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Ah, the recording industry. We’ve already discussed how ridiculously complex it is for a music startup to obtain the licenses it needs. Combine that with the ridiculously high rates demanded by the record labels and the fact that they demand licensing for things that shouldn’t need additional licenses, and you understand why it’s so difficult for music startups to survive, and why the market is so fragmented. You hear it all the time. Spotify isn’t available in the US. Pandora isn’t available outside the US. And so on. Name the startup and there are serious restrictions on it. Things in Canada are pretty bad, where they basically don’t have any of these music services, and it’s because the Canadian recording industry is apparently demanding absolutely, positively insane fees — such as 45% of gross revenue. Yes, gross revenues. If you know anything about the finances of these kinds of businesses, that’s laughable. As Pandora’s Tim Westergren notes, Canadian radio stations pay approximately 2.1% of gross revenue to the recording industry. As I read the article, what struck me about it is that, for all the complaints about how Canada was supposed to be some evil “pirate haven,” here was a clear case of how its ridiculous copyright situation was keeping new music services out. If copyright were really so weak in Canada, you wouldn’t have this issue at all. And then I got to the end of the article, where the Canadian Recording Industry Association boss, Graham Henderson, made the following guffaw-inducing statement: The music industry, meanwhile, says its fees are not the problem. It says music-related businesses are reluctant to enter Canada because of the country’s reputation as a file-sharing haven where music fans can download songs illicitly without fear of penalty. “Why would you spend a lot of money trying to build a service in Canada when Canadians take so much without paying for it?” said Graham Henderson, president of the Canadian Recording Industry Association, which represents major record labels. “[Canadians] just seem to have no appetite for a legal marketplace.” This comes after 26 paragraphs discussing all the different music services that want to enter the Canadian market, but can’t because of the ridiculous rates that the recording industry wants to charge. It always shocks me that folks like Henderson can make such blatantly false statements like this and people don’t call him on it. He gets away with it because no one points out that his statements make no sense. Permalink | Comments | Email This Story

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