Sue or Sign: EMI Trades Lawsuit for Deal With Music Start-Up Grooveshark

fought-the-lawWell look at that: EMI Music Group, which had been working on a licensing deal with music start-up Grooveshark but ended up suing it instead, now has a licensing deal with Grooveshark after all.

This one isn’t a total shock, as EMI and Grooveshark had supposedly been close to a deal prior to the lawsuit. And it wouldn’t be the first time that a label sued a Web company: See Warner Music Group (WMG) and Imeem, as well as Universal Music Group and News Corp.’s (NWS) MySpace, among others.

No details on the deal from EMI or Florida-based Grooveshark, which offers free streaming music, a la MySpace Music, Imeem, Spotify and others. Unlike those services, though, Grooveshark doesn’t appear to have licensing deals with three of the big four labels and plays their music anyway. But with the exception of the EMI suit, it has remained unmolested. Interesting.

For the record, here’s the release (Inside baseball note to Grooveshark guys: Please don’t attach press releases as PDF files. Really cumbersome. Thanks.):

Music streaming service Grooveshark signs deal with EMI Music and EMI Music Publishing
Gainesville, FL–Today, digital music service announced it has entered into agreements with major label EMI Music and EMI Music Publishing that will give Grooveshark users access to content from EMI’s roster of current and legendary catalog artists and EMI Music Publishing’s songwriters.

Grooveshark offers music fans the ability to stream songs for no fee from a vast catalog of music. Fans can enjoy Grooveshark’s music without having to download client software or register. The basic service is free to fans and supported by visual advertising. Fans who opt for a $3 per month premium service can enjoy unlimited ad-free streaming music. The site was recently named the best way to listen to music on the web by Rolling Stone, and just surpassed one million registered users.

“EMI Music and EMI Music Publishing have collaborated with us to create a mutually sustainable deal which represents the future of digital music,” says Grooveshark CEO Sam Tarantino. “We will continue to deliver the best music service on the Internet to our users, and we will expand our capacity to strengthen fan-to-artist connections through our technology.”

“We think services like Grooveshark offer great music discovery options for fans,” said Mark Piibe, EMI Music’s Global Head of Digital Business Development. ”In turn, Grooveshark offers a new revenue stream for our artists and will help us learn more about how we can better connect different types of fans with artists.”

Fighting Words! Time Warner Says Comcast/NBCU as Dumb as…Time Warner/AOL.

bewkesJust in case anyone thought Time Warner had any lingering interest in NBC Universal, this ought to put it to rest: Time Warner (TWX) CEO Jeff Bewkes just compared the proposed Comcast/NBCU deal with the disastrous one his company made with AOL nearly a decade ago.

At an industry conference in Manhattan, Bewkes repeated arguments he has made in the past: Chiefly, that big media mergers have a lousy track record and that he couldn’t see how Comcast (CMCSA) could unlock any value by buying a majority stake in NBC Universal from GE (GE).

“Somebody has finally noticed that these things don’t work out so well,” he said, adding “We love to see our competitors taking risks.”

But just to hammer that point home, Bewkes compared the proposed deal to the one his company made nine years ago when it embarked on an ill-fated merger with AOL. That deal (made when Bewkes was running Time Warner’s HBO unit)  “basically made no sense” at the time, he said.

The main talking point in favor of that transaction–that connecting Time Warner’s content with AOL’s Internet distribution would create synergy–was “nonsensical,” he said. But “these kind of arguments, you’ll hear some of them this week, in the other merger that we’ve been talking about,” Bewkes said.

Clear enough?

Wall Street, by the way, remains unimpressed with the proposed deal as well: Comcast shares are down about 10 percent since word got out.

In other reiteration news, Bewkes also said, again, that he doesn’t plan on selling his Time Inc. publishing unit. Though he left himself a tiny window of wiggling room by noting that “no public company can ever say that it wouldn’t consider restructuring some part, whether it’s Warner, HBO, whatever.”

But Bewkes insisted that Time Inc.’s best-known magazine brands, including “Time, People, Sports Illustrated, InStyle,” are holding their own as print products and that the challenge will be turning them into online successes.

“We have basically a healthy business in terms of our relationship with readers. These brands mean something and they’re evolving…,” he said. “If you can’t take the leading titles that people have known for decades, and use the new world to make them relevant, really, shame on us.”

