Begging Forgiveness

"It’s better to beg for forgiveness than to ask for permission"

One day I’ll cover this one in my VC Cliche of the Week series, but today I am going to use it to discuss the dance that is going on between user generated content services and the copywright owners. Bob Lefsetz says in the opening of his post on Doug Morris’ comments last week about YouTube:

Call it the Napster effect.  You’ve got to steal the labels’ wares, because you’re never gonna get a license.

That’s right. Technology is moving fast. We can use technology to do stuff today that wasn’t possible five years ago. We can go to a Flaming Lips show, shoot a video, upload it to YouTube, and share Wayne’s wacky crowd surfing move with the world:

We can also record The Flaming Lips and Cat Power covering War Pigs at Austin City Limits and share that with the world.

Or we can upload The Flaming Lips song Yoshimi to our blogs and share that with the world (like I did yesterday).

These are amazing things we can do. We can record and share media with others. We can be the TV network, radio DJ, the record critic. I am convinced that when the audience becomes the media and the distribution system, artists are going to be much better off than when they had to rely on middlemen to do that job.

Technology entrepreneurs are building new services every day that makes stuff like this possible. They have two choices. They can ask for permission or they can beg for forgiveness.

As Bob Lefsetz says in the same post:

Have a good idea for a business employing music?  Try to be
reasonable and ask for permission?  You won’t get it.  You’ll spin your
wheels, wasting time and money, and eventually be forced to go out of
business, or launch on such a limited, hamstrung basis, that you’ll end
up with a site/service that no one wants to use.

So act
brazenly, steal with impunity.  Maybe, like the principals of Hummer
Winblad, you’ll be sued personally for your efforts, but you’ll go down
in the history books as bringing the future to the people, as pushing
the envelope, as doing a good thing.

Without Napster, there’s no iTunes Music Store.

Without the Rio, there’s no iPod.

Bob is right about this. We’ve watched the entrepreneurs and VCs who have chosen to work with the RIAA. Where are they? Nowhere for the most part.

We’ve also watched the entrepreneurs and VCs who have "just done it". They are generally in a much better place.

Many people ask me why I haven’t ever invested in a music related technology company. There’s your answer right there. I won’t invest in a "ask for permission" deal. They don’t work. And I haven’t had the stomache for "begging for permission", at least yet.

But YouTube is begging for permission and beginning to see the fruits of that effort. Yesterday Warner Brothers cut a deal with YouTube where Warner will give its music video catalog to YouTube on a revenue sharing basis and even more importantly, they will license their songs to YouTube so people like me can upload our favorite Flaming Lips video without breaking the law. Hell Yeah!!!

That’s the ticket. Maybe Doug Morris was just negotiating via the media when he made his antagonistic comments about YouTube. Because he ought to know what Edgar Bronfman knows. It’s what Bob Lefsetz said at the end of his post (I linked to it three times because I want you to read it).

The key is to get in bed with the enemy, to play along and invest in them, rather than shut them down, because you can’t shut them down.

That’s going to happen. That’s why YouTube is going to win bigtime. They’ve built the audience. They’ve built the value added services that make their service fun to use. And eventually they are going to get the content owners to play ball.

Begging for forgiveness is going to work for YouTube. And when it works for them, its going to work for others too. Precedents are hard to break.