and not nearly painful enough.

I want to hear all those useless executives screaming in agony.

It's time to bring back impaling.

Not exactly the best use of money. It would be kind of like Time Warner buying AOL.

It would be more like AOL buying Time Warner, which would've been a very different transaction.

aol did buy time warner.

That is what I meant :D

It's not so much that the music industry is large as such.

It is that the music industry something like a token in the game of control proprietary content. Music is something of a thin wedge for showing the ability to deliver highly valued content - Look at what Apple's iPod brought it and indeed, would Apple ever want a rival control the rights to the content it has mastered selling?

Possibly, the recording industry of something of a stand-in for the movie and/or television industry, an industry which is not small by any stretch of the imagination. And the movie industry, gigantic as it might be, is something of stand-in for proprietary control of popular culture...

The music industry's legal canines need to be sawed off, one way or another.

In what possible way could ease of licensing be worth $29+ billion?

The music businesses wouldn't be worth anywhere near that much. And it would help Google's goal of making the world's information universally accessible and useful.

Wow another ridiculous blog post! And on HN! Fuck you for wasting my time.

Feature suggestion: a time delay on new accounts being able to post a comment. Would prevent trolling like this.

"if all you have is a hammer, everything looks like a nail"

Reply on news.ycombinator.com