How the Music Industry’s War on Sharing Destroys Markets and Erodes Civil Liberties

Putting the “Play” in Playlist: Muxtape

1 Leave a comment on paragraph 1 0 Nearly seven years after Uplister closed its doors, a 24-year-old designer and DJ named Justin Ouellette, who had never heard of the company, came up with a very similar idea. For years, he had been using the internet to keep track of his college radio playlists, both as a public service and as a personal diary of sorts. Having been an avid Napster user in high school, Ouellette knew that the internet was a powerful medium for music distribution, and to him, it “seemed like an incredibly tragic disconnect”[1] that there was no simple way to turn his curated list of songs into an active, on-demand digital playlist. So he set out to remedy the problem. “I just became sort of obsessed with why that couldn’t happen,” he told me. “Why can’t I just click on these songs, and hear them right now?”

2 Leave a comment on paragraph 2 0 Because Ouellette’s primary expertise was in design, and his computer programming skills were only at the hobbyist level, and because he had a full-time job at video sharing side Vimeo, he initially viewed his pet project “strictly as a user interface experiment.” After working nights tinkering on his playlist software for some time, he suddenly realized that it was “two or three weeks away from being releasable.” He quit his day job, and buckled down, spending most of March, 2008 in full-time development. Even at this point, however, he didn’t view it necessarily as a career move. It was more of a creative challenge, a test of his minimalist design principles. “I want the whole site to be music,” he told himself. “Literally, the surface area of the site should [have] very few areas you click on” without hearing something.

3 Leave a comment on paragraph 3 0 After three weeks of “intense” work on the project, which he dubbed Muxtape (a portmanteau of “MUX,” an electronic device that manages the flow of audio or video signals, and “mixtape”), Ouellette was ready to share his creation with world. Because it wasn’t initially intended as a commercial project, there was no marketing or promotion involved with its launch, though he was certainly optimistic about its social impact. He posted a screenshot of the Muxtape logo to his Tumblr blog, and told his readers, “I’m proud to introduce Muxtape, a new way to share, discover, and listen to hand-picked music online. . . . My goal is nothing short of changing the way we consume, distribute, and discover music.”[2]

4 Leave a comment on paragraph 4 0 The response was sudden and overwhelming, due in part to the fact that some of Justin’s Tumblr readers were themselves influential bloggers. Within four and a half hours, a thousand people had signed up for the service. Within 24 hours, 35,000 people had visited the site, and about a quarter of them had signed up to use it, posting nearly 20,000 songs. His post was the most “reblogged” item on Tumblr, and his site “melted” under the heavy strain of its exponential growth.

5 Leave a comment on paragraph 5 0 Music fans weren’t the only ones who responded quickly to Muxtape’s release. The day after he launched the site, Ouellette started hearing from record labels. Universal Music Group was the first to contact him. The label’s General Counsel called Ouellette directly (“how they got my contact information is still a mystery”), and “asked where he should send the summons.” Independent labels also emailed him, but unlike the majors, they were “mostly inquisitive, not hostile or anything.”

6 Leave a comment on paragraph 6 0 “Wow, I’m really on to something,” Ouellette thought to himself. “I should get a lawyer immediately.” So he found a prominent music attorney willing to take him on a deferred-compensation basis, and immediately entered into negotiations with labels big and small. He spent the entire summer in negotiations, all the while tending to his rapidly-growing site. He found the process simultaneously fascinating, frustrating, and absurd. “It was real Jekyll and Hyde,” he told me:

7 Leave a comment on paragraph 7 0 It was weird, because I’d have the business development people on one side of the table. And then on the other side of the table is the legal side. And the meeting would start, and the business side would say, “Justin, thanks for coming in. We love Muxtape. We use it in the office, it’s so cool. Let’s talk about some possibilities.” And then I’d turn my head to the right, and the lawyers would be like, “We are going to sue you into the ground. We want the site shut down by the weekend. This won’t stand. We’re going to destroy you.” And I’m like, “You guys gotta talk to each other. Decide whether you want to quash me or do a deal. But it’s like literally having two different meetings at the same table.”

8 Leave a comment on paragraph 8 0 Ouellette was savvy enough to understand that this Jekyll and Hyde routine was essentially the labels’ version of good cop/bad cop; the threat of litigation, while real, wasn’t immediate. Instead, the labels appeared to be using it as a form of leverage. This wasn’t a problem, as far as he was concerned; once the licensing terms were worked out, and he paid appropriate retroactive royalties for the site’s first months of operation, everybody would get along just fine. His attitude toward the labels at the time, he told me, was “you guys are snakes, but, you know, I can respect the game.”

