Last year the music storage locker service MP3tunes scored a big win in its lengthy battle against EMI, but it turns out that this landmark victory came too late.
Because of the legal costs and growing competition MP3tunes sees no other option than to file for bankruptcy.
MP3tunes founder Micheal Robertson explains:
While MP3tunes blazed a trail for the personal cloud music storage, it has had to deal with four and a half years of legal torment. At every opportunity EMI dragged out the legal process making it costly and burdensome. One example is the interrogation of company employees in all-day inquisitions called depositions where attorneys try to trick people into making admissions.
In our case, they deposed not just management but nearly everyone in the company all the way down to clerical help and customer support personnel. They even paid $25,000 to get an ex-employee to agree to a deposition. For management they deposed everyone – some multiple times with me getting deposed 3 separate times.
The legal pressure was not just confined within MP3tunes. EMI sent legal demands to existing partners and potential partners were told they could not work with MP3tunes or risk losing their license to sell EMI music. More than one digital company told us they wanted to work with us, but were prohibited from doing so by EMI.
They used their government-granted copyright monopoly to get MP3tunes blackballed in the industry.
EMI spent an estimated $10 million dollars with multiple law firms to arm their attack against MP3tunes in an attempt to thwart unlicensed personal lockers. They know it’s difficult if not impossible for startups to fight long costly legal battles. Their hope is that the startup cannot fund a protracted legal battle and they win by default.
This happened with the music search engine Seeqpod, Muxtape, Favtape and many others that have quietly faded away. They know that even if the digital upstart prevails in court, they will be terminally weakened. Veoh won multiple rounds of their copyright battle outright only to be forced into bankruptcy after spending $7 million on legal bills.
Read the rest of the story at Robertson’s blog.