Hello. Looks like the dog days of summer have been digging up some interesting bones.
On August 21, 2001, the FMC filed a document with the US Copyright
Office to answer the request for public comment on the Copyright Arbitration
Royalty Panels (CARP) proceedings. In the document, FMC General Counsel
Walter McDonough makes a compelling argument that Sound Exchange,
the entity created by the RIAA to collect digital performance royalties,
is fundamentally flawed and that its operations must be reformed before
it is allowed to participate in the collection and distribution of
royalties for all artists.
The FMC made three recommendations:
Specifically, the FMC suggested that:
If you would like to read the proposal, there is a PDF of the document
While summer is typically a slow time in Washington, DC, we find
it to be a great opportunity to make the rounds in an effort to educate
staff members on core issues we are focusing on. We are encouraged
to see the level of interest and concern shared by staff on Capitol
Hill and related agencies - these are people who truly love music
and are eager to help create solutions that benefit artists.
A. Music Online Competition Act (MOCA) Introduced Last month,
Representatives Rick Boucher and Chris Cannon introduced the Music
Online Competition Act (MOCA), a bill strongly backed by the webcasting
industry in an effort to boost those firms’ ability to compete.
While it is difficult to see this bill becoming law in its current
form, given opposition from the RIAA, there are a number of important
ways that simply the introduction of a bill can shape the debate around
a specific set of issues. In particular, the FMC is interested in
two provisions that are critical to a thriving independent music industry:
i) Provision of Statutory License Payments to Artists This
language is from Boucher’s staff: “The sound recording statutory performance
license provision specifies that royalty payments should be shared
equally by performing artists and recording companies. Current law
funnels these payments to artists through the recording companies.
Our bill requires these payments instead to be made directly to the
artists or to a collective organization representing the artists.”
This indicates the bill’s support of payment of the digital royalty
directly to the artist, rather than having royalty monies flowing
through the artist’s record company. The major labels have been staking
a claim to this webcasting royalty, arguing that these royalties could
or should be applied to artist debt. The FMC takes the position that
webcasting royalties are analogous to broadcast royalties — royalties
based on radio airplay in the terrestrial world. Ever since the creation
of the performance rights organizations in the early 20th century,
broadcast royalties have been paid directly to the artists, and we
believe that this method should continue for music broadcast on the
internet. We applaud Reps. Boucher and Cannon for standing up to the
RIAA and including the direct payment of the 45 percent royalty to
artists as a component of their legislation.
ii). Assurance of Nondiscriminatory Licensing to Affiliated and
Non-Affiliated Entities: This language is from Boucher’s staff:”Recording
companies recently have entered into the online music distribution
business by establishing joint ventures with other record companies
(e.g., MusicNet and Pressplay) and by acquiring well-known, formerly
independent Internet services (such as CDNow, EMusic and MP3.com).
It is anticipated that the distribution services owned by record companies
will cross license each other, so that each site will be authorized
to distribute over the Internet approximately 80 percent of all recorded
music. If the major record companies do not also license independent
unaffiliated distribution services, this could create a competitive
imbalance that could threaten the establishment and survival of independent
online music services. Such an imbalance mirrors the concern in 1995
with respect to cable and satellite subscription services, which Congress
addressed by requiring vertically-integrated companies that both owned
content and distribution services to offer nondiscriminatory license
terms and conditions to all similarly-situated noninteractive performance
services. The bill extends this existing nondiscrimination provision
interactive performance services and digital distribution services.”
In essence, this provision attempts to ensure that new competitors
are able to receive non-discriminatory license terms and conditions.
The major labels won’t be able to simply block competition from companies
who are not affiliated with the majors by skewing the licensing agreements.
In other words, if Sony cuts a deal with Universal, Sony would then
have to offer the same terms to another company. While this concept
needs a lot of thought and examination, it might lead to entrants
having a shot at competing against MusicNet and Pressplay.
As this very long process moves forward there will be many opportunities
to debate both the specific goals of this legislation and examine
whether the legislation as drafted will lead to the intended consequences.
To that end, we welcome discussion, critiques or recommendations regarding
the concepts addressed in this bill.
B. Low Power Radio Gains Strength In addition, Low Power Radio
is becoming a reality. The FCC received over 3,400 applications for
these licenses, and it looks like we may see as many as 1,000 new
non-commercial stations get on the air over the next year and a half.
While the broadcasters were successful in barring the initiative from
urban areas, the success of the rural stations will form the foundation
for opening up the service to the cities, ideally in the next several
years. The Future of Music Coalition is committed to doing anything
we can to ensure these new stations have the visibility and support
they need to prosper. The length of the process is surely frustrating,
but that’s the old cliche about Washington - there are no permanent
victories or defeats. Take what you can get and keep pushing…
It’s been a long time coming but hopefully you all will find it was
worth the wait. After much aesthetic and structural struggling we
now have a beautiful and, we hope, useful new version of the website.