Disney “Transitioning” Ideal Bite, its $20 Million “Green” Lifestyle Newsletter

heather_yogaIdeal Bite, the green-flavored lifestyle newsletter  Disney bought in June 2008, faces an uncertain fate: Its parent company is shuttling the unit from one corporate silo to another, and says it’s not sure what will become of it once that happens.

For the record: Disney (DIS) says it always intended to move the company, which offers “bite-sized ideas for green living” via e-mail and a Web site, from its corporate strategy group to its interactive division, which will happen later this year. At that point, “it will still continue in some form,” says spokesman Michelle Bergman.

That doesn’t sound good. Disney says it plans to conduct a review of the unit, so it’s not ready to answer some basic questions about the e-mail newsletter company. Like: Are cofounders Heather Stephenson (who lives and works in San Francisco)  and Jennifer Boulden (who until this summer lived and worked in Bozeman, Montana; she’s now in LA, I’m told) staying on? Will Disney have to take a writedown on the property? Will there be layoffs? “It’s too early to say. I can’t tell you,” Bergman says.

OK. But If I had to bet, I’d say at least some of the dozen-plus employees will be hitting the job market.

Disney paid a reported $20 million for the business a year and a half ago, and the plan was to create a big green-centered business around it, but that hasn’t panned out, sources said. The company, founded in 2005, is one of the many lifestyle newsletter businesses backed by Bob Pittman’s Pilot Group.

Comcast (CMCSA) bought DailyCandy, the best known of Pittman’s stable, for $125 million a little more than a year ago. That was surely one of the last “pre-Lehman” Web 2.0 M&A deals, but grunts and murmurs out of Philadelphia and Pilot indicate the business has held up during the recession. And Thrillist, a “DailyCandy for dudes” effort that has yet to sell, seems to be booming.

The Secret of Chad Hurley and Steve Chen’s Famous “Two Kings” Video. Revealed!

chad hurley and steve chenRemember the era-defining video that Chad Hurley and Steve Chen made three years ago? The one where they looked simultaneously giddy, groggy, and perhaps a tiny bit intoxicated, and announced that they had sold their video site to Google for $1.65 billion?

That clip, it turns out, is an unlikely homage to…wait for it… the artist formerly known as Puff Daddy. Really!

Go ahead and look at the first two clips at the bottom of the post. Note Hurley’s reference to “salt and pepper” and “two kings getting together”. See? In the Diddy clip, too. Who knew? (OK, so at least one of you did).

Anyway, Hurley references both clips in a blog post he’s published this morning commemorating the anniversary of the sale. He also announces that the site is now serving up “well over” 1 billion video views a day (last month Comscore (SCOR) estimated YouTube was doing 10 billion views a month in the US.)

And there’s also some general talk about the site’s evolution: Rather than focus solely on short clips, it’s also working to bring in movies and TV shows, etc. Nothing you didn’t know already.

Expect to hear more meaningful — but equally upbeat –  talk about the site’s progress next Thursday, when Google (GOOG) announces its Q3 earnings.

Last quarter, Google executives went out of their way to talk up the site, and CFO Patrick Pichette said YouTube could start generating significant profits soon. This week, CEO Eric Schmidt also made a point of praising the YouTube deal, and the site’s performance during a New York press conference.

Here, once again, is that famous clip.

And here’s the one Hurley was apparently referencing.

And here, once again, is the most popular clip in YouTube’s history:

Has YouTube Finally Figured Out How to Play Nicely with Big Media?

YouTube snuck up on big media, then scared the hell out of it, then tried to do business with it, more or less unsuccessfully.

Now, three years after Google (GOOG) plunked down $1.6 billion for the video site, it seems to have figured out an approach that works for at least some big players: Hand over a chunk of the site to content creators, who get to control it, sell ads on it, program it with their stuff, and share some of the ad dollars.

It’s a pretty straightforward compromise: YouTube gets some of the ad dollars that “premium” content — stuff you’d see on a TV screen, basically — can generate; content-creators get access to the the gazillion eyeballs that the world’s biggest video site attracts. Examples: See the pacts that Sony (SNE), Disney (DIS), Time Warner’s (TWX) Turner, Warner Music Group (WMG) and Universal Music have hammered out in recent months.

