I’ve never even heard this term before. Streamripping. I guess it means digitally recording an mp3 stream (ie internet radio) to build up a music library. I am sure it’s technically possible, but I’ve never heard of anyone doing it. I know lots of people who acquire music via torrents, p2p networks, iPod sharing, pando, pownce, IM etc. But not one single person who has ever engaged in "streamripping".

And yet apparently SoundExchange is willing to make a deal with internet radio broadcasters to alter the proposed new net radio royalties if they will use some sort of protection scheme to stop "streamripping".

This irritates me on many levels. First, this is an example of lawyers run amok. I know that lawyers are supposed to worry about "what if" situations, but there are so many better ways to steal music than streamripping that I just don’t see this as a major threat.

But my bigger problem with this is that internet radio is the future of radio. Because we are beginning to see the emergence new connected devices, from smartphones, iPhones, Sonos, Squeezebox, and soon products from Cisco and others that will replace the CD player in our home music system and the iPod in our car. These devices play internet radio and subscription services like Rhapsody, Napster, etc.

They pull the stream over the wired or wireless Internet and play it directly on the device. They key to all of this is that the streams are easily brought onto these devices. When you buy one of these devices, you want to know that it will play whatever stream you want.

This is a huge opportunity for the music industry and this was what I thought the SoundExchange fight was all about, getting as big a piece of this emerging new revenue stream for the rights holders. And at some level, I am OK with the give and take of that negotiation.

But the introduction of DRM into the mix is frightening. This is shooting yourself in the foot after you’ve already done it to yourself once. The introduction of DRM into the file based digital music business effectively gave Apple a monopoly over that business.

The music industry needs to learn from that lesson. The next big thing is music streamed to your living room, your cell phone, and your car directly from the Internet. There is a huge amount of revenue in that business for the rights holders. But if the streams are "protected" in some way, we will never get the innovation and choice in devices that will make the streaming music market the most vibrant.

This is a faustian bargain that radio broadcasters of all shapes and sizes must resist. Because the music industry still doesn’t get the fact that open is good and closed is bad.

#My Music#VC & Technology