The Digital Music Revolution, continued
Napster, built up by the RIAA as the great evil hovering above the music industry, has become something of a red herring in the field of digital music, with the press and the recording industry both fixated on it. Still defending itself against lawsuits for copyright infringement, the service is in the process of morphing from its bad-boy past into a respectable (read ‘paid for’) digital music service backed by German media giant Bertelsmann AG.
But the summer passed with Napster basically out of commission, ordered by the court to remain offline until the service could guarantee copyrighted material was not leaking through it’s portals. Whether the move turns out to be a true victory for the industry in the realm of online digital music remains to be seen. Many file-sharers, considering Napster basically D.O.A., took it as their cue to migrate to other services such as Gnutella, Aimster, Freenet, MusicCity, and iMesh, to drop but a few names. These services are basically impossible to police for copyright infringement since unlike Napster, the files are supplied by the users (peer-to-peer) and cannot be traced to one centralized file directory. Just how the industry plans to attack this new enemy is not yet clear, though advances in anti-ripping technology recently reported in the press may soon prevent the average user from copying or distributing commercial discs via email or file-sharing services.
Many of the file-sharing sites, perhaps in an attempt to deflect some of the bad press stirred up by the very public Napster battle, include political essays in support of free speech and disclaimers that their services are designed to circumvent copyright. Instead, they assert that while the technology can be used for nefarious means, it is primarily intended to foster the free exchange of information. Aimster’s site even provides a procedure for addressing potential copyright violations.
“Firstly, even if copyright were the only way that artists could be rewarded for their work, then I would contend that freedom is more important than having professional artists (those who claim that we would have no art do not understand creativity: people will always create, it is a compulsion, the only question is whether they can do it for a living).
“Secondly, it could be questioned whether copyright is effective even now. The music industry is one of the most vocally opposed to enhancements in communication technology, yet according to many of the artists who should be rewarded by copyright, it is failing to do so. Rather it has allowed middle-men to gain control over the mechanisms of distribution, to the detriment of both artists and the public.”
The RIAA, representing those “middle-men,” has posted a very different take on the issue, arguing on their site that “even in this new digital world, artists and record companies still have – and deserve – the right to protect their music.” Music piracy not only harms the artists, but “cheats producers, composers, sound engineers, studio musicians, publishers and vocalists out of their share of royalties on which they generally depend for their livelihoods.”
Meanwhile the major labels, notoriously slow to harness the distribution potential offered by the Web, have aligned themselves behind two new subscription services: pressplay, backed by Sony Corporation, and Vivendi Universal SA, which plans to distribute through MP3.com, Yahoo Inc., and Microsoft’s MSN service. MusicNet is a joint venture of RealNetworks, AOL Time Warner, Bertelsmann AG, and EMI Group. RealNetworks, America Online, and Napster will serve as distributors. Both subscription services publicized late summer launch dates, but as of this writing neither had gone live. Furthermore, neither has released information regarding cost or specific content. One snag between music publishers and the record labels, often divisions of the same company, centers on royalty payment. Reports have surfaced that the two parties are close to an agreement, though nothing has been signed.
Representing MusicNet, Ann Garrett spoke only in general terms, saying that the service intended to target “the millions of online music fans” and that with the “superior service and quality of music that MusicNet is planning on offering, we believe that consumers will be willing to pay for this exceptional service.”
Dana Harris of pressplay said that the service “has not provided details yet about the types of music that will be available. However, the company expects to have music from many genres available, and will continue to add different music over time.”
When questioned about the opportunities independent labels would have to distribute their catalogs through the two services, the answers provided only limited insight. Garrett commented, “We are actively meeting with independent labels in anticipation of adding their content to the MusicNet service. In fact, we just signed a deal with Zomba, an independent label. We invite all labels, both big and small to be part of the MusicNet service.”
Harris noted, “Again, as background information only, pressplay will be searching for and welcome music from other sources and will seek to offer consumers the widest possible choice. We hope that major record companies and independents alike will find it an attractive outlet for their music.”
In both instances, details as to the terms such agreements will offer the indie labels remains to be seen. A survey sent out by email to classical independent labels such as Koch International, Harmonia Mundi, Allegro and Qualiton asking about their plans to partner with such services received minimal response. No one had any plans to partner with either service.
Appearing to have beaten everyone, most notably the major leagues, to the punch, FullAudio has already established partnerships with BMG and EMI to legally distribute digital music to subscribers of the service independent of the major media companies. Based on a model similar to cable television, the service provides users with access to a catalog of music for a monthly fee and can be tailored to the listeners’ tastes.
Carving another facet into the story, pressplay and Vivendi Universal SA, already under investigation in Europe due to antitrust concerns, have now come under the U.S. Justice Department‘s scrutiny. The antitrust division reportedly has asked the five major labels for more information about the parameters of the services.
The situation has also attracted Congress’ attention, specifically that of Rep. Rick Boucher, D-VA, and Rep. Chris Cannon, R-UT. They have introduced the Music Online Competition Act (MOCA) legislation that would require labels to license their music to alternative services on terms similar to those offered to their own online digital outlets, all in the name of fair competition. In a statement on his Web site, Cannon explains that the legislation “would prevent the labels from providing sweetheart deals to each other, and then using their collective market power to shut out the competition. And this is exactly the type of behavior that has attracted the interest of the Justice Department’s Antitrust Division.”
Cannon suggests, “It is clear that the music industry needs closer oversight, and that the Copyright Act is in need of reform… I also look forward to Congressional hearings in the fall as we take up not just copyright legislation, but antitrust matters as well.
A statement by RIAA President Hilary Rosen attacks the bill, arguing that “a protracted legislative fight will not move us closer to where the music industry wants to be” and charging that it will “divert time, energy and resources from achieving that goal. It is essentially a solution — a very bad solution — in search of a problem.”
Vivendi Universal logo
Courtesy Vivendi Universal
She points out that the bill “substitutes government regulation for the marketplace. This is not only wrong, it is also inconsistent with the strongly held views of experts and the private sector that government regulation of the Internet would be a disastrous mistake.”
Cannon counters that Rosen appears to “have had a Conservative conversion, arguing that MOCA has too much governmental interference” and that her “call for deregulation of the music industry has about as much credibility as Saddam Hussein calling for America to be kicked off the UN Human Rights Commission.”
Wayne Crews, Director of Technology Studies at the Cato Institute in Washington, D.C., advocates for allowing distribution to develop naturally instead of trying to legislate it into place. He explains: “My concern was that the pursuit of mandatory licensing was creating an adversarial environment rather than one conducive to agreements. Rather than mandatory licensing, it might be better to shorten terms of protection for copyrighted works. If I’m looking into, say, roots country music, I’m not wild about paying a royalty to RCA for a Jimmy Rodgers song when the man has been dead for 69 years.”
Crews also points out that “since the advent of ënapsterization’ and the MP3, the artists of today and tomorrow are not obligated to deal with the big record companies–one can opt for distribution on the Web. That indeed has long been the promise of the Internet: ‘Everyone can be a publisher!’ The real fight taking place is over the existing body of copyrighted worksóaside from that, artists and entrepreneurs have choices about how they distribute their work in the future. Nothing obligates them to, say, MusicNet and pressplay. But if these consortia do offer benefits in terms of value-added or marketing as far as artists are concerned, then that’s appropriate.”