Recording Chief Critiques Criticisms of Her Industry

Hilary Rosen is under siege.

The chief of the Recording Industry Assn. of America, the trade group representing the nation’s five largest music conglomerates, lately has been taking body blows from both angry rock stars and Internet geeks in the battle over the future of the $40-billion business.

Rosen and the RIAA have filed multimillion-dollar lawsuits against MP3.com and Napster Inc., accusing both companies of violating copyright laws by encouraging their Web site users to steal music with new digital technologies. So far, Rosen has failed to stop the out-of-control flow of music over the Internet. Unless she wins those lawsuits, the music industry could suffer a crippling economic blow.

The RIAA, meanwhile, has been criticized for making a bad situation worse by dragging its feet in developing a secure method to deliver music on the Internet, something that would make it easier for fans to buy--rather than steal--the music they crave.

Already angry recording artists have been further upset by allegations that the RIAA may have secretly inserted an amendment into a recent legislative bill to prevent them from regaining control over their recordings in the future.

In her first extensive interview this year, Rosen speaks candidly about the Internet issues dogging the industry and addresses the RIAA’s controversial “work for hire” legislative provision that has outraged the artist community.

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Q: The RIAA’s war against music piracy has recently spilled over onto the Internet--and as a result you’ve become infamous. There is even a Web site up now featuring an animation of you boxing MP3.com honcho Michael Robertson. How do you feel being portrayed by the tech community as the evil overlord of the music industry?

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A: That Web site is pretty funny. It has me punching his head off but it also includes a part where he picks me up and tosses me out of the ring. I had to laugh. People see me as the threatening head of this giant enforcement agency. I have this reputation because we vehemently try to stop piracy. Copyright infringement doesn’t just cut into the revenues of the big record companies, it picks the pocket of the artists too.

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Q: Why did the RIAA sue MP3.com?

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A: What MP3.com essentially did was create a new customer service to give users access to full- length albums. The way they did that was by taking those albums and reproducing them on a service on their Web site. And they did it not just with MP3.com artists, who had given them permission, but with 45,000 other artists with record company copyrights who didn’t give them permission. They can’t do that.

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Q: The RIAA also sued Napster Inc., whose technology allows fans to easily duplicate and distribute pirated music.

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A: Yeah. I think Napster is a watershed moment for the music community, because it’s obviously a very popular site. But it’s also symbolic of the bigger question, which is: Can companies try to commercialize and essentially steal music from creators?

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Q: I assume you’re referring to companies other than record companies?

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A: Very funny. One artist manager I know told Napster: “So you think the record companies have taken advantage of artists over the years; well, now it’s your turn.” The watershed moment I’m talking about here is this: For all the RIAA’s enforcement efforts over the years, the artists have always kept very quiet about it. Napster is changing all that. It has created a level of outrage in the music community that is quite stunning. Artists like Metallica and Dr. Dre have sued Napster on their own. And there’s more to come.

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Q: Why don’t you explain what Napster does?

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A: It creates a centralized system that allows people to log on and use the Napster search engine to connect with individual computer hard drives anywhere in the world and share music--much of which is stolen. There is a very simple search mechanism where you plug in the name of any artist of any song and all of a sudden you’ll get multiple choices where you can just click on and download that song easily for free. There are a couple of legal issues expected to be resolved any day now. Soon we’ll get to the underlying issue of whether or not Napster is liable for contributory and vicarious copyright infringement.

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Q: What happens if the court rules in favor of Napster?

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A: That would be bad. Very, very bad. I really wouldn’t speculate beyond that.

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Q: A ruling is due this week on the MP3.com suit. What if the RIAA loses?

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A: Well, I think the court would be sending a very bad signal to copyright holders. But I don’t think that will happen.

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Q: If the RIAA loses these lawsuits, it will be disastrous for artists and for the record conglomerates. Some analysts say it would spell the end of the music business as we know it.

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A: I don’t actually believe that anything in the future is dependent on a litigation strategy. I think the future is dependent on creative marketing, new creative business models and finding ways to give the customer value and a reason to support music and buy it the way they always have. I believe we have to compete in the marketplace and there is no substitute for that.

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Q: Some record executives privately suggest that the old music business model built on ownership of master recordings, manufacturing and distribution of music, will collapse soon. They suggest that a new model must be built for the piracy-dominated future that is not based on selling music, but on selling the cultural trimmings [clothes, etc.] associated with the music fan.

