Wayne Russo, CEO of file sharing network Grokster was in London last week, and used took the opportunity to lay out his plans for European expansion. It seems that Russo views Europe as something as a soft touch in comparison to the US and the very active RIAA. The Dutch Kazaa ruling has set an unfortunate precedent, but Russo is misguided to think that the European music industry bodies are lenient. The difference between them and the RIAA is that they balance restrictive action with promotion of legitimate services. But they can get tough when they want to, just look at the Danish IFPI’s fines against individual users and also the BPI’s action against the Easy Internet Café chain.
Russo is clinging firmly to the business model first championed by Napster and MP3.com: rely on advertising revenues whilst building up a vast user base and then trying to use that as bargaining power for getting content from the labels. This approach just isn’t going to work anymore. The majors are finding it difficult enough licensing content to legitimate services let alone illegal ones.
Licensing to P-to-P networks in return for removal of infringed works might seem like a quick fix solution, but it is road that record labels would be ill advised to go down, be they major or independent. Russo claims that he will have “an international artist” on board for his UK initiative, but this will probably turn out to be some disgruntled has-been who has been dropped by his or her label.
Russo also took a pot shot at Dot Music’s service, calling it ‘laughable’. Which in comparison to the content available on free networks it is. But by the yard stick of legitimate services Dot Music is right at the top of the pile, which is testament to its applications and programming but also betrays the gulf that exists between current major label licenses and what consumers can get for free elsewhere.