Posted on 01/19/2003 7:18:43 PM PST by Leroy S. Mort
CANNES, France (Reuters) - A top music executive said on Saturday that telecommunications companies and Internet service providers (ISPs) will be asked to pay up for giving their customers access to free song-swapping sites.
The music industry is in a tailspin with global sales of CDs expected to fall six percent in 2003, its fourth consecutive annual decline. A major culprit, industry watchers say, is online piracy.
Now, the industry wants to hit the problem at its source -- Internet service providers.
"We will hold ISPs more accountable," said Hillary Rosen, chairman and CEO the Recording Industry Association of America (RIAA), in her keynote speech at the Midem music conference on the French Riviera.
"Let's face it. They know there's a lot of demand for broadband simply because of the availability (of file-sharing)," Rosen said.
As broadband access in homes has increased across the Western world, so has the activity on file-sharing services.
IMPOSSIBLE TO ENFORCE
The RIAA is a powerful trade body that has taken a number of file-swapping services, including the now defunct Napster, to court in an effort to shut them down.
Rosen suggested one possible scenario for recouping lost sales from online piracy would be to impose a type of fee on ISPs that could be passed on to their customers who frequent these file-swapping services.
Mario Mariani, senior vice president of media and access at Tiscali, Europe's third largest ISP, dismissed the notion, calling it impossible to enforce.
"The peer-to-peer sites are impossible to fight. In any given network, peer-to-peer traffic is between 30 and 60 percent of total traffic. We technically cannot control such traffic," he said.
Rosen's other suggestions for fighting online piracy were more conciliatory.
She urged the major music labels, which include Sony Music, Warner Music, EMI, Universal Music and Bertelsmann's BMG, to ease licensing restrictions, develop digital copyright protections for music, and invest more in promoting subscription download services.
Pressplay and MusicNet, the online services backed by the majors, plus independent legitimate services such as Britain's Wippit.com, sounded somewhat optimistic about their longterm chances to derail free services such as Kazaa and Morpheus.
But they also acknowledged they cannot compete with the "free" players until the labels clear up the licensing morass that keeps new songs from being distributed online for a fee.
LEGAL STEP
Officials from Pressplay and MusicNet, which are in their second year in operation, declined to disclose how many customers they have.
"We haven't really started yet," said Alan McGlade, CEO of MusicNet, when asked about his subscriber base.
Michael Bebel, CEO of Pressplay, said his customers tally is in the tens of thousands. He added that the firm, backed by Universal and Sony, could expand into Canada in the first half of the year, its second market after the U.S. He didn't have a timeframe for Europe.
Meanwhile, Kazaa and Morpheus claim tens of millions of registered users who download a wide variety of tracks for free.
Rosen hailed a recent U.S. court decision which ruled that Kazaa, operated by Australian-based technology firm Sharman Networks, could be tried in America, as an important legal step to halting the activities of file-sharing services.
"It's clear to me these companies are profiting to the tune of millions and millions of dollars. They must be held accountable," Rosen said.
If someone breaks the speed limit, and they don't get into (or cause) an accident... then nobody gets hurt.
With a copyright violation, such as downloading copyrighted music from the internet rather than buying the CD at a store... the copyright violator is harmed financially. I don't think anyone would argue against the idea that, of the millions of people violating copyright on the internet, a certain percentage would buy the music at the store if they could not bootleg.
I don't compare it to 'speeding'... 'Shoplifting' is a better comparison. And no, I have never shoplifted. :-)
I don't buy this argument. See my read on the real agenda, in Msg #68.
But if you (or anyone) has an idea of how to stop internet copyright violators without inconveniencing everyone in the process, I'd love to hear it.
The same way you stop every other crime -- by enforcing the law against individual violators. Duh.
And yet, with law enforcement unable to get a handle on the overwhelming number of internet-enabled copyright violations, you criticize the music industry for trying to take its protection into its own hands (eg. DRM) and protect their copyrights. That's like telling someone, "Don't protect yourself... Wait for the cops to arrive."
