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Wednesday, Feb 28, 2024

Robertson Looks To Turn Gray Area Into Gold

Michael Robertson is on a roll. He’s talking about his new online music service, Oboe, and his voice is almost rhapsodic.

The phone connection has the slightest crackle to it , Robertson eschews traditional telephone wires for calls via the Internet , but the energy in his voice is tangible. This is a man who does not give one-word answers.

At 38, he embodies the risks and rewards of the online music industry. He founded MP3.com, was targeted by lawsuits by five major record labels, but still made millions when he sold the company in 2001.

And the suits haven’t been limited to the music industry. Microsoft Corp. wasn’t thrilled when he released an operating system called Lindows. The software giant sued Robertson, but eventually bought the name for $20 million. Robertson renamed his endeavor Linspire. Today, the company employs 85 people.

Beneath Robertson’s blond hair and boyish looks is a reputation as a provocateur, a maverick, a nonconformist. On his Web site, Robertson characterizes his business approach a different way: madness.

“It’s not being a provocateur for the hell of it,” Robertson is saying. He’s talking about Oboe, his recently released service that allows music listeners to store their files online, so they can be accessed from any device, anywhere.

“It’s a great business opportunity,” he says. “Make no bones about it, I’m a businessman. I want to build a great, successful, profitable company.

“And to me, attacking monopolies , Microsoft, Apple , that’s where the opportunity is.”

Oboe is Robertson’s latest music-related venture. The service, which costs $39.95 annually, is known as an online music locker.

Here’s a simple explanation: Put your music in the locker from your home computer, go to work, log on, open the locker and, presto, there are your tunes.

Oboe’s unlimited storage space is responsible for most of the $3 million to $4 million invested in the project, Robertson says.

The name is symbolic. The oboe is the instrument off which all others in an orchestra tune.

It’s available through MP3Tunes, the 12-person company Robertson founded early in 2005, three years after stepping down as chief executive officer of MP3.com, his first foray into the music business.

It’s not the first time he’s released a music locker. The last time he tried it, “we were bombarded with lawsuits,” he says.

This time, he thinks he can pull it off without being sued , emphasis is on the word thinks.

A plug-in that allows Apple’s iTunes to be stored online may be problematic, as the company allows its popular music files to be played only on Apple equipment.

But Phil Leigh, senior analyst at Inside Digital Media in Tampa, Fla., says Robertson may have found the legal footing he needs to be successful this time.

“He got his wrist slapped so hard last time,” Leigh says, referring to the nearly $150 million MP3.com paid to settle record label lawsuits. “I doubt he’d move forward with another iteration unless he had it pretty thoroughly researched.”

Robertson’s strategy isn’t new. Analysts say he’s once again capitalizing on a gray area of the music business.

It’s an area where intellectual property rights can be the currency by which companies are made and broken. Trademark infringement risks come with the territory.

Working in gray areas can be difficult, says Terry W. Moore, managing director of HamiltonTech Capital, a San Diego-based venture capital firm.

Speaking generally about the business, Moore says: “Any good businessman would look for unexploited opportunities. In the early days, the niche opportunities are the most fruitful.”

For a businessman like Robertson, the benefits of exploring a potentially litigious niche can be huge, says Robert Cogan, an intellectual property lawyer at San Diego-based Nath & Associates.

“The stakes are high,” Cogan says. “The benefit is making a whole ton of money. Not just a lot. A ton.”

Leigh says conservative, established companies likely wouldn’t set up locker services. The risk of creating animosity with major record labels wouldn’t be worth it.

“But for a small innovator,” he says, “there’s little to be lost.”

When Robertson bought the domain name mp3.com in 1997 , he says he got it for $1,000 from a guy whose initials were M.P. , the digital music business was still embryonic.

MP3.com would eventually amass one of the largest collections of downloadable music.

Faced with numerous lawsuits and a sliding stock price, he sold the company to Vivendi Universal for $372 million.

“Lawsuits in my experience are rarely about wrongdoing and more often about impeding the competition,” he says. “The company that sued me the most was the company that bought me. That’s vindication of exactly what I’m talking about.”

As he concludes an interview, Robertson steers the conversation to San Diego, the city where he’s had his success. He begins to sound less like a provocateur and more like a philosopher.

“I want to make San Diego a success,” he says. “I think about how many millionaires have I made and will I make with my businesses?

“It may sound old-fashioned, but it is important.”


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