The blogosphere is enraged at the shut-down of a popular site called Muxtape. I am not one to defend the overly litigious nature of the fading music industry (will the lawyers be the only employees be left standing at the four majors?), but this site was unlicensed and was offering interactive (i.e., on demand) streaming of copyrighted sound recordings. You need a license to do that. It’s not even a gray area of the law.
Muxtape took the common path of choosing to infringe rather than get licensed (i.e., the YouTube strategy). This is a legitimate strategy these days. The alternative involves the raising of at least $5M of venture capital and then forking that over to the majors for licenses at terms which do not allow a sustainable business to be built (i.e., the iMeem strategy). The YouTube strategy involves a bunch of praying. You pray that you can use viral marketing to get big enough and sell to a deep-pocketed acquirer who will defend the company in lawsuits and simultaneously use their leverage to get better economics in the licensing deals. Muxtape’s prayers were not answered, it seems, and the RIAA got to them before an acquirer stepped in.
Of course both of these paths are ultimately fruitless if the goal is to once again grow the music industry. The only way that happens is if the majors start viewing entrepreneurs as partners. Isn’t it better to license 1000 new startups with non-predatory terms and see who can build something consumers get excited about?