Amazon MP3 Clips

Monday, May 17, 2010

Goodbye And Good Riddance?

File sharing service LimeWire was dealt a huge blow last Wednesday when a U.S. District judge ruled in favor of the Recording Industry Association of America (R.I.A.A.) in their copyright lawsuit against LimeWire's parent company, Lime Group.  From CNET:

"A federal court judge has likely dealt a death blow to LimeWire, one of the most popular and oldest file-sharing systems, according to legal experts.

On Wednesday, CNET broke the news that U.S. District Judge Kimba Wood granted summary judgment in favor of the Recording Industry Association of America (RIAA), which filed a copyright lawsuit against LimeWire in 2006. In her decision, Wood ruled Lime Group, parent of LimeWire software maker Lime Wire, and founder Mark Gorton committed copyright infringement, induced copyright infringement, and engaged in unfair competition."

You can read the full CNET article here, but the gist of it is that LimeWire is most likely finished. The RIAA and the major labels they represent would obviously be overjoyed if that were to happen while those consumers who prefer to get their music for free from LimeWire are going to be severely disappointed. Personally, I say good riddance. Having a professional background that includes working at record labels and having had more than one opportunity to see how a struggling band lives while on the road allowed me to see the damage that music piracy causes from the inside. That being said, I also understand it from a consumer's point of view because I buy a TON of music. The music industry really has no one to blame but themselves for the rapid ascension of online file sharing services. $18 for a compact disc that may or may not have more than one good song on it is simply not a quality product. It is no wonder that music has been devalued in the eyes of your average consumer. There has to be a happy medium between free and obnoxiously overpriced though. In my opinion, physical compact discs should be no more than $10 and MP3 albums no more than $5-7. I won't claim to have an understanding of the economics of the new music industry and whether that is feasible or not, but it doesn't really matter because ultimately you have to do what keeps the consumer happy. Your average consumer does not care about recouping marketing fees, the artist manager's cut of sales, the lawyer's cut, executive bonuses, etc, etc. Stop whining about how you are broke and do what every smart business has always done: LISTEN TO YOUR CUSTOMERS and do what you have to do to make them happy and keep them coming back.

But I am getting completely off topic....LimeWire. I actually interviewed for a marketing position at LimeWire a couple of years ago. This was when they were first starting their attempt to expand into the legitimate/legal/paid side of the file sharing business. On my way to their office I was expecting I would arrive to find a modest office with lots of computer equipment. Instead, I found a lush, expensively decorated office (complete with multiple Buddha statues and jungle plants) akin to what I imagine the Google offices look like. The HR rep actually said to me "We are going for the Google vibe here." I was escorted into a room that was basically constructed out of all pillows and conducted my interview there. It was an interesting conversation and they definitely had/have some smart folks working there and I put my best foot forward, but the whole time I was thinking to myself that they were going to have a difficult time achieving what they wanted.

Another quote from the CNET article:

"Lime Wire claims to have amassed more than 50 million unique monthly users since releasing the software in May 2000. LimeWire is free peer-to-peer software, but the company also sells a premium version called LimeWire PRO for fees of up to $35 a year. In her decision, Wood noted that Lime Wire grew annual revenue from $6 million in 2004 to $20 million two years later."

One of the main components of the job I interviewed for was to get users to upgrade from the free service to the paid as well as attract new customers. The problem there is that LimeWire is forever associated with "free". Your average tech savvy consumer is not going to associate LimeWire with subscription fees, but obviously enough did to contribute to a $14 million revenue growth in 2 years. Still, if the company truly wanted to reinvent themselves, then changing the name really would have been the only way to go. Since they had enough money to have insanely lavish office space, I'm sure they could have afforded a rebranding. Obviously, their technology was great and something that consumers enjoyed, but getting the stink of the LimeWire name off of their product really would have been the only way to go legit. But that is just my opinion. And for the record, I'm not poo-pooing on LimeWire because I didn't get a job there; this would be my opinion as a marketing professional regardless.

The death of LimeWire will not spell the end of file sharing and I'm sure the void they leave will be filled quickly, but as far as symbolic victories go, this is a good one for the music industry. Now, if the music industry was really smart, then they would try to work out a way to purchase LimeWire's technology and harness it for paid services. With LimeWire facing a potential $450 million payout for damages in this case, they might want to strike some sort of deal. On the other hand, they may want to tell the RIAA and their clients to shove it simply out of spite.

It will definitely be interesting to see how this all plays out. Will either side learn any lessons?

Oh, and if you need a laugh, take a trip down memory lane with the still hilarious story from last summer of when LimeWire employees got infuriated with the guys at Dovecote Records for taking a few slices of pizza from them at a bar. The story is just too good. (And actually even more ridiculous when you know how much money LimeWire is throwing around to decorate their offices. You'd think giving away a few slices of pizza would be the least of their worries.) Read it here.  

No comments: