Google: The Last of the Giant Music Industry Scams

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Startups used to die for a meeting with the majors.

That is, before they actually died.  Because once they got that meeting, they’d call their investors and pay a massive ransom for the right to license label content.  Either that, or they’d be crying uncle under the weight of a mighty major label lawsuit.

It wasn’t a business model, it was a scam.  And it lasted for a few years before completely drying up.  Investors got the memo, they figured it out, and now, they’ve completely sworn off startups that require music licensing.

Every party’s got to end sometime.  But wait!  Looks like there may be one big, fat, juicy target ahead: Google.  After all, this is a company willing to overpay for another company (ie, YouTube) by a billion dollars, and justify it!  This is also a company that really, really wants to beat Apple.

The result?  The rumors are that Google is willing to pony tens of millions of dollars to the Big Four – not because it’s right, but because it offers a clear, hassle-free path towards a dominant, powerful music cloud in the sky – ie, something that totally blows iTunes away.

So why not throw $10 million over here, another $10 million over there?  Not quite peanuts, but something Google can handle, and a huge lifeline for the majors.  And after that?  For the majors, this is the furthest thing from a well-architected business approach, and will do little to create longer-term monetization and growth.  But it will keep the lights on for a little while longer…

Paul Resnikoff, publisher, while listening to Room 5 on… YouTube.