New York Times lackluster coverage of Google Music failures ignores the Chinazuala Factor
The New York Times gave a great example of Google’s control over messaging in certain press organs in its coverage about the failed Google Music deals (“Google’s Digital Music Service Falls Short of Ambition“).
Here’s a few tips for writing the news about these things–if anyone is interested in the actual news.
1. The Licensee (Google) has to Demonstrate Value: Google failed to do this. Here’s a hot tip–if creators thought they would make a lot of money and have a good distribution channel for music, they’d be all in like they are on iTunes. They’re not. Tell you anything?
2. The Licensee (Google) Should Not Dare the Licensor to Sue Them When They Launch Their Service Anyway (i.e., without licenses): Which they did.
3. The Licensee (Google) Should Not Gloat About Trial Court Decisions They Like When the Case is On Appeal: Gloating during negotiations is not designed to get you to “yes.” This is not a good negotiation tactic. It’s also not smart. Just ask the Grokster 9th Circuit team. Problem Child No. 1 needs to learn to keep it buttoned.
4. The Licensee (Google) Should Build Trust with the Licensor: Ha. See you in a decade.
5. “High Prices for Licenses” is not the Same As Advances from People Who Will Stiff You: The NYT offers the theory that one reason the Google negotiation team failed to bring home the bacon is that “the labels” wanted “high prices for licenses” because they are “trolls”. This is where the NYT went into opinion land with no warning.
If you say “high prices for licenses” to most people, they will assume that there is a charge for the license itself. The reality is that anyone who earns money from royalties would want those royalties pre-paid if they thought there was a good chance that the royalties would either not be paid at all or that the accountings would be poor.
Meaning–if I charge you $5 for access to my lemonade stand, you’ll never get that $5 back. Then I charge you for the lemonade. If I charge you a $5 advance payment for lemonade, you will not have to pay for the first $5 worth of lemonade you drink because the price of the lemonade was paid in advance.
Getting advances is a very common practice when dealing in places–let’s call them Chinazuala–where you think that you will not only not get a straight count, you probably won’t get a count at all. So you charge a big advance that’s based on what you think you will make during the term of the Chinazuala license. So if I think I will make $1 million for a 5 year license in Chinazuela, I will ask for $1 million up front. And the Chinazualans will wring their hands and say how unfair I am not to trust them just because their national motto is “No Sea Malvado”.
Do I care?
6. Doing Something Poorly For A Long Time Does Not Mean You Win: Much was made about the Google Music negotiation team and how they were going to roll over the music industry. Well, that didn’t seem to work out so great. It may come as a surprise to the instant gratification crowd that just because you take a few months to negotiate a deal and fail doesn’t mean that the other side did something wrong. Particularly when you are changing the product features every few weeks and can’t manage to articulate what you are asking for.
A Google Music representative recently said publicly that if he could just get the big players to agree his deal, the “residual” would follow. As a member of the “residual” I’m not so sure I agree with that arrogance. And the underlying premise is that Google Music will use your life’s work anyway and then after the fact try to make you take the deal the majors agreed to–without payment to you of the advances that incented the majors to do a deal with Chinazuala.
In fact, the only thing positive you can say about doing something poorly is what the guy said about the benefits of having a nail in your head. It feels so good when you pull it out.
Let’s do business with our friends who give us a straight count.