This is how the system works. This is a major lesson for all founders.
Don't worry about "regulatory." If your product matters, then you will be able to afford to solve the problem. If your product doesn't matter, then "regulatory" will not be an issue. Just ignore it.
I personally find this concept pretty darn offensive, but it is exactly how the world works. It's a really important lesson that I really wish I had learned earlier.
I think you’re not accounting for survivorship bias.
For example, Grooveshark was a direct competitor for Spotify with similar apps and features around the same time[0]. It got sued out of existence by the music industry, and back then quite a lot of music on both had that bootleg audio quality that sure points to piracy.
I am not young, and I was around for both. What was the difference?
I remember going to Europe from the USA around 2012, and everyone was already using Spotify. Their music experience was vastly superior to ours. IIRC, they were based/avail in countries with really loose music copyright laws. Was that what made the difference? They grew huge where they could, before the hammer came down? Then too big to fail?
Again, IIRC, when the US music labels wanted to shut them down, they instead said: "hey, why don't you just buy a big piece of Spotify. We are already your distro. F the artists." I remember thinking that this was a gangster move. (btw, I still refuse to subscribe to Spotify.)
> Speaking of industry incestuousness, I suggest you read more about Tencent’s 9.1 percent stakeholding in Spotify, which is awe-inspiring in its spider’s web of vested interests. The short version: Tencent Holdings is about to own 10 percent of Universal, which in turns owns around 3.5 percent in Spotify, which in turn owns around nine percent in Tencent Music Entertainment, which in turn is part-owned by Universal’s two main rivals (Warner and Sony), but remains majority owned by Tencent Holdings, which in turn owns 9.1 percent of Spotify. (And, yes, no kidding, that’s the short version.)
The name "Tencent" is based on its Chinese name Tengxun (Chinese: 腾讯), which incorporates part of Pony Ma's Chinese name (Ma Huateng; 马化「腾」) and literally means "galloping fast information".
So maybe it's just concidence?
Their first product was also a messenger software so I don't see why they would name themselves "ten percent". The investing thing came later.
Sorry for the tangent, but I've always wondered: does Tencent's partial ownership of Reddit give them any access to Reddit's internal data? Is that how that generally works, or am I making uninformed assumptions?
> Is that how that generally works, or am I making uninformed assumptions?
The answer is probably a bit more nuanced, but broadly, you're making uninformed assumptions. Blackrock own about 5% of Apple, Nvidia, Microsoft, and we don't see people throwing around accusations that they're fiddling with their runnings.
I used to work for a company that Tencent had a minority (but significantly larger than 9%) share in, and they approximately 0 influence in our operations. Some places will be different, but if you've ever worked anywhere with a parent company you'll be familiar with just how untrusting the subisidiaries are. Honestly, I think the best way of thinking about it is the Larry Ellison Lawnmower joke - they're not out to get you, they don't care.
Whether or not that remains to be true going forwards who knows, but that's the same of any organisation anywhere in the world, and as someone who lives in Europe I'm far more concerned about what the US is doing right now.
> as someone who lives in Europe I'm far more concerned about what the US is doing right now.
The fact that the US is now voting in the UN with Russia, Iran, NK, which mindlessly pushes the EU towards China is mind-blowing, and entirely understandable.
source: EU born, lived most of my life in the USA, then back in the EU for the last 10 years. I will truly miss the century of Pax Americana, and I hope for the coming century of Pax Europa.
Blackrock does not have any political motives at all, and is purely interested in management competency and money.
Tencent, despite being a for-profit company, may still have political motives pushed onto them from the very top. This is true for all chinese companies (because if they don't "comply", the very public example of jack ma is the answer).
Now, of course, it doesn't mean this power is utilized all the time or everywhere. It simply means that the opportunity exists for such power to be weld if the state calls for it. Just because it hasn't happened so far doesn't mean it can't. It's different from Ellison Lawnmower, because the political differences between the countries.
> Blackrock does not have any political motives at all, and is purely interested in management competency and money.
Seriously? You can say that with a straight face?
> Tencent, despite being a for-profit company, may still have political motives pushed onto them from the very top. This is true for all chinese companies
The difference could be the attitude towards piracy, especially in the legal system.
Between 2006 and 2016, no one in the Nordics and Eastern Europe cared about piracy. By the time Spotify became prominent enough in the West to compete with music sales, it had already mainly been legalized.
Grooveshark was in the US, which has a very litigious business climate and is world-leading in copyright enforcement.
I can't think of a more plausible explanation. But I will say that breaking laws to later legalize is still only a successful strategy if one doesn't get caught. If anyone thinks this is a good strategy, I'd say there's survivorship bias going on.