'Duh' yourself.
**************
And that, boys and girls, is what's really behind the recording industry's push to mandate "copy protection".
Anything that can be heard can be copied with only one generation of analog-to-digital degradation and then digitally re-copied without further signal loss ad infinitum. Thus, the only way "copy protection" can work is by requiring that all playback devices look for some "signature" added to the recording to prove that it came from an "authorized" source. Naturally, the keys/equipment for adding this signature would be available only on industry terms (which would be favorable to the "in" crowd that gets by on silicone and mousse, and punitive to the competing "out" crowd).
It'll be interesting to see how the "local" recording artists (terminology used very loosely) will react to this. The home recording gear and affordable CD burners have enabled many such artists to crank out CDs on their *own* company's record label.
I've seen associates of a certain rap "singer" bring a few shoeboxes full of CDs to the local music shop, where the store manager places the discs in a spot near the cash register. Usually those discs are priced with a pricing gun, using a generic SKU number. In short, these local artists are making handshake deals with retail outlets, bypassing the food chain of the music industry. It'd be interesting to know just how far these artists' grass-roots distribution networks reach.
There is no short supply of talent, but the record industry has a great many criteria about whether they want to do business with you that have nothing to do with talent. Some of the criteria are, quite frankly, appalling. The record labels aggressively "game" the market to try and maximize their profits. What has happened is that the market is more fluid than it used to be but they are still trying to be as heavy-handed as they used to be.
The fundamental problem is that there IS lots of talent. The record companies used to be gatekeepers for reasons largely having to do with capitalization, but while this continues to be less true every day, the record companies act like it is as true as it was a few decades ago. More interesting, many of the criteria that were the basis for rejection of talented individuals have made these individuals particularly well-suited to doing reasonably well in the emerging market landscape. The arrogance of record label talent selection in the past decades selected against the very people that could effectively compete against them in the current market. They burned one too many bridges and it is biting them in the ass now.
People only buy what they are exposed to. MTV only plays the videos provided to them by the record companies. Radio stations only play what the record companies push at them (it is a myth that radio payola no longer exists, record companies have just found creative ways to reward stations, like buying advertising or co-sponsering events, instead of directly paying cash to the DJs.)
The O' Brother soundtrack is proof that people will buy good music if they get a chance to hear it. No radio play, no music video (until after it was a huge hit.) But people came out of the theatre and went directly to the store to buy the soundtrack (in fact, that would be a good money maker for theatres, sell the soundtrack to films they are showing right inside the theatre).
File swapping is the equivalent of radio station airplay for smaller labels/artists. That is why the big labels are trying to stop it. It is competition to the music video/radio airplay model of promoting music that they "own".
File swapping is a golden opportunity -- it massively scales rapidly. The music biz's status quoism and greed blinds it to exploiting these golden opportunity without cutting off people's hands and hobbling techonology.
Believe me, if there is talent to be exploited, the record companies will exploit it. If they miss a talented artist, it's simply because they failed to recognize the talent (even the Beatles were rejected by labels), not because of some conspiracy to shut out indie artists and only promote their acts.
The question is where are you more likely to find talent? The major recording label that put out 1,000 albums a year (just a guess don't know the real number), or 50,000 independent artists putting out 1 album a year each?
Now, you're more likely to find non-talent in the 50,000, but you're also more likely to find good original talent in the 50,000. Not only because of the sheer numbers, but because it hasn't gone through the filtering system the other 1,000 has that filters out real talent that doesn't fit the mold they are looking for.
Is it worth sifting through tons of coal to find the diamonds, or is it better to settle for rubies and avoid the coal (but also miss out on the diamonds.)
If you've got wide exposure, but it doesn't increase sales, that exposure is nearly pointless. Should labels expend millions of dollars developing an artist's career simply to give away the product?
You've got to stop thinking so one dimensionally.
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