A fascinating new report from Associate Professor Michael A. Carrier at Rutgers University School of Law, entitled âCopyright and Innovation: The Untold Storyâ, interviews 31 CEOs, company founders and VPs who have worked in digital music over the past 10 years. It illustrates the digital music landscape in the aftermath Napsterâs shutdown, demonstrating how the battle between P2P and the music industry has stunted innovation, discouraged investment in the music technology sector, and ultimately led to a complicated copyright law-dominated environment that has widened the gap between technologists and music.
Among those interviewed include Hank Bank (former Napster CEO), Dalton Caldwell (Imeem founder), Kasian Franks (Seeqpod founder), Rob Glaser (Real Networks founder), David Hyman (former Gracenote CEO), Michael Merhej (AudioGalaxy founder), and Michael Robertson (founder of MP3Tunes), Hilary Rosen (former RIAA CEO) among others, as well as several other venture capitalists and label executives.
Carrier illustrates in the 63-page report, which was first spotted on TorrentFreak, that once Napster had lost the battle and was forced to shut down, venture capital funding for digital music âbecame a wasteland.â Some interviewees called the scene a âscorched earth kind of placeâ that housed a âgraveyard of music companies,â as some go on to say in the report. Major labels began suing rampantly, so naturally, funding was hard to come by.
Some continued onward despite the lawsuits floating around, but those innovators seeking to get label approval found themselves in situations that were a bit tricky. Labels wouldnât license if a startup didnât have much traffic, but as soon as they would have solid numbers behind them, âthey want to get paid for âinfringementâ and the longer it takes to license you, the larger the âinfringementâ number they can justify charging you,â as one interviewee mentions.
Interviewees also go on to mention how litigation could be described as a âPonzi schemeâ, as the money from settlements and other fees pulled from startups were used to fund the labelsâ ongoing litigation strategy. The report notes more corruption from labels, as they would take âbig, up-front feesâ of â10, 20 million bucksâ from startups they knew would fail.
Greed continued to plague the labels, even as those services that went to great lengths to avoid copyright issues and had millions of users with interest from high-level VCs were ordered to be shut down by the labels, rather than accepting âliterally an offer of a blank check,â as one interviewee says.
The report goes on to describe the âvery scaryâ scenarios labels presented with âmultiple inch lawsuit for a couple billion bucksâ. Things even became personal, as threats were extended to the families of innovators. One was even told it was âtoo badâ he had children âwho are going to want to go to college and youâre not going to be able to pay for it.â Some threats even apparently became violent, with one interviewee speaking about âpeople being physically intimidatedâ and âbeing hung out of windows.â
For a download of Carrierâs full 63-page report, click here.