I am totally on-board with your assessment, but also please add at least Spain to the loose music IP regime at that time.
> I'd say there's survivorship bias going on.
I agree that there is definitely survivorship bias happening here. However, what exactly is the punishment for failure? Is it worth the risk for the founders?
Well, I suppose one might say there's no risk so long as the corporate veil isn't pierced and the company is limited somehow. But that is a bit cynical and reductive. In cultures that hate piracy, the personal reputational risk is high. Besides, company officeholders are sometimes sued personally for their company’s ills. Even if they can defend themselves, it will cost much money and years of stress. Another risk, I suppose, is various opportunity costs—one wastes time and funding that could have been better used.
> I am not young, and I was around for both. What was the difference?
imo the difference is that spotify at least tried to hide it
when you searched for songs on grooveshark you'd get names back like "Tame Impala - The Slow Rush (2020) Mp3 (320kbps) [Hunter]"
also IIRC grooveshark never even tried to set up revenue share with labels/artists
Spotify cheated behind the scenes and a veneer of following the rules, which eventually transitioned into actually following the rules and paying out artists
I was using Spotify Beta way back when, and they absolutely had songs named like that as well. I specifically remember one of Pink Floyd's albums (pretty sure is was a copy of the wall) as such.
grooveshark aggregated from blogs and other web sources. If I recall correctly you could follow links back to those places. Back then the web was full of decentralized independent writers doing music reviews or producing mixes or capturing new bootlegs from live shows. Grooveshark indexed those and made them playable in one location, but I don’t think it ever hosted any of the files.
The difference is that Grooveshark was always a pirate product, and didn't try to hide it. The UI had rough edges, but the library was massive, just like the old Napster era. Spotify was a growth hacker startup bro project, influenced by iTunes.
Then I'm not sure if this is a great example of the survivorship bias. One company tried to hide the piracy, the other didn't. One company operated from piracy-friendly countries, the other operated from a piracy-hostile country.
Survivorship bias is when two cases face the same selection process, not when one fails for taking an opposite approach.
Spotify had a big library of fully licensed music as early as 2008 in European markets. They were the next evolution of the record label-friendly post-Napster music startups.
They were already the teacher's pet. Grooveshark was the one that was always getting suspended, before ultimately being expelled.
A dog can be brought to heel and will comply because it prefers the warmth of the campfire to the cold of the wilderness. A wolf will do wolf things until it dies. Or in this case, is hunted into extinction.
Grooveshark had no ads and a much larger library in the early days. Also, you could upload your own tracks into the public listing. Iirc it was quite easy to embed a track or playlist as a widget into your personal website which was very cool in the era of non-walled-garden-internet. But it wasn't advertised as much as Spotify, not as many people used it, and the founders were the subject of tragic circumstances.
I’m curious if GS being located in the US made them a bigger target than an app in beta in Sweden. Also this only talks about its beta period but I’m assuming when it was actually “released” they had the deals in place.
> I personally find this concept pretty darn offensive
I'm more offended by the idea that we should sit quiet and not do anything just because the status quo set up the rules in their favor.
The immoral part here is not using pirated content to build the initial catalog. The immoral part is that their success came by aligning with the exploiters (the labels) and not the exploited artists.
Here's a direction we could take: Content distribution should be decoupled from content attribution & payment. If I have a collection of torrented music, I should be able to play it in a way that looks up who deserves to be paid for it, and aggregates that data such that at the end of the month, the artist gets paid.
Let's build it and get a bunch of people using it and show the world that the pirates are willing to pay the artists more than Spotify is. At such a point, why wouldn't everyone avast payments to Spotify and hoist the jolly roger in the name of paying artists more?
If someone lead in that direction, would you follow? Would you use the player that made the payments happen? Would you seed the torrents that made the player work?
Let's just get rid of the idea that we should pay to listen any song. I don't want to have my listening habits quantified or used as a proxy for how much any work of art is worth to me.
We can make this super simple: we can still keep the subscription model, we just need to change the revenue sharing system. Let's just charge a base monthly fee for the streaming service itself (say $1/month) and let's add a monthly "pay what you want" amount where 100% of the value goes specifically to the artists you choose.
So, let's say that I pledge to give $10/month, and I spread that around some 10-15 artists, This means that 90% of the money I am putting into the system is going to the artists. Someone wants to give $20/month, it would mean 95% of the money going to the "right" hands. We wouldn't have to argue about what the "right" hands are because that is defined directly by the people voting with their wallets.
Oh sure, I wasn't trying to propose that the coupling of usage to payment be mandatory. It's just that that's the setting I'd use because manually adjusting my payment settings sounds like work to me.
