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Future of Music Coalition - Conference Report
By Duff Berschback - 06/05/2007 - 12:05 AM EDT

This first column will be a bit unusual in that I will report on a conference I recently attended in Washington, D.C., so it won't be explicitly legal material. Sponsored by a musician activist group called the "Coalition for the Future of Music" http://www.futureofmusic.org/, the two-day conference highlighted many of the issues facing writers and artists in the brave new world of digital distribution. To read Senator Hatch's keynote address, go to http://www.senate.gov/~hatch/speech020.html. This column will summarize a few of the conference issues, and serve as a springboard for future columns based on questions about these topics. Do me (and yourself) the favor of suggesting relevant legal topics-it will help me do the greatest good with these columns. Lastly, I strove for a middle ground with this column as far as assumption about reader knowledge. As I don't want to be patronizing, nor do I want to talk over peoples' heads by assuming too much knowledge, your feedback will help me tailor future columns. Thanks.

A. Many Hats

One persistent topic among the artists present was the changing roles for creative people today. Technology gives many opportunities, they said, but it also makes many demands. For example, cheaper recording and communication costs allow artists to create and transmit their work faster and with less expense than ever before. However, many artists lamented that time devoted to solving tech hassles is time drained from creative pursuits. Giovanna Imbesi stated she has "music days" and "technology days", compartmentalizing her schedule to avoid creative stalemates. This highlighted a broader issue: the brave new world in which creators live allows unprecedented opportunity to eliminate traditional "middlemen" from the equation. But the real question is: do you WANT them eliminated? For example, new technology allows you to assume the role of marketer and distributor of your product. Some artists feel comfortable assuming those roles, others less so. The point is that technological changes are affording you the choice.

B. Changing Royalty Collection Models

One of the most impressive (to me) moments of the conference was the presentation of a new standard in royalty collection by Michael Robertson of MP3.com. All songwriters, no matter what performing rights society they choose, have two concerns in this area: speed and accuracy. What Robertson unveiled is a reporting model that raises the bar, and hopefully it will encourage the major PRSs to action. Essentially, a songwriter now waits 9 months after performance to get compensated, and that compensation is based upon complicated statistical modeling that many argue is inaccurate. Robertson posited a system that reported and compensated for performances the next day. Significantly, MP3.com's system counts songs precisely, i.e. each play is tracked-there is no averaging or sampling involved. I questioned ASCAP, SESAC, and BMI representatives about these issues at the conference, asking what are the obstacles standing in the way of compensating songwriters more quickly and accurately. Essentially, the problems are logistical, although representatives from each organization maintain they are working diligently to solve the problems. This is an area that bears watching in the future.

C. The (other) Influence of Technology

Most of the attention technology gets in this space is distributive technology, i.e. Napster and its ilk. But, as hinted at above, an equally important part of the revolution is technology that allows writers and artists to record their music cheaply and with excellent quality. Many conference participants noted that $10,000 can buy enough equipment to make good sounding demos, at least, if not 2 track quality masters. For those who choose not to buy equipment, but purchase studio time, you can lease top-quality recording studios for hundreds, not thousands of dollars a day. The real cost associated with producing impressive records is labor, i.e. the producers, engineers, etc. (assuming you have a killer song).

Technology allows writers and publishers to record demos at very reasonable cost. And what about communication? It used to be that a songplugger sent a tape to an A&R type. Then, it was the CD. It may not be too long before a plugger simply sends and MP3 or other compressed computer file of a song. Whether that is a good thing is debatable.

D. Fair Use and First Sale

The copyright laws reward creators a great measure of control over their creations. Because U.S. copyright law was designed to benefit the public, creator's monopoly is limited in several ways. One such limitation is a concept called "Fair Use", a Gordian knot of legal complexity if ever there was one. To over simplify, the fair use doctrine tells copyright holders, "Look, we let you have a lot of control over your stuff, but some things are more important than that control. So, in certain circumstances, we'll let other people use your stuff without your permission, etc."

