Turns out there's a bit more to the story. The aforementioned RIAA, according to the anonymously sourced report, wants $100 million -- in addition to future licensing fees, something MP3.com is keen to avoid. It doesn't sound like that story is quite over, does it? (Oh, the story also pointed out that if the sites don't settle, MP3.com could be on the hook for "billions" of dollars in damages. Billions, with a "B.")
The fact is that MP3.com needs the recording industry significantly more than the industry needs the company. Another recent news story quotes Seagram <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VO)") else Response.Write("(NYSE: VO)") end if %> CEO Edgar Bronfman -- his company runs Universal Music -- as saying his company has no intention of calling the legal dogs off music pirates (though he wasn't talking about MP3.com or the MP3 format specifically). "Except for the gifts of God," Bronfman hyperbolized, "things are free because someone else has paid for them."
Sure, MP3.com has nearly $430 million in cash and marketable equivalents on its balance sheet. That's what happens when a company raises hundreds of millions of dollars in an IPO -- at a price, I might note, nearly three times its Friday close. But each and every one of the wonderful, revolutionary (and controversial) services it's providing its users are free of charge and a drain on those reserves. It pays popular artists with lots of downloads even though most return little in revenue -- another drain.
And should it ever settle with the RIAA, MP3.com will likely pay handsomely for access to music from the industry's big players, which have already learned to play nice with the likes of Launch.com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LAUN)") else Response.Write("(Nasdaq: LAUN)") end if %>, Audiohighway <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AHWY)") else Response.Write("(Nasdaq: AHWY)") end if %>, and SonicNet by using secure formats. That's not "fighting with one another." That's collaboration. Is there still room for evolution? You bet. It's up to you to decide what's worth more: MP3.com's BeamIt technology or the record companies' music. My guess is that the companies with the creative property and marketing muscle will win over the technology which, boy bands notwithstanding, is far more easily replicated.
And for MP3.com to pay the RIAA's component companies for access to its songs would change the dynamics of the company's business significantly in a way I don't feel qualified to predict. Sure, MP3.com hopes to mix up its revenue streams with its new subscription and canned music offerings. But as long as MP3.com wants to be an advertising-supported business, it will need the new Beastie Boys single as well and the new track from Paris By Air.
Oh, one more thing: On April 15, Canadian growless Alanis Morissette filed to sell 100,000 of the MP3.com shares she received a year ago in exchange for her promotional services. Here's Alanis' stock chart. A little too ironic, yeah I really do think.
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