The Future of Music Coalition is a not-for-profit think tank that advocates for new business models, technologies or policies that will advance the cause of artists. We firmly believe that the music industry as it exists today is, at a very basic level, anti-artist, and that any serious examination of a digital future must first take into account the imbalanced structures in place in our analog present.
Todays panel is focused on piracy. It is a question for serious consideration and discussion. Without a doubt musicians should have serious concerns if the music/technology future realizes its most discouraging and very real possibilities. The future could be a landscape where the creation and transfer of music is removed entirely from the legal and cultural responsibility of society to compensate artists for their innovation and creation. That said, to look at file trading or the question of piracy in a vacuum without acknowledging the failures of the existing music business structure is to ensure the replication of that same system of terminal imbalance. We need to reverse the systematic diminishment of the music industrys responsibility to compensate artists for their innovation and creation as much as we need to fight piracy.
I am very honored to be asked to contribute today. As a musician Im glad to be included in a discussion at the level that is often reserved for artist representatives. As the executive director of a think tank representing a broad diversity of interests I understand the value of public discussion. Inevitably the lasting solutions to the challenges in this space will come only from honest public discussion between musician, label owner, citizen, and technologist. Many of these solutions will be driven by the invisible hand of the market. Some may be set in place by the broader reach of legislative concern. Still there is no question in our minds that many solutions to todays financial threats and structural inequities will very likely come to us in the form of technological innovation. It is our greatest hope, therefore, that todays discussions will not lead only in the narrow direction of a punitive and restrictive policy whose surface appeal to protect musicians merely masks much less altruistic and ulterior motives. In these motives we recognize policies that will do more to allow the established players to maintain control over existing structures of contract, distribution and promotion than to do anything that would place more control back into the hands of musicians.
Yes, it is vitally important to understand and explore how technology-enabled piracy can negatively impact the legitimate music marketplace. Its also vitally important to enact policies that will guard the value of artistic labor. But it is also vitally important to not allow piracy to become a code word for not allowing artists and consumers the ability to create a legitimate marketplace that takes advantage of technological advances to offer more equitable products and services that consumers and musicians may ultimately demand. The VCR looked awfully frightening to a movie industry that only understood how to charge at the box office. Those who brought forth the Blockbuster culture were courageous enough to imagine a way to extend the value of those creative works well beyond the box office totals. Had we left that choice to industry an industry that was quite legitimately frightened by a technology that it had yet to learn to control we might not have reaped the benefits of these valuable new revenue streams and that is the cautionary tale to remember today.
A Look at the Music Landscape
For too long musicians have had too little voice in the manufacture, distribution and promotion of their music on a national and international level and too little means to extract fair support and compensation for their work. For that reason, much of the work that Future of Music has done in the past two years has been focused on documenting these structures of imbalance and inequity that impede the development of an American musicians middle class. This includes original research: a critique of standard major label contract clauses, a study of musicians and health insurance and a comprehensive study of the radio bandwidth in the aftermath of the drastic consolidation that followed the 1996 Telecommunications Act. I wont go into details on these studies today but they can be found on our website, www.futureofmusic.org and they are linked here at the bottom of our statement.
Two parallel oligopolies dominate the commercial aspect of music today the major labels that control an overwhelming percentage of copyrights and album sales and the broadcasters that remain the most effective way of promoting new music to potential fans. Both of these industries are driven by publicly traded conglomerates with a laser-eyed focus on the need to maximize shareholder value. Major labels hope to take advantage of the economies of scale that come with huge, multi-platinum hits. It costs so much to promote and distribute albums through this system that the RIAA claims that roughly 90% or more of their releases lose money. It is commonly estimated that it takes sales of 750,000 copies of a particular release for the record company to break even on their investment. A major cause of the problem and an outgrowth of consolidation of commercial radio, is the extraction of huge independent radio promotion costs that are a prerequisite to getting a song commercial national airplay. In the 1950s, this practice was called payola.
Contrast this with the reality of the majority of working artists. In 1999, 99% of all albums released sold less than 10,000 copies. For an overwhelming majority of artists, the idea of getting a song on commercial radio is a pipe dream. According to a National Endowment for the Arts, their study, based on census data, musicians typically work between two and three jobs to meet their household expenses. According to a recent Future of Music Coalition study of 2400 working musicians conducted last spring. Musicians are three times less likely than the average citizen to carry health insurance. And over 70% of the musicians surveyed indicated that poverty was the most important factor in not carrying coverage.
This is not the face of all musicians. Some have been lucky to find good business relationships and good council like many of the artists that Londell represents. Just the same, I’m sure we’ve both have first-had experience watching that "impulse to create at any cost" that is the core of the artistic disposition I bet he would agree with me when I say that for many musicians, their dream is not to be a superstar. If they were offered the modest rewards that would allow them to meet a mortgage payment, to have health insurance and be on the radio in their hometown theyd take it in a heartbeat. But sadly due to the increasingly consolidated marketplace those three goals might as well be pipe dreams for 99% of working musicians.
It is with this in mind that we say today that its not possible to discount the value of new technologies, like peer-to-peer file trading systems. Artists in desperate need of ways to promote their music. It is also not wise to simplify what is a complicated debate involving developing technologies, an emerging market for broadband technologies, new business structures and the potential need for changes in existing copyright law to black and white choices. These are not black and white choices. The choice for artists is not whether they are pro- or anti- technology. The challenge, rather, is to facilitate the development of a legitimate marketplace where the new opportunities made possible by emerging technologies result in artists gaining additional abilities to control and be compensated for their work. Until this legitimate and open marketplace is created, an underground market will unquestionably continue to flourish. And, certainly, it would be unwise for artists to sit back and allow the same structures that have been so damaging to artists in an analog world to be replicated in a digital one.
The Future of Music Coalition nonetheless remains committed to working with industry, the policy community, public interest and consumer groups and other artist organizations in an attempt to find creative solutions to some of the daunting challenges we all face in this space. Thank you again for the opportunity to participate in this panel.