Songwriters: Meet MP3

The traditional power of the record labels resides in their seemingly unlimited supply of money in combination with their singular access to major distribution channels and radio programming. The major labels provide dollars to fund recordings, advertise and market the music, and allow the artist to tour. The major labels grease the wheels of radio and make the music popular.The traditional power of the record labels resides in their seemingly unlimited supply of money in combination with their singular access to major distribution channels and radio programming. The major labels provide dollars to fund recordings, advertise and market the music, and allow the artist to tour. The major labels grease the wheels of radio and make the music popular. They get the music heard. They deliver the music to the listener. Because these record labels possess this power, they have historically attracted the best and brightest of creative talents. Whether they be producers, musicians, songwriters or artists, their ultimate hope and lofty dream is to obtain the elusive deal with the major label.

Under this traditional paradigm, there was simply no other way to get your music distributed to the masses except through the major labels, which distribute 85% of the music CDs sold in the United States. Their lock on the distribution chain was so strong, in fact, that the Federal Trade Commission recently forced the five major distribution companies to enter into a consent agreement barring the companies from using “minimum pricing programs,” which required retailers to sell their products above a certain set level.

The MP3 and the internet offer an attractive alternative to the major label’s monopoly in this area. As the MP3 format and similar technology continue to emerge and flourish, the power that the recording industry possesses will diminish or, at the very least, shift dramatically. Other avenues will become available. When a talented songwriter and/or musician can distribute music to millions of people via the Internet, what purpose will be served by giving up royalties to affiliate with a major label by signing agreements which include reduced statutory rates and controlled composition clauses?

A growing number of independent labels, songwriters and artists across the globe are quickly discovering that all of the traditional hallmarks of power for the recording industry – marketing, distribution, and public performance – are easily reproduced and obtained on the internet at little or no cost. Therefore, anyone with a personal computer theoretically can become a viable player in music distribution. The only remaining obstacle is exposure, (i.e. radio airplay), and that obstacle can be effectively eliminated with word of mouth and banner advertising over the internet, as well as traditional means of advertising such as television, radio and print advertising.

A recent New York Times article reported the story of a computer programmer in California who uploaded his entire collection of 78-rpm jazz recordings from the 1900s onto his web site. Within a few short months, he had over four thousand visitors – all from his home with absolutely no advertising. Combine this knowledge of the internet’s colossal marketing power with recent trends among the major labels to focus on profits by cutting back their roster of artists, drawing from a select pool of creative talent, and promoting only the top level artists, and you create a volatile atmosphere that threatens to erode the very foundation of the recording industry. The bottom line is that the nexus of power may begin to shift away from the major labels into the hands of the people. As Bob Dylan once crooned, “the times, they are a’ changin’.”

In its initial encounter with this new technology, the recording industry, ala RIAA, overreacted and tried to suppress the value of MP3 by preventing the distribution of RIO players. The industry lost that round. More recent lawsuits against such internet behemoths as MP3.com and Napster.com are having greater success, however. MP3.com recently settled with distributors BMG and WEA to the cool tune of 20 million dollars each, along with royalties for submissions (reproduction royalties) and transmissions (performance royalties).

Thus, at least some of the giants in the recording industry have chosen to modify their strategy and co-develop innovative means and methods of exploiting technological benefits while protecting the value of the music as intellectual property. That’s good news for artists and songwriters alike.

What is clear to everyone is that it is time for a paradigm shift, i.e. a major refocusing of values, belief structures, and the industry perception of its role. Currently, the Big Five record distributors – WEA, Sony, UMG, BMG, and EMI – spend 80% of their resources on manufacturing and housing physical objects and moving them from one place to another. In the future, however, intellectual property will no longer be physically constrained to CDs, books, and video tapes, but delivered in electronic format.

