Vivendi To Acquire MP3.com

Herschel Krustofsky writes: "Vivendi Universal finally got tired of suing MP3.com and decided to buy them out. Look for MP3.com to become the platform for Duet, the new online music venture from Vivendi and Sony Music. Any coincidence this happens right after the industry puts the breaks on SDMI?"

Comments

Missing the point (sturgeon's law).

[landley]

In any publishing industry (music, books, video), content is cheap. The real value is fighting off sturgeon's law.

Sturgeon's law says that 90% of everything is crud. The contents of mp3.com are the same as a book editor's "slush pile", which is full of a thousand amateurs all trying to write the great american novel, and 99.5% of them really sucking at it. mp3.com has every garage band on the planet that can rune Lame or BladeEnc sending in a demo tape, and most are really awful.

This is normal. There's great stuff out there, but you have to find it. This is why search engines exist on the web, because most web pages are terrible and pointless, and the value is in finding the good ones. That's what SLASHDOT does! (And why slashdot's comments have a ranking system.)

That's what Red Hat or Debian does bringing out new Linux distributions, going through the hordes of code on freshmeat and such and finding the stuff that's worth including.

Fighting off sturgeon's law is a useful service, quite possibly THE most successful business model on the web. Skimming off the cream, polishing it up, and packaging it in a shiny box. But that is -NOT- what mp3.com did.

mp3.com did for music what sourceforge does for open source or what geocities does for web pages. It's nice, but it also rapidly fills up with unfinished or even random cruft. It's also not something people are really willing to pay for, except maybe to view advertising. The very "freeness" of it is why people use it. It's a big public canvas, blank space in which amateurs can scribble.

What mp3.com needed, and what they never had, was an editorial board that found their top 1%, collected it together, polished it, and promoted it. THAT is the valuable service music companies have forgotten they provide. (NOT distribution, sorting through heaps of demo tapes to find talent and then, once upon a time, nurturing it.)

Same with the motion picture industry, the point isn't that they can crank out yet another crocodile dundee movie but that they can find people like Steven Spielberg and hand him the budget to make "Jaws". These days the new talent is going to atomfilms.com or some such, and getting lost in the slush pile...

Fighting off sturgeon's law is a service people ARE willing to pay money for. If you can ensure quality and save them time, they will pay for it. Always have, always will. The publishing industries are terrified of the web taking away their distribution role, but only because they've forgotten why they were the ones who had something to distribute.

Rob

Re:Well, there goes the indy artists on mp3.com.

[victim]

You mean we haven't already signed onesided contracts? My tiny little band makes nice music, but nothing that will ever be popular. Let's see what MP3.com has in their contract bag...

1. mp3.com routinely sends us email telling us the rules have changed and these are the new rules.
   
2. the pay-for-play program divides a pot of money between the artists, but mp3.com refuses to state the formula for the payout.
   
3. if they believe you are attempting to trick the formula you will not be paid.
   
4. a month or so ago the bands were unilaterally notified that if they wanted to earn money, they must pay mp3.com $20/month in order to be elligible to be paid. How about if your employer serves you with a $20/mo paycheck-privelege-fee?
   
5. bands which are not paying their $20/mo still deplete the pay-for-play pot of money, except mp3.com keeps instead of accrueing it to the bands.
   
6. it is right at impossible to get a straight answer from them on any matter.
   
7. if you watch closely the song play statistics (that govern your pay through the mysterious, but presumably monatonically increasing function) will sporadically change and reduce your plays. No explanation.
   
8. despite mp3.com's denials, artists complain that their band contact email addresses are used to direct marketing.
   

Remember, the bands are all paying their own production costs up front. There is no mysterious development costs for guiding the bands into success. mp3.com is just a distribution chain and they manage to screw the artists at every turn.

That all said, I still like the concept. I don't make music for money. If someone can enjoy my music, then great, go to it. mp3.com is just a nice distribution channel where I don't have to pay for the bandwidth.

It looks like a pretty good deal all around

[hillct]

From the article:

The transaction has been structured as a reorganization that will be tax free to MP3.com shareholders to the extent they receive Vivendi Universal shares. Consistent with its previous statements, Vivendi Universal will not issue new common shares in this transaction, but will use treasury shares for the share portion of the aggregate transaction consideration. The Board of Directors of MP3.com has unanimously approved the transaction. Holders of more than 50% of MP3.com's outstanding shares have agreed to vote in favor of the transaction.

MP3.com shareholders get a fair value, with tax advantages, and Vivendi aquires a valuable internet property without diluting it's currently outstanding shared, or risking any previously held positions.

Free Music advocates might object but from a financial perspective it looks like a sound deal

--CTH

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