9 Leave a comment on paragraph 9 0 It was clear to Ouellette that the four majors had conferred about terms prior to their separate negotiations with Muxtape. They each offered essentially the same economic terms: the service would have to pay anywhere from half a cent to two cents each time a song was played on the site, it would have to share 50% of its revenues (Ouellette anticipated selling ads to music-related companies) with the majors, and it would have to give each major an ownership stake in Muxtape ranging from one to five percent. Against these terms, the labels collectively required cash advances amounting to ten or fifteen million dollars. While he considered these terms onerous, Ouellette was fine with them, as long as they’d allow him to go about his business in peace. “I’m not interested in being a millionaire,” he told me. “What I really wanted was to build the best music experience.”

10 Leave a comment on paragraph 10 0 The problem, from Ouellette’s perspective, was that even if he agreed to the labels’ financial terms, he still couldn’t build the “best music experience” as he envisioned it. Some of the major labels also insisted on having “some say in the project,” demanding that Muxtape’s front page dedicate a certain portion of its space to promoting major label bands. For an obsessive design geek, this was simply beyond the pale. “I started to get freaked out a little bit,” he recalls. “What I want for my money is to be able to develop this product exactly the way I want to and with total transparency. I’m not gonna turn this into a new payola. This is not going to be a new thing where the record industry gets to fuck it up just like they’ve fucked everything else up.”

11 Leave a comment on paragraph 11 0 Meanwhile, Ouellette had another problem on his hands. While he was theoretically willing to let the labels “drink me dry, in terms of money,” potential Muxtape investors were not so sanguine about the proposed financial terms. As he discovered, “there’s a lot of music-loving venture capitalists in New York who just could not stomach the idea of paying that much money to a bunch of robber barons.” Without the major label licenses, Muxtape would have cost half a million dollars to become a viable business. With them, he needed to raise 30 times that amount just to get off the ground. Once Ouellette realized that he was essentially stuck between the rock of the major labels and the hard place of the VCs, it started to dawn on him that maybe “this isn’t going to work out.”

12 Leave a comment on paragraph 12 0 Unfortunately, Ouellette never made it past this point in the negotiations, anyway. Out of the blue, he received an email from Amazon Web Services, which hosted the Muxtape site, saying it was going to shut down the server in 24 hours, pursuant to legal action by the RIAA. He immediately called Amazon, with whom he’d been in acquisition talks, but they claimed to have no influence over their corporate sibling. He confronted the labels with whom he’d been negotiating, and though “none of them would cop to” having ordered the closure, “none of them were willing to make the call to the RIAA to stop it, either.”

13 Leave a comment on paragraph 13 0 At this point, Muxtape was less than six months old, it had 600,000 active and enthusiastic users, it was the darling of the blogosphere and mainstream media alike, and, as far as Ouellette was concerned, it was dead in the water. Once the site was taken off-line, it would lose the inertia it had enjoyed since its debut, and it would become “toxic for any investor” due to the cloudy legal outlook. And, most importantly, Ouellette told me, “I felt betrayed. I was like, ‘this is not a negotiation in good faith.’” The labels had failed to live up to even his diminished expectations of how “the game” was played. So he pulled the plug on negotiations, closed down the site, and replaced it with a brief note saying that “Muxtape will be unavailable for a brief period while we sort out a problem with the RIAA.”

14 Leave a comment on paragraph 14 0 After spending “a long weekend feeling sad,” Ouellette dedicated a few months to developing a new version of Muxtape, in which bands and labels could voluntary post music as a form of self-promotion; that way, licenses wouldn’t be necessary. After six months, he closed the doors on that, as well. “My heart wasn’t in it the same way any more,” he said. “It just wasn’t as interesting to me as a product.” Today, Ouellette works at Tumblr, the site where the Muxtape story began, and says he “love[s] working there. . . . If there’s anywhere that the spirit of Muxtape is alive, it’s in Tumblr.” Despite his own venture’s disappointing outcome, he acknowledges that “that’ll probably go down as the best year of my life . . . I don’t have any real regrets.” Nonetheless, he told me, there is one thing that continues to bother him: “I still wish the state of music on the internet was better.”

15 Leave a comment on paragraph 15 0 [1] All quotes from Ouellette are from an interview conducted via phone on July 18, 2012.

16 Leave a comment on paragraph 16 0 [2] The original Tumblr post is available at: http://jstn.cc/post/29796928

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Source: http://mcpress.media-commons.org/piracycrusade/chapter-7-this-sounds-way-too-good-no-good-idea-goes-unpunished/putting-the-play-in-playlist-muxtape/