This is where we totally disagree. There is very little similarity between radio pushing sales and P2P pushing sales. It is the height of delusion to think that the vast majority or even a majority of those downloading buy more music because they download. Kids just don't work it that way. I have kids, and they have friendsand I know they download music because it is free. While they buy music at times, they relish the thought of acquiring free music without any apparent ramification (more on this below). They have very slight resources, and if they have $40 a month to spend on entertainment, they have a choice of buying four CDs or stealing all the music and going to the movies four times. At 16 what would you do? We simply have to stop this crazy thinking that illegal piracy helps sales. It is the primary reason, if not the sole reason, for the depression we all face. If P2P pushes sales we would be in a golden age of music sales. So lets stop drinking the Kool-Aid and at least agree that unauthorized P2P is our greatest enemy; perhaps, if monetized properly, it is our best friend. I have read studies trying to prove the opposite. I not only find them totally unpersuasive, but think they are actually a form of satire.
Quit being a jerk to your customers:
Here is one I don't get. If someone sneaks into a show, they are either thrown out or arrested. A kid who steals merchandise is in big trouble. If you walk out of a store with a CD, you are most certainly arrested. Yet, stealing music via the Internet seems to be not only an acceptable act. Some try calling it fair useand some even praise the act. Some even try to differentiate between stealing a physical copy and a digital copy. In today's world there is no basis for such a distinction. Stealing intellectual property value is like stealing physical property. We should be teaching our kids to respect the intellectual property of an artist. Many kids and even parents don't understand because they think since the computer lets them do it, it must be legal. Simple education alone is a folly. Deterrence is an essential part of the solution. It is impossible for the IRS to arrest all of the tax payers in the United States if they all refuse to pay taxesbut the vast majority of Americans file anyway. Why do they do it? Because of the fear of being arrested, even though there is an extremely low probability that they will be arrested. And that is exactly what the lawsuits are doing. They are creating deterrence so the vast majoritythough not allmay stop engaging in such a destructive and illegal practice. This is why the music industry started the lawsuits. Maybe the suits have reached a saturation point, but the initial reason was absolutely valid, legal, proper, and moral.
Now I have no problem with those arguing that it may be a bad business move at this time, but I sincerely hope they differentiate between the business rationale and the copyright rationale. We cannot and should not turn this into a form of fair use. And perhaps the deterrent has had the requisite effect. But if not, then the lawsuits should continue. And I know this is a position not shared by many in my profession at this point in time.
Embrace your friends:
Everyone wants to pretend that they are the friend of the artist. In my estimation, anyone not paying an artist a fair royalty or failing to get authority to use the music may love the art but they certainly don't love the artist. There are many good hearted music lovers and business leaders in the Internet radio community who want to make the world of the artist better. But they must meet the artist at least halfway. In the long run, the Internet radio community must learn to work with the rates, enter into good faith negotiations, or direct license. Some stations and services may go under. It will not be easy, but it is the only antidote. But you must recognize that many artists have lost their careers as well. I know you think your movement is righteous, but where were the same people when the artists' careers were and still are being killedwhere is the SavetheArtist.net campaign? Certainly you don't believe that Internet radio fits that bill. The small webcasters may be hurting because of this turn of events, but they are a small part of a much bigger picture. Major webcasters will figure out how to survive, just like any major industry faced with increased costsand some of them may reduce their services or maybe stopbut in the long run most of them will figure it out. The basic reality is that the harm to all artists receiving a below-market rate or perhaps nothing is much greater and more important than the problems facing the webcasters, especially the small webcasters. It is the difference between someone who has a healthy appetite and someone who is starving.
And by the way, people have always been excited about musicthey really don't need the small webcasters to find music. Did you and I need a small webcaster to find Bruce Springsteen? All we needed were friends, and in your instance, a friend with a bootleg copybut ten to one, you would have found Bruce anyway.
Jay Rosenthal is a partner with the Washington DC law firm Berliner, Corcoran & Rowe, LLP; co-legal counsel to the Recording Artists' Coalition; and a SoundExchange board member. He also represents numerous recording artists, independent record companies, producers, songwriters and independent film companies and is an adjunct professor of entertainment law at the George Washington University School of Law and at the Washington College of Law of the American University.
Prices and rates nobody can work with
Jay, you wrote, "But they must meet the artist at least halfway. In the long run, the Internet radio community must learn to work with the rates, enter into good faith negotiations, or direct-license."
First, it is impossible to "work with" the CRB rates to offer advertising-supported radio in the current advertising environmentthe rates per listener-hour are higher than 100% of what advertisers are willing to pay per listener hour. (The CRB judges pulled their alleged "market rate" from the per-track pricing for an on-demand subscription service. Maybe we can go into this in more detail later this week.)
Second, we (the Small Commercial Webcasters group) have been trying for two years to enter into meetings with SoundExchange for good faith negotiations; only in the past few weeks have we actually been able to get a meeting.
Third, a direct license will probably not "meet the artist halfway" at all, as the legislated 50/50 split between copyright owners and artists would not apply to direct licensesin other words, the label would be able to keep the cash while the artist, depending on his or her contract with the label, as I understand it, would get little or nothing!
You also wrote, "But you must recognize that many artists have lost their careers as well. I know you think your movement is righteous, but where were the same people when the artists' careers were and still are being killedwhere is the SavetheArtist.net campaign?"
I don't understand your point here. Which artists have lost their careers? Why have they lost them? (If it's due to lower CD sales for catalog product, don't we agree that might simply be a pricing issue?) What would have been the goals of a SavetheArtist.net campaignto encourage labels to issue accurate recoup reports to their artists?
Develop a more rewarding ad base
1. Moving toward a more viable and economically beneficial advertising business model for you is the best goal. Right now, you and others may be losing a bit, but if you develop a more financially rewarding advertising base, then you wini.e., there is incentive for you to move toward a better advertising model.
2. I don't want to get into too much history. The key point is that right now negotiations are going on with all partiesserious negotiations. And I truly believe they are good-faith negotiations. I am optimistic that settlements will be reachedso long as they don't have to answer congressional staffers' emails and press requests every day regarding the proposed legislation. This was my point about legislation not being the right way to gofighting for that back-up position may prevent a negotiated settlementand as I said before, it is a lot easier to stop a bill in Congress than to pass one.
3. Almost all labels will use SoundExchange anyway because of the administrative ease, so this is not such a big deal. You direct license, and whatever the deal it will most likely go through SoundExchange. And if it is a gratis license, there is nothing to pay anyway. Plus, your concern has been with the indie labels, and many of their deals need artist approval and are already set up for a 50/50 net split, and in many instances the artist can get the money through even if they are unrecouped. And regarding the whole concept of being recoupedthere is no one more aware of that problem than I am, but the reality is that even if an artist is unrecouped, third party licensing payments reduce the unrecouped account, helping the artist reach that golden moment sooner. But for major artists, most never recoupand that is why SoundExchange is the better alternative. I also believe even some majors would send the direct-license money through SoundExchange, even if they have unrecouped advances, especially with the smaller webcastersagain, because of the smaller administrative costs.