Tuesday, September 18, 2007

Let's Get Physical: the state of retail in the digital age

Despite all the focus on digital distribution, physical CDs and LPs are still the dominant form of music sales. But that doesn't mean that the retail sector isn't experiencing tremendous change of its own. Join us for a panel that covers topics such as wholesale price points, to the impact of "digital only" releases on the terrestrial retail sector, to new bundling packages like CD with coupon for digital download, to the deals that are cutting traditional music stores out of the equation altogether. What does the music store of the future look like?

Mike Dreese
Co-Founder and CEO, Newbury Comics Inc.
Josh Madell
Co-owner, Other Music
Franz Nicolay
Musician, The Hold Steady, Anti-Social Music
Sean O'Connell
President, Music Allies, Inc
Tim Quirk
Vice President of Music Programming, Rhapsody
Michael Selverne
Managing Partner, Selverne Mandelbaum & Mintz, LLP

10:07AM EST
- TQ: What does the music store of the future look like?

JM: It's not going to look that much different. We focus on music that we love, and supporting bands that we love. Our music is based on our taste. We focus on mail-order, and hopefully our new downloads store will continue to improve, but for us its just about finding get new music and getting it into as many hands as possible. We have a strong brand name and people come to us because of our selection. We are selling less CDs for sure than we did five years ago, but we still have excited music fans coming in every day.

SO: I think the music store of 2020 will really be a curator, a trusted brand and a forward-thinker. If you're not on the web, you need to start being honest with yourself as a retailer about the future of the physical medium.

MD: I don't think there will be a music store in 2020. I think we have five to seven years left for the CD. Maybe niche music specialty stores will be around, selling collectibles, but the music store won't exist. Realistically, four to five years from now you'll see the end of the record store as we know it, besides a hundred or so examples of people clinging on. That model is running out of gas pretty quick.

10:17AM EST - TQ: As a musician, does this matter to you? Do sales even matter to your band?

FN: We've never expected to see money from retail sales, besides sitting at the merch table and getting hard cash in hand. It's nice to do in-stores and have another way to access your fans, but the royalty checks are pretty limited in the grand scheme of things.

TQ: In recognition of this fact, you all are getting online in various ways. Can you talk about this?

JM: We've been online for almost seven years with our mail-order service, because we have a lot of music that's hard to find. We just launched our download store, which is built around our weekly new releases email list. We write short record reviews and have about 25,000 people on the list. We have an independent mp3 download store, which is very curated, catering to the real music collector.

MD: We're acquiring a lot of legacy work and building a lot of exclusive collectibles, as far as movie merchandising and comics. We've got a pint glass series of notable artists, Marilyn Manson, Elvis Presley. Building merch is a very strong aspiration. We're in a good position for first arrival of such products, as we are helping creators decide what to make.

FN: As a band, a very small business, we can't handle merchandising ourselves. Though it might be profitable, we let our label, or services like MerchDirect.

10:26AM EST - TQ: Let's talk about other entities like Starbucks getting into music.

SO: I don't think that Starbucks is competitive at all. There are so few titles.

MD: It's certainly true that that which doesn't kill you makes you stronger. The best thing that happened to Newbury was when Tower Records came to Back Bay, MA. Starbucks really knows their customers. We're going to learn a lot from them, and their branding.

FN: I don't have a preference for my CDs being sold in a coffee shop or a record store.

TQ: What do exclusives mean for you?

JM: Exclusives are huge, especially with the glut of material out there these days. Customers are more knowledgeable about music than ever. Even just one bonus track, in the download world there is a lot of competition for those. If you can have a release a week or two early, or a couple exclusive live tracks, customers are really aware of that. If you have those, it can really drive business. We had the new Beirut record a month before it came out, because the label realized that people were going to get it for free if it wasn't readily available.

SO: We've had artists cut a couple of live songs just to stop the bleeding, to provide that exclusive material and ensure an album sale. We don't traditionally do retail marketing, but its become much bigger with these smaller labels.

MD: If we can get exclusives, we like them. But I think a lot of these are a classic record label bait-and-switch, repackaging the same product and selling it twice. The industry is reaping the harvest of exactly what it sowed when it started giving marketing rebates to big box music stores. The pricing environment that Wal-Mart and Target have created significantly diminishes the retailer's ability to set price.

10:38AM EST - FN: Exclusives are a troublesome topic from a musician's point of view. We're not a factory pushing out widgets. The label asks for two covers and six acoustic version so we can have an eMusic exclusive, and an iTunes exclusive, and something for Australia, and it upsets people because they have to keep buying the record. It's trying to make up for declining sales by scavenging the true fans, and it leads to a mindset on our part of: "how important are these songs?"

MD: Artists can't really control their image or their sound the way they used to.

SO: A huge part of an artist's profit now has to be catering to their unique fans, the people who want the bootlegs, the people who are visiting your site. A lot of the value of the music itself is filtering away.

10:48AM EST - MD: Songs are worth a lot, not perhaps through a typical record deal, but you've got to find another way to monetize the songs. My friend just got a song on Guitar Hero, and that's the biggest check he gets.

JM: There's a big opportunity today for smaller bands. The real small indie bands that were never able to make any money...they have an opportunity today.

11:00AM EST - Questions from the audience

Q: What do you think about labels packaging music with extra content like Rringles and web content?
FN: I think it's fighting a lost battle.

MD: These are without a doubt going to fail the first time around, but they're beginning to learn what it means to create account status out of a fan.