I'm just saying that paying the artist and handling the bits are totally separate things and if we want to challenge the existing model we should use something that decouples them in a way that demonstrates that the bad deal that artists are getting from Spotify is not the only option.
If you know the artists or anyone who would be interested to invest some time (and just a bit of money) to make this happen, let me know.
I have setup this system where people can set up how much they want to pay each artist per month (out of a fixed budget), and anyone that signs up to my service [0] gets an account on our Funkwhale server [1] where they can upload and promote their work. I take zero commission from these payouts, the only thing I need is to have content creators who prefer to pay a flat $29/year to have this instead of giving out 8%-12% of their earnings to Patreon.
My personal Spotify alternative is KEXP, KCRW human DJs -> Bandcamp purchases.
If anyone else could share any other radio stations who still have living human disc jockeys, I would love to check them out. DJs are an amazing resource which should be cherished.
The next logical step is for one of us to make a Spotify clone which leverages these human DJs, and gives credit with links to station and artist Bandcamp.
I don't make any moral judgement unless I have Skin In The Game. In this particular case, you can follow me by joining the Communick Collective and pledging $20/month. Is that ok?
Make it a music locker service with a small subscription price and have an addon where 100% of the revenue goes to a pool of artists that make their catalog available there.
There's several examples where this is true even in other industries, like Uber. That being said that is the wrong take away. Upon seing some unfair cases of crime not being put to justice, the response shouldn't be "everyone does it, let me do it too". In fact the idea that "everyone does" whatever crime you're considering is the first and foremost rationalization people make before committing crimes like tax evasion and so on.
Uber is really interesting example, since they started as a legit upscale taxi service, got mad Lyft flaunted the rules and regulations. They finally pivoted to the success story they are now after seeing how toothless the check and balances actually were.
It's really interesting how much Uber was trying to do things the right way, only to then over-correct into being the most devious and underhanded app-taxi company.
But the other company that Uber reacted to was Wingz, Inc, not Lyft.
I am being pedantic and never worked for Uber but I always assumed it was sidecar, I vividly remember them all over the city with their side mirror covers--don't ever recall seeing Wingz, though I am sure the existed.
I would argue it was not even so much that they were doing "things the right way", they were optimizing black car service and pivoted because it was not as lucrative.
What they pivoted to wasn’t lucrative either. I ubered all the time when it came out because pricing was like $4-7 for most trips that would be $30ish or more now. It was fueled on vc money to prime a generation of people going to bars to use uber and it worked perfectly. Now people just reflexively call that uber even when its surging to $60.
I agree with your sentiment one hundred percent. However, I am just stating that this is how the world works.
Cryptocurrency is another horrific example, where the value-add is avoiding KYC = tax and sanctions evasion! I knew this over a decade ago, and decided to sit it out for moral reasons. ¯\_(ツ)_/¯
edit: to be honest, not just moral reasons. I just could not imagine that in a just world, this illegality would be allowed to continue. So little did I know.
Worked for all the AI labs as well. Turns out you can steal the entirety of copyrighted works in existence on the internet without consequence if the resulting company is big enough.
The very top of the US government is partnering with and supporting OpenAI, Meta etc. None of these lawsuits are going to amount to anything more than a slap on the wrist. Their logic seems to be that AI is going to be a matter of national importance, and other countries will infringe the copyright anyways, so it must be allowed for the US AI industry to stay competitive.
There's a list of cases here [1]. The case against Github Copilot was already mostly dismissed despite it producing identical samples to license-restricted code. The cat is so far out of the bag now anyways with many open models and datasets containing the stolen data - there is nothing anyone can do about it now.
If an individual did this, or what Facebook did, they'd get a prison sentence. Should startup founders give themselves prison sentences?
Spotify only got away with it after the fact because they pivoted to a model that gives money to the people who wanted to put them in prison before. And Facebook got away with it becau it's big.
There maybe an inkling of truth for mass consumer markets where incumbents set up regulatory capture but it couldn't be more untrue for hard-tech companies or companies that work in dangerous domains where human safety is a concern.
If Spotify was properly paying its share of royalty fees to the artists I don't think it violates any regulations that they used pirated versions of the music. It's simply more convenient for Spotify because they don't have to rip the music from a CD themselves.
When rights holders use a pirated version of their work it may be embarrassing, but it certainly doesn't violate copyright law. (Assuming the pirates didn't transform the work in a substantive way)
Theranos was also a fraud. I am not talking about outright fraud.
I am just some shmoe, so I would love someone else to put this more clearly. Is what I originally posted intellectual property/regulatory arbitrage, vs. fraud?
