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"I am amused by those who suggest that record companies don’t want to be on-line with legitimate music... It is a ridiculous notion that should be given no credence by this Committee or this Congress."
——Hilary Rosen, RIAA President/CEO

SENATE HEARING DIGITAL MUSIC

Execs, Artists Speak—But Nobody Filibusters, It Just Seems Like It
The Music biz circus hit the Senate Judiciary Committee this morning, with the jauntily dubbed hearing, "Online Entertainment and Copyright Law: Coming Soon to a Digital Device Near You." There was no mention of music in the title, but music was the main topic of discussion, though Motion Picture Association of America President/CEO Jack Valenti scored some points with Hatch. That meant Orrin Hatch (R-UT) and his cronies got to listen to artists complain about labels, labels complain about Napster, the RIAA complain about Napster, tech companies complain about Napster, Napster complain about labels… The good news is that nobody complained about artists and Orrin Hatch quoted Woody Allen, Ted Nugent and Alanis Morrissette.

Copyright and licensing issues aren't all that interesting on their own, but when you throw in the Internet and the music industry, it's as riveting as, say, work for hire.

You could have watched it on CSPAN and transcribed it for yourself, but here are some highlights, lowlights and dim lights.

In order of appearance:

Judiciary Committee Chairman Orrin Hatch: "…some may feel about the road ahead as Woody Allen expressed it: We stand at a cross-roads, one road leading to despair and hopelessness, and the other leading to extinction, and I hope we have the wisdom to choose correctly. Well, I am optimistic that we will be able to choose the road that embraces technology, respects the creativity of artists and meets the justifiably impatient demand of consumers. With apologies to Ted Nugent, who unfortunately could not make it today, I do not believe we are riding a Terminus Eldorado. Rather I like to take the advice of Alanis Morissette, who suggested on her last album that the appropriate response to experience, even to experience we don't particularly want, is a resounding 'Thank U.'"

Ranking Democrat Patrick Leahy (VT): "History has shown that new technologies may initially appear to trump intellectual property protection but, in the end, open new opportunities for artists, new sources of revenue for the copyright owner, and new choices for consumers. I am reminded of the battles in the early '80s over the videocassette recorder. I am confident that the VCR's history of success will repeat itself in this new era with these new issues. The copyright industries appear to have learned from this history and are making efforts to develop new business models that will flourish in the digital environment." (Editor's embellishment:  I still don't know how to program the damn thing.)

Richard Parsons, AOLTW COO: "Amid all the views you'll hear today, it's my hope we can reach consensus on these three facts: digital distribution is here to stay; copyright is key to making it fair for consumers and creators alike; competition and consumer choice are the way to ensure a continuing supply of high-quality content at affordable prices." (Ed. embellishment:  And $21.95 is a small price to pay.)

Hank Barry, CEO Napster: "I think no one in this room—even those with whom we have disagreed vigorously—would contest that accessing music over the Internet is something that tens of millions of people, young and old, love to do…The question before us today—from all of our very different perspectives and responsibilities—is what does it take to make music on the Internet a fair and profitable business. To realize this goal, I believe it will take an Act of Congress—a change to the laws to provide a compulsory license for the transmission of music over the Internet….Copyright is not based on a private right of the individual, it is a creation of and a tool of public policy. It requires a constant balance between the public's interest in promoting creative expression and the public's interest having access to those works." (Ed. embellishment: And, of course, its effect on Hummer-Winblad's bottom line) 

Don Henley, Recording Artists Coalition/"Hotel California" bellman: "Napster and other 'locker' systems have flourished because the record industry has failed to be forward-thinking and has made it extremely difficult for legitimate companies to license the rights on an arm's-length basis. The record industry fiddled on the sidelines while the digital revolution went on without them. The major labels should have spent their time negotiating and implementing a fair and comprehensive licensing system; one that addresses the interests of all the parties, including recording artists. While we support the copyright infringement lawsuits filed by the record industry, the lawsuits should not be used to destroy a viable and useful independent Internet distribution system. It is in the best interests of recording artists, as well as consumers, that Congress promotes an atmosphere of independent digital distribution of music. The solution resides in the marketplace and not in the courtroom. If, however, a resolution can not be reached quickly, compulsory licenses should be considered—but only as a last resort." (Ed. embellishment:  Hey, if you can get Glenn Frey and me out on the road again, anything is possible.)

Alanis Morissette, Canadian: "I have always believed in the concept of everyone winning or there not being a deal to be made. That remains true to this day and yet it would be remiss of me not to notice that the longer we stay in the 'no deal' holding pattern while trying to figure this out, we run the risk of missing the opportunity to connect directly with people and of driving these forward-thinking distribution outlets created by the web underground." (Ed. embellishment:  Of course, don't ask me what a Canuck is doing testifying before an American Senate Judiciary committee...Hey, Orrin, you got a Labatt's?)  