And that sounds like the deal that YouTube and Britain’s Channel 4 have reached. Telegraph:

YouTube and Channel 4 have been in talks for at least the last six months and a contract is expected to be signed imminently. The Telegraph understands that Channel 4 has negotiated the right to sell its own advertising around its content on YouTube and share the revenue with the Google-owned site.

A senior television source close to Channel 4 said: “It was key for Channel 4 to be able to sell the advertising around its own inventory so it could extract maximum value from the deal and retain commercial control over its own property.

“When the Channel 4 content formally appears on YouTube, it will be branded exactly the same way as it is on the Channel 4 website. It will be a fully Channel 4 branded space and look as if someone has picked up 4 on Demand (Channel 4’s online catch up service) and put it on YouTube.”

.,.The partnership will be the first formal arrangement YouTube has agreed with a British broadcaster in which the majority of its content will be shown in full on the video-sharing site.

No comment from YouTube. If the report doesn’t pan out, I’m assuming it won’t have any impact on anyone reading this in the U.S.: The Web is worldwide, but these content deals tend to be specific to various territories, which means you won’t be able to watch British programming from the States. Fair enough: My non-US readers always gripe about not being able to watch Hulu clips.

Look Who’s Selling Warner Music’s Videos on YouTube: Veoh’s Sales Team

green_day_Last month Warner Music Group (WMG) won the ability to sell ads on its YouTube videos. Next step: Getting someone to sell ads on its YouTube videos, since the music label doesn’t have its own sales team.

Warner is handing those duties over to Outrigger Media, a New York-based rep firm that specializes in Web media  (Outrigger’s preferred description: “Internet video sales and marketing firm”), the companies announced today. (Oddly, Warner’s release goes on and on without ever once mentioning Google (GOOG) or YouTube once. Go figure.)

I’ll admit that I hadn’t heard of Outrigger before this morning, but I had heard of its CEO, Mike Henry, an ad sales veteran who was previously running ad sales for Veoh, one of the many video sites that aimed at becoming the next YouTube during the past few years. Turns out Henry is still running ad sales for Veoh — it has outsourced its ad sales business to his new company.

Warner’s strategy is different than the one that its rival Universal Music is taking with Vevo, the “Hulu for music videos” joint venture it has launched with Sony (SNE), with help from YouTube. Vevo is creating its own in-house sales force, to be led by Nokia and and Viacom vet David Kohl.

I can understand Warner’s reluctance to build one of its own — if you really want to do this stuff right, you’re looking at 20,30 people — but it seems that long-term, if the labels have a future, it’s going to be primarily as a sales and marketing force, and you’d want to make a bet on that now. It will be interesting to see how this plays out.

Spotify Promises a TV Service (in Sweden, of Course)

spotify-logoSpotify, the streaming music service Americans love talking about but can’t actually use, has given us even more to chat about: The company now promises to roll out some sort of TV service, some day.

Where? In Sweden, of course, which is where Spotify started, and which acts as a sort of test lab/best case scenario-provider for the service.

The company has announced a two-year deal with Telia, a European telco/Internet service provider, “to work together developing Spotify’s music service for computers, mobile phones and eventually TV as well.” No details about what that TV service might be, but the companies say a mobile offering will be available for Swedes within a “few months”.

That’s interesting, since Spotify already has a mobile offering: Subscribers to its premium service can use the company’s iPhone app, which Apple (AAPL) approved last month. No description of how the new service will differ.

It’s also worth noting that this is Spotify’s second deal with a Swedish ISP. It already has a linkup with Bredbandsbolaget, owned by Telenor, (TELNF) Scandinavian telco, which allows users to bundle their subscription fee with their Internet bill.

It’s also the only territory where the service has a bundling deal, and industry observers think that tie-up has a great deal to do with the company’s much-talked about success there.

Everywhere else, though, Spotify remains a work in progress. It claims 5.5 million users, but as of last month only about 100,000 of them were paying the company a monthly fee, according to people familiar with the service. It is currently trying to break into the US market, but has been mired in discussion with the big music labels — the same ones that have licensed the company in Europe — for months.

For more on the company’s plans, see this interview Kara Swisher conducted with cofounder Daniel Ek last month:

[ See post to watch video ]