Great News Sultan: Choruss is raking it in–Update
Update: Choruss on the march–or at least on the panel again.
Jim Griffin was on another panel recently expounding on deus ex machina, the vulgar latinate for the Greek (e.g., Euripedes) “god in the machine” or the perfectly good English secular version, usually translated as the “ghost in the machine”.
For purveyors of vaporware, using the phrase “ghost in the machine” is ill-advised. Apparently our suspicions were correct–what Choruss has done is get one or more student government organizations to agree to give up part of the student activities fees they sort-of control (known as the “bursar’s bill,” “Bevo bucks,” etc., depending on which school you’re at) and pay these fees to Choruss. According to Griffin, Choruss is then going to give the money back to the school to support music education.
Lest that transaction just slip by–think about that for a second. Let’s see, it comes out of the student’s pocket and goes into the school’s pocket. Or said more accurately, it comes out of the students’ parents pockets, goes into the artist/producer/songwriter/publisher/record company pocket, and then Choruss decides to pay it to the school. The problem with that–Choruss is essentially a retailer, and once someone who is essentially a retailer “sells” the tracks to the students they have to pay a wholesale price (usually about 70% of the proceeds) to the rightsholders–songwriters, music publishers, artists, unions and record companies.
If Best Buy were to sell some CDs and decide not to pay the record company and give the money to the “Minneapolis Youth Orchestra” I think we would all find that odd and probably illegal. Unless, of course, all the rightsholders consented to it. So that means Choruss would have to identify the rightsholders to get permission (which they can’t, at least not yet).
When asked if Choruss would take a fee, Griffin said it would not. When asked what fee structure Choruss uses for its financial projections, Griffin said that Choruss doesn’t use finanical projections.
I’m sure A&R executives everywhere will be thrilled to know that someone somewhere someplace in the music business doesn’t have to run a P&L every time they want to buy a paper clip. Of course, if you are the ghost in the machine, maybe you don’t have to live under the same rules that everyone else does.But–what about the ghost in the machine? The ghost in the machine is supposed to be able to account to artists/producers/songwriters/publishers/record companies for their share of the student activities fees that Choruss is to collect. Two problems–the ghost doesn’t have a license and the hasn’t figured out how to account to anyone yet.
Let me offer another explanation for this phantasmagoria. Griffin also said that Choruss would be “going independent” soon. We used to call that running out of money, but let’s say it is “going independent” and will be taking in new money for whatever in the world this ghost is supposed to be. It is highly unlikely, particularly in this environment, that a VC would allow a strategic partner (such as Griffin’s putative investor, Warner Music Group) to set the valuation for the company. That means that in order to survive, Griffin must have some kind of validating commercial deal, preferably one that throws off what is lovingly referred to as “top line revenue” in the trade. Hence his deals with these six campuses (is that different than six universities? Time will tell.) The new money VC will then use these benchmarks to set a new valuation in what is sure to be an absolute knockdown dragout with WMG over liquidaiton preference, dilution, etc.
But of course, Griffin doesn’t do financial projections. Oh, no.
So–that means that the ghost is going to (A) have to get the deals to survive and (B) figure out what to do with the revenue. So in a flash of ghostly brilliance–let’s give the money away!! SMART!! The only problems with that are that the money is either (1) being paid for something other than rights and indemnity which is probably not what the students think they are getting, or (2) is being collected in return for rights, but Choruss can’t distinguish one song or recording from another so they don’t know how to divide it up, or (3) Choruss is collecting for a covenant not to sue (see Bennett Lincoff) and so doesn’t have to share the money with anyone but does not want to deal with the political fallout from artists/producers/songwriters/publishers/record companies who figure that out, which is unpopular among rights holders, not to mention Internet savants.
But wait–there’s more! Given Griffin’s public statement to The Register, it sounds like someone is going to be collecting millions of dollars. That’s definitely worth suing over.
I remember asking a guy from BMG why the company was still in the Napster lawsuit after Thomas Mittelhoff’s investment. He told me, make no mistake. That investment came from Bertelsmann, not BMG. Griffin may not be the only one looking for a deus ex machina in the third act.
To my knowlege–Griffin has no deals with any rights holders aside (possibly) from some elements within WMG and even then that will probably not hold if I had to guess. So what is he collecting money for, exactly?
Or to ask the musical question: Who you gonna call?