"Does anyone else feel like we just time-warped back to the late '90s?" John Worthington fired off in an email to music/technology discussion group the Pho List recently. Worthington, who runs a musicians toolset provider called Tectonic Sound, was reacting to the announcement that Fox Interactive Media, an arm of Rupert Murdoch's News Corporation, had agreed to acquire Intermix Media, Inc. later this year for the eye-opening price of $580 million.
The name Intermix may not ring a bell. But its primary asset, a little property called MySpace, certainly does. The MySpace community of bloggers, musicians, and the people who love them has expanded exorbitantly in its brief lifespan to a membership of nearly 23 million, recently becoming, according to Media Metrix, the sixth most highly trafficked web domain in terms of page views.
But Worthington's point was all too well taken by members of that community: Traffic doesn't necessarily translate into dollars, as countless web entrepreneurs and investors discovered to their dismay between 1999 and 2001. And for a site like MySpace that charges nothing for membership or content, that $580 million price tag set off red flags: Was Fox getting more than banner-ad revenue for their money? Say, rights to the hundreds of thousands of songs that 350,000 musicians have uploaded to the site?
by Joseph McCombs
Discussion forums such as Slashdot and Boycott-RIAA.com were rife with suspicion, many participants attempting to parse the MySpace TOS statement that "by posting Content on any public area of MySpace.com, you automatically grant as well as represent and warrant that you have the right to grant to MySpace.com, an irrevocable, perpetual, non-exclusive, fully paid, worldwide license to use, copy, perform, display, and distribute such information and content to MySpace.com and that MySpace.com has the right to prepare derivative works of, or incorporate into other works, such information and content, and to grant and authorize sublicenses of the foregoing." Does this suggest that Fox can lay claim to ownership of this vast music library?
Absolutely not, declares MySpace CEO Chris DeWolfe. In an interview with the Voice, DeWolfe sought to dispel the notion that Fox Interactive will soon own the copyrights to all MySpace music. "If a band wants to cut a separate deal with them, they can," he explains. "To answer your question directly: Fox does not have rights to that music, to do anything, to exploit the music in any way."
MySpace did, however, subtly adjust its TOS after the acquisition news, to terms far less foreboding: "By posting any Content to the public areas of the Website, you hereby grant to MySpace.com the non-exclusive, fully paid, worldwide license to use, publicly perform and display such Content on the Website. This license will terminate at the time you remove such Content from the Website."
The success of MySpace is remarkable, especially as social-networking sites like Friendster and Ryze and musicians' communities like Garageband all failed to make such broad impact. MySpace's incorporation of Craigslist- and Evite-like features, as well as its generous bandwidth allotment that permits uploaded song files and videos at no cost, have made it an attractive destination. "It's definitely a large cost that we're eating," DeWolfe says of the bandwidth, adding that "We realize that most emerging artists don't necessarily have a lot of extra money to build up their websites and cover bandwidth costs . . . [From aggregating these costs] we get some volume discounts, and sell some ads around that."
It's a model they're maintaining. As Teri Everett, a representative of Fox Interactive, confirmed in an interview with the Voice, "We're just going to go on letting them do what they do, since that's what's made them so successful." And DeWolfe, in closing, offers this assurance to musicians: "They will not lose any of their copyrights. We will not charge them [to retain membership]. It has been our mantra from the beginning that we're not looking to make money off of our bands; we're looking to provide a service for them." If Fox Interactive/News Corp. has designs otherwise, there's nothing in place at present to make them happen.
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