The record industry has begun its journey down a road that quickly merges with the technology of the information superhighway. If it continues to embrace the coming virtual world where the value of intellectual property does not reside in the tangible medium on which it is conveyed, but rather in the demand for it as a thing of value in and of itself, the recording industry will steadily move closer to effectuating the shift in paradigm necessary to carry it into the 21^st century. To survive, the recording industry must develop new strongholds of power to attract the talent. Soon, the Goliath may not be strong enough to withstand the stones of David.

It all begins with a song

The value, and the power, of the product is in the song itself (something Nashville has had to relearn over and over again), not the physical medium which delivers the song to the customers. Good music will always be valuable. The medium on which it is distributed, on the other hand, has always been a mere novelty – a secondary element. Recall the demise of such great devices as the vinyl record, the reel-to-reel, and the eight-track tape. Remember Betamax? The industry knows this all too well – when CDs began saturating the market, every record with any modicum of success in the previous few decades was repackage and resold. The Eagles’ songs sounded better on CD than they did on vinyl.

Developing and cultivating a broader variety of artists who create good music is something the major labels can still offer the consumer that cannot necessarily be obtained for free over the internet. Let the consumers tell the industry what they like to hear rather than being so committed to the opinions of a select group of radio programmers. The value is in the music. Develop good music and the world will always listen. In essence, to survive the paradigm shift, the industry should return to the basics.

How Songwriters’ Compositions can be legally protected in the New Millennium

The head of the Electronic Frontier foundation recently bombasted the music industry’s approach to the problem of obtaining payment for musical compositions distributed over the internet, stating that the restrictive SDMI guidelines will, in fact, encourage people to attempt to steal the music. She summarized, “There’s nothing like an oppression to set up a good rebellion.” Most technology gurus agree that when and if SDMI watermarks are circulated, ingenious hackers will eventually discover ways to dilute those marks. In fact, a 23-year-old Irish programmer named Ian Clarke recently developed a program that makes it possible to acquire and exchange information of the internet anonymously, impeding any attempts to discover infringers. The music industry may soon find itself in a game of technological leapfrog, similar to the anti-virus software industry, in which new watermarks are perpetually released to counteract the latest hacks.

Sony recently began offering its music product over the internet in a format known as ATRAC3, which unfortunately can be played on the user’s computer or on Sony’s own proprietary devices. Can we say “BETAMAX” again, Sony? The industry simply must investigate other means of protecting creative industry.

As a humble proposal, and to draw an analogy from another computer software program, maybe the recording industry, perhaps through its SDMI consortium, should develop a three-pronged encryption scheme similar to that incorporated in PGP (Pretty Good Privacy), a software program used to encrypt text files sent over the internet to any digital player or device. The PGP system involves two keys, one private and one public, and a password. The private key is used only by the individual to encrypt his or her text document. The public key is distributed to any party to whom that individual intends to send a document. Finally, the document is encrypted using a password. All three elements are required to unlock the PGP encrypted file.

Using a system similar to this, the music industry could encode their playing devices with a private key, unique to each player and software package. The second part of the unlock, the public key, could be encrypted in the digital music as it is downloaded. The final piece of the puzzle, the password, would be given to the end user upon receipt of payment, and used to track illegal distribution of the product. Once the user purchases his or her copy of the musical composition and enters the provided password, the music could be played an infinite number of times on the device for which it was purchased (similar to requiring a user to purchase a CD to replace his vinyl records), and perhaps copied a limited number of times to accommodate different devices owned by the purchaser.

Existing copyright laws, though perhaps not perfect, are still applicable to the creation, distribution and performance of digital files, despite the new ease of duplication inherent in MP3 technology. Many believe, however, that existing laws are inadequate when applied to new technologies, and that the U.S. will have a difficult time enforcing its existing copyright law in the brave new world of anonymous, global access. Revision and continued enforcement of these laws as they apply to MP3 and future music formats is, nonetheless, a critical task that must be diligently studied and pursued. It is critical to encourage and work with both state and federal legislators to develop more comprehensive laws that specifically address these new frontiers of copyright protection. To quote one of my favorite bands from the 80s, REO Speedwagon, we must “roll with the changes.”