Universal Music 'Settlement' With Bolt Makes A Mockery Of The Law; Common Sense
from the ridiculous dept
Last September, Universal Music’s CEO, Doug Morris, threatened to sue both YouTube and MySpace, claiming both sites owed Universal Music millions. Morris was completely wrong on this assessment in almost any way you looked at the law. First off, many of the videos that contained UMG’s music were clearly using them in a manner consistent with fair use. However, much more importantly, Morris was going after the wrong targets. The law is exceptionally clear that the service provider is not responsible for what its users do. To claim that YouTube has liability for a user uploading a video that contains some UMG music is clearly wrong — and this view has been supported by numerous court rulings. Of course, soon after this, Google bought YouTube, and in the process gave a nice cash windfall to the big record labels, including Universal Music Group. The widespread rumor was that part of the deal was that the record labels wouldn’t sue YouTube/Google… but absolutely would sue smaller competitors. Universal Music quickly complied and sued a few smaller sites, including Bolt.com and, a month later, sued MySpace as well.
The news is spreading now that Universal and Bolt have reached a settlement — though, the details suggest this isn’t so much of a settlement as it is Bolt effectively paying a ton of money to Universal and more or less shutting down. All of this is despite the fact that Bolt has an incredibly strong legal position. It seems extremely unlikely that a court would find for Universal here — but to continue to fight it is probably prohibitively expensive. Bolt, itself, can’t afford the “fees” it has to pay under the settlement, so it’s selling itself to a much smaller competitor who has some cash it can use to pay off Universal. Bolt’s founders have apparently already moved on to some other startup. Realistically speaking, this is Univeral Music pressuring Bolt out of business (and even getting the company to admit it was “guilty” of violating a law it didn’t break).
In the meantime, Doug Morris can chalk up another ridiculously hollow victory. He’s the same guy who successfully convinced Microsoft to give him a cut of every Zune sold, despite no sane legal reason to do so. While Morris may think he’s cleaning up by forcing companies to pay fees they shouldn’t, he’s actually shooting himself in the foot with each move. Videos uploaded to these sites that include background music from a UMG act hardly hurts sales. It seems almost laughably ridiculous to think that anyone would hear a song in the background of a video on YouTube (or Bolt) and decide that he or she no longer needs to buy a copy of that song from iTunes or via CD. Having these songs in the background of videos clearly acts as a promotion — and it’s a free promotion that Morris has just killed off for the short-term gain of a few million dollars. Morris is destroying Universal Music’s long term chances with each “short-term” win — and at the same time making a mockery of both the law that protects service providers and basic common sense.