Fair use is complicated enough in the physical world, despite hundreds of cases decided that give guiding principles. The problem is, no one is quite sure how those principles apply in the digital world. To give the most recognizable example, it's "fair use" to copy a TV program during the day and watch it at night in your home. Is it "fair use" to receive an MP3 audio file from a fellow Napster user and listen to it at home? The court (literally) is still out on that issue.

Another hot topic is the First Sale doctrine. Essentially, this doctrine states that once you buy a piece of music, you can later sell or give that copy away to a secondary market. Thus, used-CD stores, second-hand bookstores, etc. The question for the digital age: should the First Sale doctrine apply to digital copies of copyrighted works? Marybeth Peters of the Copyright Office indicated one proposal is for the doctrine to apply, but only if the owner agrees to destroy the original copy when he passes it on. That concept involves a range of technical and legal considerations that will be thrashed out in the coming year(s).

E. Don't be a (King) Canute

King Canute, as some may recall, was the Scandanavian king who ordered the North Sea to retreat from his country, a fairly ambitious undertaking.

But not AS ambitious, some say, as attempting to secure, or "lock" digital music. This debate raged at the conference. On the one side, you have the "hackers", who contend no lock or fence put around digital entertainment will prevent people from picking, jumping, or otherwise compromising such security measures. (And, importantly, are largely motivated in their belief that such security violates their "fair use" rights, discussed above) On the other side of the debate are those involved in "Digital Rights Management", or DRM, in which I include such concepts as watermarking. These folks contend that you CAN lock down music, or at least make it so inconvenient to get to that people would sooner buy it than attempt to steal it. If the DRM side wins out (as a technical matter), the major content companies will breathe a lot easier. But if the hackers are correct, writers and artists need to think about ways to earn a living different than "business as usual".

F. Making Money If/When Music is Free

Let's assume for a minute that music cannot be secured, and that people can get what they want, when they want it, for "free". How is an artist and/or writer to survive? Generally, artists have more options than pure songwriters because the former can tour, sell merchandise, and exploit other revenue sources. But what about the songwriter? Momus, a British artist, related his experience (as an artist) making $30,000 (which went to his label, but that's a whole nuther story…) doing specially commissioned work-30 people paid him $1000 apiece for a song. This is a bit "back to the future", with the writer relying on essentially a patronage model for support. Some writers may view this as "impure", or "too commercial", but for others, writing songs to fill particular requests may be an attractive option. As one conference participant put it, the internet offers the promise of "being famous to 15 people". If your goal is a chance to make a living expressing yourself and if those 15 value your work sufficiently, perhaps you don't need to reach a larger audience.

G. Miscellaneous

MUSIC PUBLISHERS GET NEW CEO

The Harry Fox Agency recently hired a new CEO. Gary L. Churgin, a vice president of Citibank and director of electronic bill presentment and payment, will take the reins effective Jan. 29. He currently manages all aspects of Citibank's Internet-based transactions, experience that should come in handy as the publishers attempt to get paid for copies of songs in cyberspace. As Harry Fox and NMPA are managed separately, Edward Murphy will continue to lead the NMPA, a role he's held since 1985.

LITIGATION UPDATE

Churgin will have his hands full in a number of respects, including litigation. In what many see as a bit of comeuppance, several major publishers, supported by the NMPA, sued Universal for its "Farmclub" website. The publishers contend that Universal is guilty of the very wrongs it accused MP3 of in Universal's (and the other labels') suit against the online music provider. The case, filed in December, has not yet advanced passed the complaint phase.

REGULATORY UPDATE

Also in December, NMPA and the Songwriters Guild of America (SGA) petitioned the Copyright Office to convene a Copyright Arbitration Royalty Panel ("CARP", or "CRAP" depending on the outcome, I suppose-don't you love these acronyms?) to determine the conditions and charges for song composition royalties for digitally delivered music. The Copyright Office is considering the petition. On a separate matter, the Copyright Office is scheduled to release a report on the effects of the DMCA ('98 law encouraging digital distribution of music) in late February. Look for a report on this in a later column.




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