* For those interested-- the problems with the cable modem continue...
CARP - RIAA - Congress
Welcome to Hell Part 3
"Is it the responsibility of the world at large to protect an industry whose business model is facing a strategic challenge? Or is it up to the entertainment industry to adapt to a new technical reality and a new set of consumers who want to take advantage of it?" Andrew Grove, Chairman of Intel
Amen Andy. Amen.
Okay-- I've been reading the Satanic Verses... er CARP document for the past couple days and doing a little research. Call it "testing the temperature of the lava." Here's my opinion for what it's worth--
It still looks like the LOC CARP group got a little punch-drunk on RIAA's idea of sticking it to the Internet Radio Stations. (Didn't anyone send these folks a gift or fruit basket?) It's obvious to me that someone who was handling this issue, didn't know how "the intellectual property game is played."
Anyone with a little common sense knows that Internet Radio Stations aren't making dittly-squat in the income column. Even broadcast radio stations are having trouble selling slots to onair advertisers on their websites. So how in the hell are the internet stations going to do any better?
NEWS FLASH TO HILARY ROSEN: THE MONEY ISN'T THERE KID!
From what I can see, it appears CARP and RIAA, are pretending to be paralyzed and braindead when it comes to digital transmission of recordings. In the case of RIAA this is nothing new. Does anyone remember the VCR, the Minidisk or the cassette tape? Each and every time a new product was developed, the entertainment companies, bitched, moaned, whined and called their lawyers to slow the down the process. While all the time the greedy bastards in the industry planned to control the market place, and their own gravytrain. This time it is the Record Industry-- again.
Over the past ten years the recording industry has been given several the opportunities to embrace different digital distribution models. Every time they were approached and asked to join the brave new world of digital distribution they screamed COPYRIGHT! Swore up and down the world would rob them blind, and then they ran away and called their lawyers to block the idea. (Trust me on this one, I know far more about this than I can say.)
But in reality the recording industry isn't as stupid as they are pretending. Most musicians are some of the most technologically savvy people I know. Most of today's musicians can record, mix and produce a recording digitally with the same ease you operate a toaster oven. The digital recording tools have been available for at least the past 8-10 years on a large scale. The thing that scares the hell out of the record business is that the tools are getting cheaper and the quality is nearly perfect today.
Many savvy musicians do not need a record deal. Especially if he or she can produce good music that the audience wants. And as many bands will tell you, with the right about of self promotion they can generate enough buzz to sell their CDs-- online with the help of a little airplay on internet radio.
Putting the shoe on the other foot--
What most musicians are concerned about is protecting their music from someone stealing it, because those who want a record deal know record companies won't touch an artist that is online. The record companies feel there isn't any thing ($$) in it for them if someone is giving it away online for free. Or so they say...
But if they're so scared-- Why is Billboard Magazine Online and Amazon devoted an entire sections of "Free Downloads" to distribute new music on their site? Granted, some are time limited, and others are a single selection on a album given away for a short timeframe. But most people can make up their minds to buy in that time. So what's the big deal?
Furthermore these free services also cut the record company's cost of distributing records and singles to Radio stations-- So what's the beef recording industry? You ARE saving money in one place-- and making money in sales in the other!
The Greedy and the Stupid--
The CARP document appears to be a cookie-cutter variation of the private deal cut between Yahoo and RIAA last year. The problem lies in that Yahoo Radio, is one of the largest rebroadcasters of live radio and television stations on the internet. Yahoo Radio is not a pure webcaster. They also generate revenue from the stations whom they transparently host and distribute online.
A pure webcaster's revenue stream is no where close Yahoo Radio's! Webcasters are barely breaking even with their Amazon links. Many webcasters are hobbyists or it is a learning experience until they can get a gig in the real broadcasting business or as a DJ. Many webcasts are being done to teach college and high school students about the mechanics of the business and they are non-profits. There is no income to pay the high royalty fees CARP is suggesting. So if the LOC imposes the terms of the CARP-- most sites will just shut down.
The major missing piece in the CARP document is the assumption that RIAA will be the Trustee to issue payments to ALL ARTISTS and NON MEMBER RECORDING COMPANIES whether they are a member of RIAA or not. RIAA will collect a 15% fee for being the Trustee, so you can see why Hilary Rosen is lobbying like crazy to protect her newfound turf and RIAA's wealth.
The question is can we trust RIAA any more than we trusted an institution like Enron? I know too much about the entertainment industry and how books get cooked, so I don't trust RIAA any further than I can throw boulder across a room.
While RIAA paints internet radio and webcasters with the broad brush of being thieves, most are not. Smart webcasters are more than willing to pay reasonable fees for the rights to play music. But with all the venom RIAA has spread about everyone on the internet being a thief or bootlegger, I highly doubt webcasters will ever warm up to Rosen and her crew as being trusted to pay artists and labels for the music they play. Just too much bad blood there.
Some independent third party trustee has to be appointed by the Library of Congress-- or I suspect somewhere along the way a court will do the appointing.
The current system of royalty fees in radio broadcasting only pays the record companies and not the artists. In the past it was felt that the promotion of the artist was supposed to be "enough" to not share that revenue for playing a song. Also many artists receive nothing for the re-release of their songs, like those Time Warner 70's and 80's compilations CDs. This was caused by a contractual loophole that was not plugged until about 10 years ago. These loopholes create some pretty pathetic situations. Case in point: when an elderly musicians can't make the rent because a record company's contract will not share the profits with the creators every time a new deal is done on their material. At present there are several lawsuits regarding copyrights where artists and songwriters never got paid. Also older musicians are suing for their share of their Rights to electronic distribution, because at the time their original contracts were done-- the internet distribution system was "Buck Rogers" material when their original contacts were signed.
