FTC nails online music store vendor BurnLounge as pyramid

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FTC/BurnLounge - Follow the Money: Whenever a government agency (like the FTC) goes after someone (like BurnLounge)and before you make a personal judgment about the merits of the underlying issue; it's always best to ask yourself: "If the FTC is successful in shutting BurnLounge down, who benefits the most?"

Before continuing it's a little history lesson is important.

In the late 50's there was no such thing as a "fast food" restaurant. There were no franchises and few, if any, national restaurant chains. All that changed when Ray Kroc, a milk-shake machine salesman, bought two restaurants run by brothers, Dick and Mac McDonald. In order to build enough restaurants to meet the exploding demand, McDonald's began to franchise its restaurant concept to entrepreneurs who wanted to own their own business. Soon McDonald's restaurants begin to spring up everywhere. But, the thing that is important to keep in mind for this discussion is the fact that for years and years and years, McDonald's Corporation made far more money selling franchises than it did from the royalties that it received on the override of food sales. That is only logical since they made more money selling a franchise for hundreds of thousands (now millions) of dollars than they did by receiving a few pennies for every food product sold. It was only after the popularity of "fast food" was nationalized and the distribution model completed, that revenues from food sales exceeded the revenues from the sale of franchises. As a result of being overwhelmed by the competition created by this new distribution system, mom and pop restaurants tried to get government agencies to intervene on their behalf to halt the growth of McDonald's. They alledged everything from inferior quality ingredients, to undercooked meat, to poor sanitation, etc. etc. But, alas, none of these charges were found to have merit and McDonald's became the number one seller of prepared food in the world.

Like McDonald's in the early days of its history, this is the exact same place in which BurnLounge finds itself today: 1) brand new, emerging market (digital distribution of entertainment content vs. hard unit distribution [CDs, DVDs etc.], 2) a new company building out its distribution channels and 3) old dinosaur businesses trying to survive in the face of revolutionary new competition.

So, who in this environment, benefits most if BurnLounge is shut down by the Federal Government? iTunes, Rhapsody, RealNetworks and the like, that's who. I know right now, iTunes is the 900 pound gorilla. But, given the choice, who would you rather to buy music from: yourself or Steve Jobs? Who would you rather profit from the sale of music to your family, your friends, your classmates and your neighbors: You or Steve Jobs? Easy, given the chance to make money on the sale of digital entertainment content, you would rather make the money that allow that money to flow to Steve Jobs.

Steve Jobs knows this and understands that music and entertainment products have always been marketed and promoted via word of mouth. Monetizing this normal behavior and providing consumers the ability to buy and sell content to and from each other is something that Apple can not allow to happen. BurnLounge allows consumers to profit from buying entertainment content. (By the way, why is iTunes aligning itself with a social network? If its so bad, why is iTunes copying the BurnLounge model??) But I digress.

So that brings us to "Follow the Money" Billions and billions of dollars are up for grabs when all entertainment content is available globally and almost exclusively via download from the internet. Steve Jobs wants this money, and so does BurnLounge and its retailers. The BurnLounge model compensates music fans and allows them to sell digital content to a global market. iTunes does not. Here's an important question, which political party is the Patron Saint of "Consumer Protection"? The Democrats, of course. Democrats love government oversight in all aspects of our lives and our businesses. As a matter of fact, the FTC was the result of Ralph Nader type consumer protection initiatives and Democratic political intervention.

Who is a big Democrat? Al Gore. Who is on Apple Corporation's Board of Directors? Al Gore. Who has high placed friends at the FTC? Al Gore. Who stands to loose if BurnLounge fulfills the promise of its business model and vision? Apple Computer Corporation. Who makes more money selling iPods than it does selling music downloads? Apple Computer Corporation. Why isn't the FTC investigating the exclusive monopolistic relationship between iTunes music downloads and the iPod device??? Hummmmmm??

Maybe there is more to this FTC investigation than meets the eye. Ya reckon Al Gore might have put a bug in the ear of one of his buddies at the FTC and asked them to shut down BurnLounge???

That's what I personally believe is happening here. What do you think???; Posted by: txharleyman@... Posted on: 06/15/07 You are currently: a Guest | Members login | Terms of Use