International Law

"Breaking the Law To Get a Break"

From the Washington Post:

For many music-oriented Web start-ups, a copyright lawsuit can be a death sentence. But for Imeem, getting sued by one of the biggest record labels played a pivotal role in its success.

In May, Warner Music Group sued the social network, saying that it allowed millions of people to share Warner artists' music and video content without permission. It sought up to $150,000 in damages for every unlicensed song or video posted on the Imeem site.

Two months later, Warner executives changed their tune. They scrapped the lawsuit, invested in the company, and struck a deal to make its entire catalog available to Imeem's growing number of members for free -- to stream, not download -- in exchange for a cut of the site's advertising revenue.

Warner now regards the site as a powerful word-of-mouth marketing asset.

"If you can take that, sponsor it with advertising, and have an integrated way to buy, we think we can not only retain those customers but also grow the business," said Michael Nash, Warner Music Group's executive vice president of digital strategy and business development. "The more music people experience, the more they'll want to download and own."

Imeem lets its members upload and swap songs, music videos and photos and is the first start-up to get all four major labels to sign off on an ad-supported model for distributing digital music.

The site got the attention of users -- and music labels -- by first allowing the unauthorized exchange of music on its site. Like Napster and Kazaa before it, Imeem gained popularity by using music to promote its technology -- even before getting the necessary licenses from record labels. The lesson of Imeem, however, points out a dilemma in the entrepreneurial world: Is breaking the law the secret to success in the digital music industry?

Read more here.

Full post as published by Freedom to Differ on March 21, 2008 (boomark / email).