We’ve cleaned up the design and added some pretty significant sections
to help users to inform themselves and share information among one
another. There will also be a way for you to register for our second
annual Policy Conference, January 7-8, 2002!
In order to flex our mental muscles and focus on the bigger pictures
in an environment of seemingly endless details, the board members
of the FMC are engaging in a reading course this summer and fall dealing
with activism, music, technology and copyright. We are about to embark
upon a discussion of our second book, The Future of Money by
Bernard Lietaer. Curious folks are heartily encouraged to read along
and join the online discussion. Email Kristin at Kristin [at] futureofmusic [dot] org
for more info!
The free flow of information over the web makes it difficult to keep
unfair business practices private. As imbalanced standard industry
practices become common knowledge to people outside the music industry,
those people can’t help but begin to see these businesses and institutions
as hostile to musicians, greedy and morally corrupt. Recent articles
that make a good case that the music business is broken are:
Recording Industry’s Top Lobbyist Seeks Harmony in a Time of Discord
by Laura Holson
New York Times, August 20, 2001
Lawmakers Take Aim at Music Industry Contracts Recording: Officials
prepare to examine what artists call the ‘unconscionable’ agreements
of the Big Five conglomerates by Chuck Philips
LA Times, August 8, 2001
Suit: Clear Channel is an illegal monopoly by Eric Boehlert
A tiny Denver promoter is taking the most powerful force in the music
industry to court.
Salon, August 8, 2001
More Waves in the Radio Business by Eric Boehlert
Salon, August 6, 2001
Payola City by Eric Boehlert
Salon, July 24, 2001
What’s Wrong with the Music Biz? by Eric Boehlert
Salon, July 19, 2001
We’re putting it all together and taking it on the road. Between
Oct 8 and Nov 16 Jenny and Kristin and other FMC board members will
be touring the country with a full band to give Jenny a chance to
promote her new double CD, Antidote. While they are on the road they
will also be stopping in at more than a dozen universities to speak
about issues impacting citizens and creators concerning music and technology.
Issues of discussion with include:
When we relaunch the website on September 1, we will have a full
list of University and Rock club tour dates. If you would like to
help volunteer to promote the shows, let us know!
Just returned from ten days of recording in Tucson but hit the ground
running upon return working with Kristin to solidify details for her
fall tour and to begin to organize the Future of Music Policy Conference
next January. Earlier in the month she spoke at the Jupiter Plug In
Conference, The Center for Arts and Culture Policy and at The Net
Media Conference in London.
Besides working on the Policy Conference planning, Michael has been
analyzing the various pieces of legislation introduced on Capitol
Hill in the past two months, including the Boucher/Cannon bill and
the Department of Justice’s recent announcement about anti-trust investigations
surrounding Musicnet and Pressplay. He is also keeping tabs on California
State Senate’s investigation of the so-called “Seven-Year Statute.”
Don Henley and Courtney Love are expected to testify at the hearing,
which will be held by the newly formed Select Committee on the Entertainment Industry.
Brian’s been working to rustle up panelists worthy of the Policy
Summit’s name. He’s been addressing how the CARP proceedings regarding
a digital performance royalty have been slanted in a way where the
artists’ and smaller media’s best interests are not being sufficiently
represented. He’s also working to stimulate some thinking into the
issue of how non-quantifiable exchanges and alternative currencies
might benefit musicians. He’s trying to figure out how many of the
college fall tour dates he’ll be able to attend (after having just
taken a bit of travel time, visiting hot springs through Idaho and
Mountains in Montana).
Walter McDonough is following up on the recent FMC comments to the
Copyright Office regarding the RIAA’s Sound Exchange proposal. The
FMC is also examining the Bush Administration’s efforts to compensate
European music publishers and songwriters, but those in the United
Stats, for nonpayment of performance royalties. The FMC is continuing
its discussions with colleges and universities throughout North America
for common music business research efforts. Finally, we welcome any
submissions from published authors for the upcoming 2002 FMC CLE book.
walter [at] futureofmusic [dot] org.
Kristin has been working on the logistics for the Fall Speaking Tour,
advance planning for the Policy Conference, doing research into the
impacts of radio consolidation, and reorganizing the website. In mid
August she traveled to Indianapolis to speak on a panel at the Midwest
Peter DiCola is continuing his research on compulsory licenses for
recorded music, and their possible effects on musicians and consumers.
He has focused on three areas to investigate this question: a study
of the contractual relationship between musicians and recording labels,
a consideration of lessons from the economic literature on patent
law, and an application of certain legal research on property law
to intellectual property law. His research is funded by a grant from
the John M. Olin Center for Law and Economics at the University of Michigan.
If you have any feedback, questions, or suggestions please send an
email to suggestions [at] futureofmusic [dot] org,
and let us know how we’re doing.
Thanks for your support and see you next time.
xo Jenny Toomey
Executive Director, Future of Music Coalition
jenny [at] futureofmusic [dot] org