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A: I don’t see it as an either-or situation. I think that there will be products that allow music to be more of a service along a subscription or a licensing basis. But I also believe that there’s a market in the future for the way that people use music now: the desire to have some level of ownership, a package, some portability. I think the great thing about the way technology is going is that we’re moving from one format to multiple formats. And I think that lots of them will coexist.

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Q: Last year, the RIAA launched the Security Digital Music Initiative to create an industry standard for protecting music sold on the Web. SDMI missed a deadline last year on coming up with a digital watermark and they are rumored to be on the verge of missing a second deadline this spring. What’s up with SDMI?

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A: SDMI is important. But it’s not the be-all and end-all of the future. It’s just an important part of the strategy. I don’t think that the marketplace is holding its breath for SDMI. There’s a whole host of complicated issues associated with bringing the music business online. And security is just one of them.

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Q: Are you satisfied that the SDMI technology created so far cannot be hacked?

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A: I’ll leave that for someone else to judge.

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Q: There is speculation that the tech divisions and manufacturing arms of the major conglomerates have really slowed this migration to the Internet down. And that by moving so slow, you are losing a whole generation of music consumers, for whom it is easier to steal music on the Internet rather than buy it.

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A: I think everybody in the music industry and the technology industry wishes that this process of getting new business models and getting music online was happening faster. I think we all see a troubling pattern of consumer expectation developing regarding their perception of the value of music, because there is so much wholesale free distribution.

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Q: Your role as an artist advocate has been challenged recently. Artists are angry at the RIAA, accusing the group of sneaking a controversial amendment into a bill last fall that would make all sound recordings “work for hire.” Artists say it robs them of the right to reclaim their authors’ rights to their own albums as spelled out in a previous copyright bill?

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A: Well, this has probably been the most disheartening experience for me. The way this thing was reported in the media is so inaccurate and I think our integrity has been maligned. This is what happened: Near the end of last year’s legislative session, a number of artists wanted to amend a cyber-squatting bill to protect their domain names against extortionists. I was asked by some members of the congressional committee whether I thought that was a good idea and I told them I did. But the movie studios didn’t agree. So it was in the context of a complex compromise on that bill that the congressional committee determined that the law should be clarified to say that sound recordings were eligible to be “works for hire.” The copyright office was consulted, the members of the committee were consulted and, at the time, no one thought that it was at all a problem.

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Q: Explain what “work for hire” means.

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A: Under the copyright act, all of the creative participants in a recording can claim co-authorship status. That’s why you have to allow for eligibility for “work for hire.” Because if you didn’t, each creative participant would have equal right to authorize commercial use of that recording. For instance, a bass player could say, “I own part of that song therefore I can sell it this way or this distribution outlet.” That’s why the marketplace has turned these into “works for hire.”

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Q: Why do you think artists are so angry about this?

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A: Apparently it seems that despite the contracts that they have signed, which might say that the work that they are furnishing the record company is a “work for hire,” that they were planning on going back into court to get that provision voided. Because under the 1978 copyright law, if it’s not a “work for hire,” then the author has the ability to get rights reverted.

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Q: The RIAA has been criticized for hiring Mitch Glazer, a Washington insider who helped push this amendment through.

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A: Mitch Glazer has been the chief counsel for the copyright subcommittee for the past five years. He’s been involved in every issue that has effected the industry. He’s helped artists, record companies and computer software companies alike. I didn’t have a job opening when all this was happening. My head of government relations didn’t even tell me she was leaving until after Christmas.

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Q: So the idea that you had somebody slip this amendment in under the back door in the dead of the night so that the record industry could retain control over the masters in year 2013, when there is a possibility that a legal loophole will allow artists to establish ownership of recordings they created--that’s completely untrue?

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A: I will say that contrary to reports, RIAA has never sought this change before. The amendment was entirely the result of the cyber-squatting bill. I understand that people are suspicious but there is nothing I can do about it. We’re just doing the best we can here. But I think that this issue is being used because of some long-standing frustration about contractual relationships between artists and record companies, which I understand.

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Q: You started out as a Washington lobbyist representing songwriters before being hired by the RIAA. How does it feel being criticized as an anti-tech enforcement agent who is trying to screw artists out of their own master recordings?

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A: Phrased like that, it sounds pretty bad. I’m very proud of our work on the Internet. I think what we do is very supportive of the creative community. It’s frustrating to have worked with artists for as long as I have and to have as many artists friends as I do and to be so, so, so . . . well, to have the facts about these issues so inaccurately reported so frequently in the media.