On behalf of the Future of Music Coalition I want to express our appreciation for this workshop and the overall process that the Commission has undertaken.  We believe strongly that the public needs to be engaged in the complicated policy debates that the FCC is taking on, from reforming radio to developing a national broadband plan, and we appreciate your efforts and being invited to participate in today’s workshop.

In many ways, the questions that you raise to frame today’s discussion mirror the questions FMC has been asking since our formation nearly a decade ago. We launched FMC in the year 2000 because we recognized that the introduction of digital technology to the music marketplace was — by the very nature of these technologies — going to fundamentally disrupt the way music is produced, marketed and distributed. We felt it was critical for musicians and their advocates to be fully educated about and engaged in the debates that would determine the future of the music community.

Clearly, the digital transition has presented historic opportunities for musicians. We’ve worked with dozens of artists over the years who speak passionately about the previously unthinkable options made available to them because of broadband, ranging from communicating with their fans, to organizing their tours, to the possibility of global distribution with the click of a mouse.  

However, significant challenges also exist. Some recording artists and songwriters express concerns about how to replace the income they once received from sale of physical products. Some express anger and outrage about the high level of unauthorized file trading, while others feel that unauthorized trading builds their visibility and lead to increased ticket and merchandise sales. In the midst of such robust debates about the best strategies for growing this nascent digital music marketplace, it has been particularly important to ensure that artists themselves are directly engaged in the discussions that will determine the future structures of the music economy.

The first file-trading sites were launched when FMC was only a few months old. At that time, we had a simple mantra: the only antidote to an illegal Napster was a legal Napster.  

What we mean by that is that the focus for artists and the music community needs to be an evolution toward a legitimate digital music marketplace that compensates artists for their work. Indeed, we have supported and will continue to support policies, technologies and business models that will accelerate innovation and the introduction of creative, forward thinking applications into the marketplace that will generate income for musicians and the broader music community.

We will continue to express concern about the role that Federal action — or, in some cases, inaction — can play to facilitate this legitimate digital marketplace.  As just one example, the disastrous impact of the 1996 Telecommunications Act on localism, competition and diversity in the commercial radio marketplace serves as a reminder of the significant impact policy has on musicians’ livelihoods.

We recognize that this evolution involves many more issues than just music licensing and pricing.  Infrastructure buildout, monopoly or duopoly pricing in the broadband marketplace, innovation in consumer electronics and music delivery applications, allocation of spectrum, digital inclusion strategies, and the shifting nature of the music industry itself are all factors in play. Even issues that seem tangential to today’s workshop, such as comprehensive policy reform in the terrestrial radio industry, are important in the music ecosystem.
  
So these issues are complex, in part because they present a number of if/then scenarios that are challenging to game out.  They are also difficult because of the sheer size and scope of the music community — hundreds of thousands of songwriters, musicians and entrepreneurs are attempting to manage this transition in real time. There are real concerns and vibrant debates about issues like contract and copyright reform, how to address unauthorized distribution of music, and the emerging new structures of the digital music landscape.  And as the music economy shifts, some jobs are threatened while new jobs are created. There are, quite simply, no easy answers.

With that in mind, we would like to present four key ideas to workshop participants:

1. There is a significant public interest in ensuring that economic structures develop that allow for creators to be compensated.  A healthy, vibrant music community is vital to our economy and culture. As the music economy continues to evolve, some traditional jobs are threatened, while new vocational possibilities emerge.

 

2. Ongoing collaboration and innovation is the key to the development of a legitimate digital music marketplace that compensates creators.  We live in an era where, as our friend Jim Griffin likes to say, purchasing music is optional.  We are not aware of a workable scheme that prioritizes government-mandated technology workarounds like content filtering by network operators or industry overseers.  We firmly believe the focus should be on development of innovative solutions that encourage consumers to participate in legal, licensed music delivery platforms. Equally important to the long-term sustainability of new models for music acquisition is ensuring that these technologies are available to more Americans. Only then can we benefit from the economics of scale that could become the bedrock of tomorrow’s music industry.

 

3. We are just beginning to see how this new legitimate digital music marketplace will take shape.  Over the past few years we’ve seen a vast array of new products and services that provide a variety of music experience for consumers.  These range from subscription services like Rhapsody and eMusic, digital download stores like iTunes and Amazon, radio stations delivered via satellite and the web, and emerging streaming services like Spotify.   In a short few years, we’ve been introduced to products and brands like iPod, iPhone, Zune, Ibeza, Sonos, MySpace, Twitter, Guitar Hero and Rock Band.   The way that music is accessed and consumed has been - and will continue to be - completely transformed. And, in a market where well over 80 percent of music released domestically comes from independent record labels, we’ve see a matching burst of ingenuity as bands and labels use these new tools to leverage their copyrights and brands across multiple platforms and reach new fans.

 

4. This transformation is nowhere near complete.  No one is sure about the “future of music”, but one thing is for sure: we firmly believe that universal access to a competitive broadband market — combined with strong enforcement of transparent net neutrality principles — is a critical step in the evolution of this legitimate digital music marketplace.  If and when we reach the goal of universal access to a competitive and open Internet marketplace, we anticipate that more consumers with disposable income will be able to access a robust range of licensed, legitimate means of listening to and purchasing music.  And that, in turn, will generate more revenue for artists and the music community as a whole.

 

In closing, I want to reiterate our appreciation for being invited to participate today. And, in particular, I want to express my appreciation to Alex Shapiro for making the long trip in from Washington State to speak with you today. Alex in many ways is a model for today’s music community — hustling to make technology work for her, fully engaged in the discussions about the structures of the new music ecosystem, and eager to participate in these critical discussions.  We appreciate her taking the time to travel to DC, and we appreciate you holding today’s workshop.