Steve Gottlieb, Credit First Suisse Boston Spokesman/President TVT Records: "Our concern is that without Congressional scrutiny, any service that attempts to encompass a majority of available music content could be unfairly dominated by the few owners of the most content. The result would be a two-class system of copyrights wherein there are the copyrights that are owned and aggregated by multinational corporations and represented by professional trade associations that are treated one way—and the copyrights of everyone else." (Ed. embellishment:  Doesn't anyone recognize me from my Suisse Credit Bank commercials?)

Ken Berry, EMI Recorded Music President/CEO: "My message to this committee is simple: EMI is embracing this medium…EMI alone has signed three dozen deals in the past two years to make music available online from North America to Europe to Australia to the Pacific Rim. Name a business model—from direct-to-consumer to business-to-business—and chances are we've embraced it. Name a mode of digital delivery, and recordings in the EMI library are probably online there right now or on their way soon. Kiosks. Portals. Digital downloads. Customized CD's. Music videos on demand." (Ed. embellishment: Now, does anyone know where I can get a decent burger in this town?)

Gerald Kearby, Liquid Audio President/CEO: "Why then are tens of millions of users turning to unauthorized sites on the Internet to obtain digital music? The answer is simple. The music most people want is not available for purchase through legitimate websites. The good news is that millions and millions of consumers are excited about digital music. But those consumers must be attracted to legitimate websites…This cannot happen unless all the music that the consumers want is made available, including access to all the rich and varied catalogs owned by the major and independent record labels. Defining price points and business models in an open and competitive marketplace is never easy, and there will always be Napster progeny that promote taking rather than purchasing. But with the assistance of this Committee, by encouraging record labels and content owners to work with all participants who add value to the music industry, fans will remain loyal and the music economy will grow for all legitimate participants." (Ed. embellishment: Speaking of Liquid, anybody up for a liquid lunch?)

Hilary Rosen, RIAA President/CEO: "I am amused by those who suggest that record companies don't want to be on-line with legitimate music—that we don't want to serve our customers. It is a ridiculous notion that should be given no credence by this Committee or this Congress. We are a huge industry trapped inside a small physical package. Our freedom from selling only physical CDs or cassettes means a huge expansion worldwide in the artists we can support, the diversity of music we can offer and the commercial potential we can unleash. We understand that better than anyone else and we are taking the most active steps to embrace the opportunity." (Ed. embellishment: Namely, lining the pockets of every politician we can bribe.) 

Robin Richards, MP3.com President: "Despite what you may hear from some of the copyright owners, our inability to obtain the necessary licenses is not merely a contractual problem that can and will be solved by the marketplace. Rather, it is a reflection of the fact that the existing marketplace and statutory music licensing mechanisms—mechanisms that developed nearly 100 years ago—simply do not work in the digital environment. As a matter of public policy, it is incumbent on government to address the failure of these marketplace and statutory mechanisms, both through immediate remedial action and through a comprehensive reassessment of the application of the copyright law to digital music technologies." (Ed. embellishment:  Anybody remember me?)

Edward Murphy, National Music Publishers' Association President/CEO: "We believe that the compulsory license provisions already in existence for musical compositions are sufficiently flexible to address the new business models that crop up every day on the Internet. A level playing field, however, is essential so that Internet music services have every incentive to obtain licenses and compensate songwriters, and so companies that do so are not penalized for following the rules of the road." (Ed embellishment: Unfortunately, I'm going to have to charge you for singing that song you crooned in the shower last night, Senator.) 

Mike Farrace, Tower Records /Books /Video, Sr. Vice President, Digital Business: "Many of the barriers that prevent access to an exhaustive inventory of sound are perplexing, and frankly, lead us to question the motives of our suppliers. We're starting to worry that maybe all the talk and activity about protecting the music is not just about controlling copyright infringement, but is really about controlling lawful use and hiding plans for cutting retailers out of the marketplace. A lot of the deals the record companies seem most interested in pursuing are with each other, or with companies that they all buy a piece of—like MusicNet. They tell us they want us in this business, but they don't follow up with products that we would want to sell or that our customers would want to buy. Instead, Bertelsmann buys CDNow, which has a strategic relationship with Time Warner, which wants to cross-license movies with Sony, which has a subscription service project with Universal (called Duet), which has a joint venture called 'GetMusic' with BMG. That's four out of five of my major music suppliers, and the fifth one, no offense to Ken Berry at EMI, has been for sale all year." (Ed. embellishment: I am not now, nor have I ever been, a member of the Communist party.)



 



 

 

 

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