Zennstrom: Internet “good” for Record Companies

Inadvertently or not, Skype cofounder Niklas Zennstrom provided a bit of historical context today that’s worth noting.

At the European Technology Roundtable Exhibition held in Barcelona, Zennstrom was reported to have said the following:

Kazaa came five years too early, but without that and Napster we would never have seen the transformation we’re seeing in the music industry. Record companies are seeing that the Internet is good for their business, and we made that possible.

Zennstrom made it possible, as you’ll recall, because he was a cofounder, along with Janus Friis, of Kazaa, a P2P file-sharing application that, like Napster, struck fear into the hearts of recording-industry executives and forever changed how consumers, particularly the younger ones, obtained their digital entertainment.

While the architecture of YouTube is more traditional — involving plenty of servers and the consumption of enormous amounts of data-center bandwidth — than the P2P architecture of Kazaa or Skype, the consumer behavior, downloading and uploading digital content at will, is essentially the same.

There’s no question that the recording industry, as well as the television networks and the major movie studios — have come a long way in their thinking since then. They have come to realize that an accommodation must be made between the new content-distribution technologies and business models and their own insistence on being paid for copyright ownership.

What we saw today with Google’s acquisition of YouTube was a hard-earned reconciliation between new distribution mechanisms (and channels) and the entertainment industry’s evolving business philosophy. As I said in my previous post today, the Google acquisition of YouTube would not have happened if the latter wasn’t already managing to sign content-distribution agreements with major recording labels and television networks.

So perhaps Zennstrom does deserve his due, even if, as he concedes, Kazaa probably was “five years too early.”

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