Wednesday, October 12, 2011
Why media streaming apps need to be licensing-free to survive
Recent analysis has it that Spotify is incurring "gargantuan" losses, $68 million in four years. And this is even with paying artists bupkus. And it is all being blamed on licenses with content providers which are crippling Spotify and, according to some prognosticators, bent on killing it.
This highlights another superiority of the digital content exchange. We don't need no stinking licenses! If you understand the Amazon cloud player, if you understand Google music beta, you understand the DCE. We put stuff that you own in the cloud and serve it back to you. (And let you sell it to other users and let you lend it to friends or strangers just like a library would do, i.e., on a one for one basis ... no copies!).
But unlike Amazon and Google we make sure you really own it. So, whether it is a video, a book, or a piece of music, we are providing a basic service to a user, are doing it on an ethical basis, and doing it better than anyone else because we are the only ones that have the securities industry background (where they really know how to handle and move fungible commodities and prevent forgeries).
That being said ("we don't need your license"), we invite content owners to participate. It is very easy in this system to pay royalties to people that want to cooperate in helping us scale up and keep to scale long-term. Nonetheless, just like IBM cannot prevent IBM stockholders from trading their shares of IBM, no one can stop a user from doing what he or she paid for when he became an owner of a media item.
Once everything that you've ever bought in books music and video is placed on the exchange, immobilized in the cloud, it becomes the lingua franca of your media collection. Content owners can then come in and authorize as many units of new material as they want, and charge what they want and get nearly 100% of what you, the buyer, pay them.
Moral of the story: Spotify and its ilk have overpaid for licenses in an attempt to get to scale. In helping Apple get to scale, the Big 4 have given a license which rewards anybody who grabs free music by "matching" the counterfeit in the cloud. You, the user, will bring the DCE to scale, piece by piece by joining the DCE. The more the DCE acquires scale, the more it will thwart the usability of counterfeits and the more it will provide buyers who will, in turn, provide struggling artists, authors and filmmakers (who get to keep nearly 100% of all buying and borrowing fees) with a steady income.