Music Exec: ISPs Must Pay Up for Music-Swapping

Reuters ^ | January 18, 2003 | Bernhard Warner

[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.

[nononsense]

I remember when the RIAA had its panties in a bunch because there were websites devoted to listing the lyrics of songs. I believe they even had the police seize the servers of one of the websites. Now they have an even bigger problem.

A lot people refuse to pay between 13.99 to 18.99 for 11 to 15 songs album when they don't like half of the songs. Folks feel like they have been cheated and are looking for ways to screw the music companies.

[Flashman_at_the_charge]

This makes about as much sense as going after the USPS for lost revenue from internet cigarette sales.

[tortoise]

I'm curious how you know all this about the inner workings of a record company. I'm not necessarily saying you're wrong, or right, but I hear a lot of this said from pure conjecture.

I've been involved with the media industry (both music and movie/broadcast) for a long time, and spend part of my time now as an executive in the industry. I'm hoping that through careful and deft maneuvering I can save the industry from itself, or at least make sure that it doesn't take the world of media with it when it goes down. I consider most of what I do in this regard charity work, as it is not related to my primary business interests. Nonetheless, it is much easier to make things happen if you are in a driver's seat. :-)

The corruption and gross inefficiency of the whole industry really bothers me, but unlike some people, I think it can be salvaged even though the transition will probably be very painful for many people. I am in an unusual position because I am not really a true insider, but I wield quite a bit of leverage.

[steve-b]

Digital Restriction Management schemes which infringe upon the fair-use rights of law-abiding consumers (i.e. all of them offered to date) are unacceptable, for the same reason explosive booby-traps which endanger innocent bystanders are unacceptable.

[TheEngineer]

Digital Restriction Management schemes which infringe upon the fair-use rights of law-abiding consumers (i.e. all of them offered to date) are unacceptable...

Well.... Looks like we're going to be stuck with these schemes... thanks to the Napster and Kazaa users' collective inability to obey copyright laws.

[bvw]

Thanks to the Napster and Kazaa users' collective inability to obey copyright laws.

Blaming the whole public, or significant sets of it, is a folly. This IS is world we live in, with the people here at the same time for us. At the least it suggests the problem to be solved is elsewhere.

[TheEngineer]

At the least it suggests the problem to be solved is elsewhere.

Sure it does... The problem is that, if nobody is looking, a large number of Americans will break the law. It's a sign of morality decay within our society. And I don't know how to fix that.

[bvw]

The world has never been exempt from total freeloaders, as you seem to espouse. And at many times harsh laws and policeings brought down generally on all to cure the few.

I'd suggest to you that there is a great joy and good-feeling to be had in producing goods and services that others take to use. No freeload of stuff can substitute for that sense either.

Be what you must be, but consider that too.

[bvw]

The law or the Law? Men make laws on a trial basis to achieve in that present circumstance conformity to the dictates of an absolute Law. Men's laws aren't perfect -- John Hancock, whose signature is first and grandest in our founding -- he was a smuggler, a law-breaker and Law-keeper, one and the same.

[TheEngineer]

The law or the Law?

OK, Captains Courageous... If you think it's so patriotic and admirable to break laws which you deem unjust, just post your name, address, and list of laws broken on this thread. (I'm giving you an opportunity to be a real brave patriot here.)

[bfree]

The elite class expects this to be a big issue? I'm sorry, if the RIAA thinks it is important for this country to expend one resource dollar to protect them against the public, then their priorities are totally misapplied. If I buy one CD with what I consider 2 good tracks on it, why can't I copy those tracks along with others I like into a CD and then share it with friends? I paid the poor starving artist when I bought the product. What in the hell gives the RIAA the opinion that they should check the computers of people. The elite left is nothing but Nazis and those who agree with them are too.

[bvw]

That would be only proof of folly. Even a misformed law should be followed if it's tolerable -- for the sake of peace and order. And when it can't be followed, better to keep it discrete and particular, rather than to promote a more general disobedience and disorder.

[TransOxus]

Keep blaming others while still putting out crappy overpriced products where the musician rarely sees much money from album sales. Plus the record companies deduct a lot of expenses especially when making video garbage and gilding their own nests. You imply that others to have to earn a living not just the musician. The musician should get most of the money, not the parasites. Plus the hanger ons should get a real job. The problem is that musical talent is being stifled and the mass exposure outlets are restricting free expression. Prior to the 90s, you could switch from radio station to station and get a lot of variety in musical tastes and styles, hear new music which were good, and actually hear DJs introducing new music/bands they liked. The braindead names of the current bands, faggy boy groups, girls singing and trying not very hard to not be sluts, thugs (c)rapping, divas sprouting and snorting, etc. are all indicative of the decrepitude of the current music scene.

Early in the 90s, the liberal rot really set in the music business. Interestingly Talk Radio became really popular from Rush to Howard Stern leading the pack when the music started to suck. You got more talking along with canned music shlock in the music radio stations. I am surprised that the music companies are not blaming Talk Radio for their self-inflicted woes for not being able to sell garbage.

[tdadams]

Blah, blah, blah. Same old Marxist crap that gets recycled on these threads ad infinitum.

Who are the "parasites" and "hanger ons" you refer to? The songwriter? The producer? The studio musician? I suppose you think these people are insignificant factors and it doesn't matter if they're getting screwed. Is that what you call compassionate conservatism?

[steve-b]

Well.... Looks like we're going to be stuck with these schemes... thanks to music industry bribery of Congress.

Fact checker's correction.

[steve-b]

Music HCI Exec: ISPs Gunmakers Must Pay Up for Music-Swapping Armed Crimes

[Leroy S. Mort]

They're not a beggar. You're violating their patent (copyright in the case of music). They have the right to stop you because you have no right to copy their product. It's the same as stealing. Is that so confusing?

Just as a point of information, do your feelings on this extend to the unauthorized reposting of source articles on FreeRepublic, which some claim derives the originator of advertising income? Or is that a separate situation altogether?