It is time we see the law does something to correct that situation as long as it's fair to everyone-- especially the musicians.
The reality is the situation is just heating up. In the past couple days my email box has filled up with suggestions and other comments.
It amazed me that one of the surprising comments came from Senator Orrin Hatch (Republican from Utah) who said at this week's National Association of Recording Merchants:
"...I think that most of us who have thought about the policy issues raised by the digital distribution of music can agree on a common goal. That is, to achieve ubiquitous, instantaneous access to any music or media we want, at any time, in any place. Imagining the ultimate goal is not the hard part."
"... But while vast changes are happening in the distribution of music, I believe that certain relationships and principles remain constant."
"The first principle is that the focus of the music and entertainment business is on mediating the relationship between the artist and audience. Second, creativity is essential, and creativity should be rewarded. Third, the players who enable the most freedom in the relationships involved in the delivery of music will ultimately prevail."
"... First and foremost, the music and entertainment businesses fundamentally are about mediating the relationship between the artist and the audience. That relationship is the central purpose of every other component of the business, and that fact will not change. The Internet can serve the useful function of making that relationship more flexible and more interactive."
"...With digital interactive music, multiple versions of individual songs can be more readily available, such as the original album version, the uncut version, the live version, the alternate demo version, and so on. We could also see a single song evolve over time with listener input."
"The new digital distribution world also presents a win-win opportunity to breathe new artistic and economic life into familiar songs. As you know, music fans have shown real interest in new versions of familiar songs over the last few years something easily attainable in the digital age."
"The bottom line for creators, music fans, and those who serve them can be affected positively, too. After initial set-up costs, it stands to reason that the costs of manufacturing, shipping, warehousing, returning damaged goods, and on and on, could be saved and shared by everyone along the chain of value...."
"... A second basic principle and its corollary stem from the first one. Creativity is necessary, and creativity should be rewarded. This applies both to the original creators of music and those who add value by bringing that music to the customer. Songwriters and performing artists deserve to be paid. So do the companies that bring their work to the public. So do the merchants who bring the customers to the works. Neither music distributors nor music fans should expect to get music for free, unless owners of the music choose to make it free."
"... While everyone who has mediated the relationship between artists and their audiences may see this development as a threat to business, it need not be. One thing is clear about the Internet explosion. There is vastly more information than most people can process alone...."
"...The third and last principle I will mention is that freedom in the relationships involved in the delivery of music will prevail. Music makers should be free to relate to their fans in the ways they want. Consumers should be free to deal with whomever they want, and to listen to whomever they want. In my view, those who do the best job of catering to customer wants and preferences will win."
"...Thanks to technological innovators and forward-thinking music makers, more of what consumers want is being made possible every day. Music fans are learning what technology can do to enhance their enjoyment of music, and they are excited about it. They want to take their music with them wherever they want, any time and any place, without having to lug a case of CDs and a boom box with the. The possibility of accessing databases of music over wireless connections on a pocket device is thrilling to music fans like me. Of course, the enthusiasm of music fans about these possibilities presents valuable opportunities to everyone in the music business..."
"...What policy makers and industry executives need to recognize is that, for most of us, the vision of the ideal media marketplace of tomorrow is very similar. In the case of music, most hope to see a democratization of access to the distribution channels for every artist, songwriter, and genre. And where these creators get compensated for their work. We hope that the music marketplace is shaped by market forces not regulation and that new business models are allowed to obtain capital, launch, and succeed or fail..."
"...I will try to be brief in the remainder of my comments, but you have to realize that Im a lawyer by training. Bear with me. After all, lawyers are the only people who prepare a forty -page document and calls it a brief."
"But in all seriousness, there are steps I think we need to take. First and foremost, let me say that I do not support compulsory licensing at this time. I do believe, however, some competition issues need to be addressed and apparently are being examined by the Justice Department. I have always maintained that proper and timely enforcement of competition principles can foster both competition and innovation, while minimizing the need for government regulation. This is an especially important paradigm for the Internet. Many people in Washington are raising competition concerns about some of the current online music ventures."
"I also think it is important for policy-makes to work to ensure that the benefits of the digital world are shared by consumers and artists, as well as by those who add value along the chain."
"...Third, I think it is appropriate to consider changes or updates in the law that facilitate the successful online deployment of music and entertainment. If there are roadblocks in the law that stand in the way of both music owners and listeners, we should remove them. If we can make the process more efficient or user-friendly, we should support such reforms. If there are legislative ways of better fostering the relationship between music makers and listeners, I think we ought to work to those ends."
"I intend to continue to work on these issues, and am actively engaged in discussions with my colleagues about how we might most fruitfully proceed. I invite you to join us in that conversation. You have substantial expertise both in the area of competition in the delivery of music, as well as in the area of mediating the relationship between creators and consumers. I recognize the tremendous value of your input in this conversation."
"I take particular interest in these issues, because they are important to our economy and our country. Especially during these troubled times for our nation, we as Americans look to music and entertainment that uplifts and encourages us. I thank you for your part in bringing the gift of music to so many. Lets work together to make this time of change and upheaval a time of opportunity and positive change."
(I'll post the entire speech in my stories tomorrow)
At least we got someone looking at this situation with an intelligent eye--