I am doing some research on the online video / virtual club space and just ran across a very interesting blog post by Justin Kniest, Founder and CEO of the now defunct Fabchannel.com. I know, this post is from March 2009 but what he is saying, below, is (unfortunately) still very timely and true: there is no license for content without money (fair enough) but the amount of money (and the conditions of the license) that is being asked for is tantamount to an invitation for a kamikaze mission. 10 years after Napster 1.0, the music industry is still asking for utterly impossible rates, free equity, and all kinds of veto rights as far as the use of content is concerned. Someone out there, please: tell me how this is going to be different with Spotify, MOG, iMeem, rdio etc?
"Fabchannel and the record Labels
No money means no content. That is the way the labels (major and independent) look at potential partnerships with internet companies. Even when it is obvious a service provides added value in promotion and sales, the mantra stays the same: no money, no content. Even when a service invests substantial amounts of money in creating high quality concert footage and an award winning platform to show it to the world, the mantra stays the same: no money, no content.
When you look at it from a label point of view it might even look logical. Their businessmodels have been hammered the last ten years by decreasing CD sales. Their radio, TV and newspaper partners are not doing their promotional job as they used to. And last but not least: the majority of consumers are now downloading tracks for free. All bad things for companies that invest in recordings of artists.
So the most important feature that new partners have to have is: MONEY. Money to counter the decrease in CD sales. Promotion has turned into a dirty word. MTV for example got big and wealthy by showing videoclips paid for by the labels. So now these labels think: We will not let that happen again. From now on everybody who wants to become a mediapartner online is going to have to pay upfront to even start"
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