Downhill Battle wages uphill fight vs. music industry

It's no shocker that some of the most provocative ideas about the future of the music industry are coming from . . . Worcester?

Worcester, of course, is home to the world-famous Centrum (playing there this month: Yanni!) and the first radio station in America to play the Beatles, WORC. It's also now the home base for Downhill Battle, an activist group founded in 2003 by four twenty-somethings determined to end what they see as the ''major label monopoly" that's ''bad for musicians and music culture," according to the group's website.

This month, Downhill Battle is sending a belated Christmas present to the Recording Industry Association of America and the Motion Picture Association of America, two Washington-based industry lobbying groups. The gift: stockings filled with coal.

Downhill Battle opposes the lawsuits that the two groups have filed against technologies like BitTorrent and Napster, as well as more than 7,000 individual users of file-sharing software. So in December, Downhill Battle decided to launch its own fund-raiser for three digital rights defense groups, including the Electronic Frontier Foundation: For every $100 donated to the groups, Downhill Battle would send one lump of coal each to the RIAA and the MPAA.

''We think it will be a big box" that gets sent to each of them, says Holmes Wilson, one of Downhill Battle's founders.

The special delivery is only the latest of the group's Abbie Hoffman-esque actions. (Hoffman, you may recall, was born in Worcester.) On the day after Thanksgiving 2003, members went to a Wal-Mart and Best Buy near Worcester to slap bright red stickers on CDs being sold there. One sticker read, ''Warning! Buying this CD Funds Lawsuits Against Children and Families."

Last February, they organized an online protest called ''Grey Tuesday," in which more than 150 websites posted a copy of Danger Mouse's ''The Grey Album," which blended Jay-Z's ''The Black Album" and the Beatles' ''The White Album." This was after EMI, which controls the Beatles' catalog, had served Danger Mouse with a cease-and-desist order, demanding that he stop producing and distributing ''The Grey Album." The protest lasted 24 hours.

Downhill Battle's founders, Wilson and Nicholas Reville, don't view Internet file-sharing as a problem. They see it as the foundation for a new, legal music distribution system.

Current online music stores run by Apple and RealNetworks only offer a tiny slice of the total breadth of music that has been made available by various (illegal) file-sharing systems at various points. ''What we'd like to see is a flat-fee licensing system," says Reville, one that would give listeners equal access to big name bands and up-and-comers via file-sharing. A monthly fee of about $5 or $10, perhaps paid via a consumer's broadband provider, would buy a blanket license to download and use music; musicians and record labels would get paid from the licensing pool based on a song's popularity -- how frequently it is downloaded.

The group's website -- which includes a great critique of Apple's iTunes Music Store -- is at www.downhillbattle.org.

Courthouse wranglingThe story of David Solomont, a founder of the Massachusetts Software Council and the CommonAngels investing group, seems to be Boston's highest-profile example of what happens when an angel investor puts too much of his net worth into start-up companies. When the liquidity crunch comes, look out.

At least three cases involving Solomont are meandering through the courts in Suffolk, Norfolk, and Middlesex counties.

Solomont appeared in this column early last year, accused of diverting more than $1 million that had been invested in an online payments company in Chestnut Hill called PLEJ. (Solomont was connected both to PLEJ, which he helped start, and to CommonAngels, which made the investment.) That suit alleged that ''Solomont has become overextended, and is robbing Peter to pay Paul."

Solomont and PLEJ -- now effectively defunct -- settled their dispute last April, with Solomont making a lump-sum payment to PLEJ, and agreeing ''to arbitrate the balance he disputed," according to a new suit filed by PLEJ's attorneys in November. As a security deposit for additional money that might be awarded to PLEJ in arbitration, Solomont pledged 351,609 shares that he held in a Burlington online scheduling company called TimeTrade Systems and 213,404 shares of Boston-based Bitpipe Inc., which distributes technology research and white papers.

But Solomont never coughed up the stock certificates. A Suffolk Superior Court judge ordered him to show up in court Dec. 3, with stock certificates in hand, but neither Solomont nor his attorney materialized. That same day, coincidentally, Bitpipe was sold for $40 million in cash to TechTarget, a company in Needham. Suddenly, Solomont's stock was actually worth something: about $220,000, according to an affidavit from James Geshwiler, the managing director of CommonAngels. (Solomont is no longer connected to the Lexington-based investing group.)

In a motion filed with the court in December, Solomont asserted that the reason he couldn't hand over the stock certificates was that he had forgotten that ''years before" he'd transferred the shares to the Solomont Family Childrens Trust.

''PLEJ seriously questions the purported timing of Solomont's supposed transfer of the TimeTrade and Bitpipe stock to his family trust," according to PLEJ's new complaint. ''The circumstances indicate that Solomont signed the certificates and dated them himself." It's alleged that he also never informed Bitpipe that he was transferring his shares, as he would have been required to do. ''Furthermore, Solomont admitted in January 2004 that he was transferring everything he owned out of his name," the documents continue. Solomont denied those allegations in his response to the court.

On Dec. 30, a judge issued an injunction to prevent the trustee of the Solomont Family Childrens Trust from doing anything with the cash from the Bitpipe sale, or the TimeTrade stock. Solomont was also ordered not to sell several of his other holdings, including stock in Adesso Systems, Newton online gaming company WorldWinner, Maynard-based Kaon Interactive, and his positions in venture capital funds run by Zero Stage Capital and Prism Venture Partners.

No decision has been made yet in the ongoing arbitration between Solomont and PLEJ.

When Solomont apparently ran low on cash following the dot-com bust, he had a network of friends willing to help him out. But when they later asked Solomont to repay their loans, and he refused, things started to get less chummy.

In Middlesex Superior Court, Scott Benson is suing Solomont to try to recover $500,000 Benson loaned him in 2002. (Benson, a software entrepreneur who lives in Hopkinton, later agreed to convert $50,000 of his loan into PLEJ stock -- which proved unwise.) According to court documents in that case, after Benson sued Solomont in January 2004, Solomont transferred two pieces of property on Heath Hill Road in Brookline to his wife, one for $10, another for $1, presumably to shield them from his creditors.

And in Norfolk Superior Court, entrepreneur and part-time racecar driver Frank Selldorff is trying to recover $626,814 he loaned Solomont in 2001 and 2003.

''There are a lot of folks who appear to be after him," says Kevin Peters, an attorney at the Boston firm Todd & Weld who represents PLEJ. ''We want to make sure that we're in line, and in the right line, to collect whatever the arbitrator says we get."

Solomont, who now serves as president and CEO of a New York company, Candide Media Works, didn't return my phone calls or respond to my e-mails.

Scott Kirsner is a contributing editor at Fast Company. He can be reached at skirsner@verizon.net.