Independent rights agency Merlin has signed an important distrubution deal with P2P music file-sharing site iMesh, the third-largest music subscription service in the US. iMesh users will now be able to download songs from indie labels such as Domino, Beggars Group and bands including Arctic Monkeys and Franz Ferdinand. iMesh now has access to about 20 million tracks and has both free and paid-for subscription options. The deal also covers the previously unlicensed Lphant P2P app, which iMesh recently bought as part of European expansion plans — Lphant is now relaunched as a legal download P2P site but is still is still compatible with file-sharing networks such as BitTorrent.
The deal is a marked departure from the stance of the music establishment: labels and rights agencies are more often seen citing P2P networks as enemies that should be shut down rather than a potential revenue stream. As we have seen in the case against Swedish torrent-tracker The Pirate Bay, the major labels are genuinely worried about P2P’s effect on their profit margins and market share — but without the same multimillion dollar budgets it’s the indie labels that really face a tough challenge from the culture of illegal file-sharing. In December Pinnacle Entertainment, the distributor for a host of indie labels in the UK, went out of business following the collapse of Woolworths and its music wholesale division Entertainment UK, leaving labels and bands without a route into shops.
Merlin’s members have a nine percent share of the music sales market in the US alone. But with the IFPI calculating that 95 percent of all music downloads are illegal, a figure that can only grow as people get access to faster broadband and as the recession bites, no music company can hope to rely on traditional licensing deals to sustain it. Merlin, which launched as a “fifth major” in May last year and is owned by a non-profit foundation, was an early partner of increasingly popular Swedish file-sharing site Spotify. One music expert in the Pirate Bay trial said music companies risked losing total control of their content if they persisted in aggressive legal action against P2P networks. Perhaps this is how you hold on to it.