Protagenic Therapeutics Inc. (PTIX)

[vlftraders]

Since Google and Amazon already went...

to great lengths to circumvent the process of bowing before the record labels, what would prevent one of them from buying Atrinsic and instantly launching a fully legal on demand streaming music service? They would get dollar for dollar what capital is invested into growing the service + the first $12 million in profits + 80% of the profits beyond the recouping of that investment. Given the vast resources available to these larger players, they could sink enough capital into the business to grow it rapidly to show the labels the potential for such a service with the backing, talent and expertise of these companies, with an existing contract that ensures that they will get 100% of any profits until that investment is recouped + $12 million already invested by Atrinsic and then 80% of any profits going forward.

This approach would allow them to have a full function service to launch on day one, buys more leverage with the music labels and more time to work out a full license deal without allowing one of the other competitors to beat them to market with a full featured streaming service. In a worst case scenario, they determine that this is not a business they want to pursue further or they find that the music labels are simply unwilling to do any kind of deal with them (unlikely) and they are stuck only earning 80% of the profits from the service.

Even that scenario is not as bad as it may seem on its face - how many companies are built on a model that only allows them to keep 80% of their advertising revenue while Google provides the ads and keeps 20% for its trouble? In any case, it seems much more likely that Amazon or Google would be able to show the labels how they can create value for the labels and artists in addition to the shareholders of Amazon/Google.

I have discussed all of this using Amazon and Google as examples, as they are two companies that obviously want into this space enough to push the envelope by circumventing the established system to get a product to market. There are others who could also find value in this approach including Facebook, who along with Google was rumored to be in talks with ATRN's largest shareholder (and Skype investor/director) Mark Dyne about such a deal a few weeks ago.

Always looking at the possibilities...

VLF