Licensing emerging from the backwater?

Browsing blog post titles recently, the phrase “Ajax is not a business plan” caught my eye. Since I was looking for something else at the time, I did not capture the link, and I’ve been unable to find it again. However, it has continued to reverberate, because it reminds me of the danger of building businesses around content technology without addressing the serious issues of content rights. Web scraping, text mining, peer-to-peer sharing, and other types of technologies that effectively repurpose content offer tantalizing opportunities, but unless the rights of content owners are taken into account, entrepreneurs and venture capitalists building businesses around these technologies are walking a risky path. Yesterday’s headlines about Napster’s decline in fortunes is a cautionary tale about how companies need to secure licensing rights before “betting the farm” on technologies that require other peoples’ content in order to work.

As a content licensing specialist, I have often had sales people show me competitor products that were built to systematically violate copyright, like ad hoc emailing or syndicating of articles or reports, and inevitably they ask, “If they are doing it, why can’t we?” The answer, which always disappoints the person looking for a quick “OK” is that it CAN be done, as long as the proprietary rights of the content owner are not violated. This requires licensing for the specific use to be made of the content. Why were iTunes and Rhapsody phenomenally successful while Napster ended up with lawsuits, bankruptcy, and shareholder losses? Because these successful technology companies made licensing a cornerstone of their business strategy! They put effort and investment in this key area, negotiated deals that provided win/win’s for both sides, and in so doing they created enormous value for themselves and for their content partners. “Rights & Permissions” may seem like an obscure field to most people; I’m used to the blank stares when I try to explain what I do for a living. However, maybe such clear cases where the right licensing strategy has meant the difference between success and disaster will help persuade the boards and executive managers of high-tech companies that there is real value in licensing.