As with everything there’s lines you can bend and lines you just don’t cross. Gambling with your clients’ deposits is always going to mean jail time. Timing is also important, for example the US basically has given up on consumer finance protection laws and white collar crime being a thing, so while big companies can still sue you the government will let you get away with anything you like. Go for it!
Promising a of self driving and delivering a much lower level is not nearly as much fraud as "the entire product does nothing". And it being a promise about future improvements also reduces the level of fraud compared to lying about what the product already does.
Worked out better for Uber and Lyft. Say what you want about how ubiquitous those platforms are these days, they were unlicensed taxi services for years.
Except for people making individual choices. I don't do business with companies that were founded by asshats. I will not use Uber even if they changed leadership. The shenanigans they pulled were inexcusable, and I will not whitewash them with my patronage. There are other companies for various similar reasons led me to make the same decision.
Unfortunately, there are many many more people that don't care and/or don't know about the decisions made by company leadership, so voting with my wallet makes no difference to the company. I just keep adding to my soapbox collection. Starry eyed world would have more people making similar decisions so that asshat companies do not succeed so that regulations would not be necessary. To bad that world doesn't exist
People always think big mega corps are the most egregious offenders of skirting the law and doing nefarious things to avoid prosecution.
bruh...
Having been in industry for over a decade now, the opposite is true. Big mega corp has a huge legal team and is always looking to stop any law breaking. They don't need to break the law and doing so will only incur huge fines and huge negative public outcray. They pay compliance people to walk around and breath down managers necks.
Small corps on the other hand...it's basically a free for all of "do whatever it takes to get this over the line and keep it alive, and if it fails just walk away and let the public deal with it".
He launched Megaupload two years before Dropbox. Kim could have pivoted there, then expanded to docs/collaboration. Yes, hindsight is 20:20, but in theory it would have been possible moving from a piracy-centric business model to regular cloud storage/collaboration for businesses and small teams.
Regulatory does not matter if your product does not matter. Megaupload did matter, and did not solve the regulatory problem or change the business model.
Maybe it came too early for the solution or alternative business models to become apparent.
He knew that and talked about and used alledgedly illegal files. He should just not do the drugs himself and fire everyone who eats from the forbidden fruit and he would be fine.
While I have no proof, I feel like the fact that Megaupload wasn't in the US prevented them for using the correct legal loopholes that could have kept them aloft for long enough to grow to a size where they could settle these types issues out of court.
Devil is in the details. Teenagers tend to appreciate things that can seemingly collapse a complex topic into a binary black and white thing. The real world is nuanced.
If you're building an electronic device, "the next best gadget AI" , with a brand new Bluetooth chip that can communicate over 5 km by using some radioactive material, but you don't know whether it will be a success or not, you face two situations :
1. You do all government certifications like FCC, recycling, pollution, security, backed with scientific research that your chip is ok.
This will cost a lot of money and time and might prevent you from reaching the market quickly.
2. You start selling asap as a Prototype. You make money and you can start the whole certification process. (or not).
The concept of Prototype is legal in many countries, there's often an official threshold of product sold at which your product is not a prototype anymore.
It depends on exactly what Spotify does for you. Launchcast was a pioneer of personalized internet radio, starting in 1999. Pandora offered a similar service in 2005. Both of those services claimed legality through mechanical licenses for non-interactive play.
In the ~ 2005-2008 time frame, many monthly services sprang up to offer play any song from their catalog on demand, along with limited downloading, based on Microsoft's PlaysForSure DRM program. Services included Yahoo Music Unlimited, Napster to Go (lol), (Real) Rhapsody, MSN Music and a bunch more. Afaik, this was all legal, but Microsoft shut down the DRM program with, I think, very little discussion as to why (but probably had to do with lack of market share in portable players)
I do recall some issues with the catalog on Yahoo Music Unlimited where the non-interactive catalog was bigger than the interactive catalog, because non-interactive has mechanical licensing and interactive play requires an intetactive licensing exercise between the rightsholders and the service provider.
> Don't worry about "regulatory." If your product matters, then you will be able to afford to solve the problem. If your product doesn't matter, then "regulatory" will not be an issue. Just ignore it.
Unless you live in a country where copyright or other regulations can lead to actual jail time.
IMHO, companies intentionally breaking the law should be held accountable by going after executives - even if they left the company.
Don't worry about "regulatory." If your product matters, then you will be able to afford to solve the problem. If your product doesn't matter, then "regulatory" will not be an issue. Just ignore it.
I personally find this concept pretty darn offensive, but it is exactly how the world works. It's a really important lesson that I really wish I had learned earlier.
https://news.ycombinator.com/item?id=42677087 (see top reply)