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Was MegaUpload shut down because it challenged the RIAA music business model?

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The headline asks one of those questions that really is a question. Sometimes criminals are put out of business because they are criminals. Sometimes one criminal is chosen over other criminals because his sister wouldn't date the cop on the beat.

Here's the "RIAA wants me dead" part of the MegaUpload story, told first-person by MegaUpload founder Kim Dotcom (yes, that does seem to be the name). His article is wandery, and includes info about Kim's supposed wicked past, his explanations, and some background on the production of his song "Megasong".

Do read, but for me, that part's in the weeds, at least at my present level of understanding. What woke me up was this (my emphasis):

UMG [Universal Music Group, the former MCA Records] knows that we are going to compete with them via our own music venture called, a site that will soon allow artists to sell their creations direct to consumers and allowing artists to keep 90% of earnings.

We have a solution called the Megakey that will allow artists to earn income from users who download music for free. Yes that’s right, we will pay artists even for free downloads. The Megakey business model has been tested with over a million users and it works. You can expect several Megabox announcements next year including exclusive deals with artists who are eager to depart from outdated business models.

You need to understand that some labels are run by arrogant and outdated dinosaurs who have been in business for 1000 years. These guys think an iPad is a facial treatment, the Internet is the devil, and wired phones are still hip. They are in denial about the new realities and opportunities. They don’t understand that the rip-off days are over. Artists are more educated than ever about how they are getting ripped off and how the big labels only look after themselves.

Dinosaur labels don’t have the answers to today’s new realities. UMG chose to willfully sabotage our campaign instead of analyzing the situation and seeing that the answers to all their problems are right in front of them.

In parallel UMG were calling up all the artists who endorsed us telling them that they are endorsing piracy. That they are working with a convicted felon. That they are losing money because of us. They are trying to force the artists to issue statements against their endorsements and agreements. They are burning their own talents. And I wouldn’t be surprised if some of them fold under this enormous pressure.
Read that a couple of times. There's much there, but the assertion is clear: UMG is trying to kill a new business model for music ownership and delivery that challenges their revenue stream and that of their industry.

(More on MegaBox here.)

How different is this, if true, from the MPAA (Motion Picture Assn of America) trying to outlaw all VCR sales in the U.S. to kill a delivery system that could cut into their revenue stream? The takedown argument in both cases is (gasp) there are thieves in the world.

The story needs leg-work to verify all the threads, but this thread is certainly one of them. The head of MegaUpload, right or wrong, is a primary source and deserves to have his story told for its own sake.

Some background:

    ▪ Read about UMG here: they're the biggest music company in the world. Their trade association (mega-lobbyist) is the RIAA (more here). The relationship between the RIAA and UMG is the same as the relationship between the MPAA and Sony Pictures.

    ▪ The big enchilada. "Music publishing" rights are the real pot of gold in the music business. Owning the publishing rights to a song means owning the song itself, not just a version of it. When record labels used to sign new artists, they got them to sign away the publishing rights to their own songs as part of the deal. Most new artists had no clue what they were giving up and signed. (Talk about theft!)

To perform a song publicly, you need permission from the "owner" first, and you must pay him or her. When your four-year-old daughter sings "Yesterday" with feeling but without permission, and you post that to YouTube, you're a thief.

How does this relate to UMG? If a new artist doesn't have to go to people like UMG to make recordings, they aren't meat for the simultaneous "theft" (ignorant signing away) of their publishing rights in the same contract. A lose-lose for UMG.

Is the MegaBox model part of the story? Most of the story? Any of it? Time and research will tell.

But keep in eye on the money. Artists who bypass the predators and go directly to digital markets threaten the dollars these dinosaurs devour every day of their lives. And like all monomaniacs, corporate persons want only one thing — money. No other thing in the world matters to them; it's the law.


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