magically transferable label deals

A subtle thing about the MOG/Beats/HTC deal just occurred to me.

Companies like MOG, Spotify, and Rdio rely on negotiated deals with record labels. Those deals usually contain clauses that make the deal non-transferable in case of a change of ownership. When MOG changes hands to ownership by Beats, it has to start over again with the labels.

It happens that one of the major stakeholders in Beats is Jimmy Iovine, who is also a lead at Universal Music. That’s not to say that in this deal UMG is getting ownership of MOG (they already have equity anyway). It is to say that getting Universal’s blessing is pretty much a done deal. And where Universal goes, Sony and Warner go, because Universal is the 600 pound gorilla of labels.

The deals not being transferable depresses the value of a company like MOG, because the deals are a key asset. That’s why Myspace Music went for so little. But Beats doesn’t have the same problem with buying MOG that other suitors did. For Beats the deals actually *were* transferable.

5 thoughts on “magically transferable label deals


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