Major label licenses for download platforms: The mountain is finally moving – but is it moving fast enough?

20 08 2008

The recent lunch hour session with Ted Cohen at Bandwidth 2008 in San Francisco triggered a strange Deja vu moment with last month’s Future content models conference in London.

An eclectic group of digital media entrepreneurs, marketers, and small label representatives gathered last week in the University Club to adjure the great potential of the Internet to enable new business models to distribute music online. After presenting and discussing potentially visionary concepts for a while, the entrepreneurs agreed that the main reason that so few of these models have been implemented was the inflexibility of the record labels to grant licenses under acceptable terms. The commonly used example is the blanket license subscription model of Playlouder in the UK, which has been around as a technology in development for 5 years without being able to offer a comprehensive service due to the lack of content. Without a deal with a major record label, it only survived due to the stamina of its founders Paul Hitchman and Paul Sanders.

But following a recent announcement to have signed deals with at least two major labels and a major ISP in the UK, the situation could be changing and at least some users in the UK will be able to enjoy unlimited access to shareable music for a monthly flat fee. How the service will really look like and what restrictions the deals with the labels impose on the freedom of the subscribers to use the music they have downloaded remains unclear for the moment. The good news is that the majors seem to have realized that stemming the dominant social practice without offering a realistic alternative is no sustainable option and that isolated deals with innovative download distribution platforms are appearing. But according to Ted Cohen, these deals are hardly profitable for the distributors at least as long as subscription fees are the only source of revenue.

Hence, the future of the blanket license model seems still precarious despite the wide support among entrepreneurs and marketers on both sides of the Atlantic.

by Wolf in San Francisco / London