Music Meets Media: Social Networking & Blogging

Social networking websites abound, but how do you use them to market your music? What are some new ways to use blogs more creatively? How do you make sure the time you spend is a money-maker and not a time-waster?

Corey Denis Vice President, reapandsow
Rachel Masters Director of Strategic Relationships, Ning
Charlie McEnerney Host + Producer, Well-Rounded Radio
Lou Plaia Co-Founder / VP Artist Development, ReverbNation.com
Brian Zisk Technologies Director and Founding Board Member, Future of Music Coaltion

09:25 AM EST - BZ: How do you decide where it's worthwhile to spend your energy?

RM: I think it depends on what kind of artist you are. There are two thoughts being debated. For example, if you are an artist, should you keep your videos exclusive to a few sites or open to all sites? If you're just starting, you need to be everywhere. You also need a home base for all your fans, where other fans can meet. This is also a way they can feel close to the artist.

LP: You have to be everywhere. Our company helps you syndicate it all to one site. You can also track where your fans are by gender and age group. You need that data in order to promote yourself.

CM: There are so many choices now. You have to think about what the end goal is. Whatever it might be, there are so many choices, artists tend to lose focus on what you are trying to sell.

09:35 AM EST - BZ: Any suggestions on how artists can stand out?

RM: You need to create a great experience for your fans. For example, a tour diary, or blogs of the artist, showcasing themselves on an artist to fan level. They need to be careful making and using a brand for the artist. Your logo should be your watermark online.

LP: Make good music. So many artists are just putting up what they just made. If users listen to your "garbage", they're not going to come back.

CD: I want to bring blogging into this now. What the RSS feed and blogs do, is they can eventually get rid of email lists. With an RSS feed, the fan is making the choice to read whereas in an email list, you're hoping they will read it. In the beginning, keep your email lists, but slowly start to make the transition; with RSS, the greatest thing is they provide information on fans and it's mobile.

09:42 AM EST - BZ: How do you decide what is going to be worthwhile before you do it?

RM: You have to look at it as a venture capitalist. Who is behind the website, and how are people utilizing it? If their management team is looking to give you great promotion, go for it. If it bombs, in the end, no one will know about it.

CD: Be an early adopter, especially if you want to be a promoter or publicist. You can't do your job unless you know how to use the outlets.

CM: I think you have to measure it a little bit, and think about your end goals because of the vast amount of choices.

LP: Also, really evaluate what the site is going to give you. They are making tons of money with advertisement, in the end, what are they giving you?

09:52 AM EST - BZ: Once you have used some social networking sites, some of them aren't as effective anymore. Once you try something, are you committed to it forever?

LP: There are companies out there so you don't have to keep updating them. There are groups that will syndicate information for you. There are still some things artists will have to keep up with such as myspace friend requests.

RM: Just like in the past as you would have a team to write fan mail for you, it's a good idea to have a team for online services eventually.

10:00 AM EST - BZ: how important is it for folks to create their own shows?

CM: Although social networking sites are a good idea, it's just another idea of email. I don't think it's about creating new platforms but more of finding others out there who are doing what you are doing. I've been working with people who are happy to have cross promotion.

BZ: How important is it to promote things your fans will also like?

RM: I think it's important to cross promote, because it also shows what you like and who you are.

CD: Its more effective to link information. If you join a group in Facebook, they keep track of what groups are linked and which the popular groups are. Really pay attention to the groups that are a part of each other.

10:07 AM EST - BZ: Does anyone want to explain tagging?

RM: It is very important. It is taking keywords so people can find your content. It's used in search engines. It allows your content to be easily be found.

CD: One way you can use a tag is to make a contest online. Lets say you do a contest and you want the fans to feel exclusive to the artist. You give them a password, you have given them an exclusive code even though it's on the web. You can make your own tag and do a search online and find out more about the fans. Remember when you tag anything , it's up there forever. Also make sure you use the word music in your tag or else you will miss a lot of posts.

Music Meets Media: Podcasting

In the age of the ipod, podcasts have replaced radio for many listeners. In this session we'll discuss how to reach the growing legions who are bypassing the airwaves. How can you increase your visibility using your podcast? How do you use the medium creatively to connect with your fans?

Jennifer Buzzell VP for Marketing and Communications, Strathmore
Corey Denis Vice President, reapandsow
Chris MacDonald Founder/President, Indiefeed Networks
Steve Savoca International Director, Digital, Domino Recording Co.

panelists from left to right: CM (moderator), CD, JB, SS

11:08 AM EST - CM: Differences for uses for full songs vs. snippets in podcasts. You are giving up your right to a small portion of your music for an opportunity to share your music.

CD: Podcasters have an obligation to give the full credit to who the music belongs to. There are many rights issues, and podcasting is very murky right now. You are forfilling a roll for the artist in which they are sharing their music with you.

CM: Keep in mind, rights owners of songs have full right to their content. You want to be careful on how you choose your policies.

11:26 AM EST - SS: How can musicians get their music into podcasts?

CM: Indiefeed gives a song and then a back story on the band in short podcasts. It seems to have had a positive reaction with listeners. There is a submission form on the website.

11:33 AM EST - CM: How can you stand out with so many podcasts to choose from?
For me, thinking creatively from a marketing perspective is important. Getting your medadata straight is also key, so when people are searching, they can find you.

SS: Another good tip is to use "like artists" in your key words.

CD: Treat your podcast like its an album. You can promote it like any piece of media because it is. Updating information and follow up also important.

SS: Table of contents is important as well. That way listeners can go straight to the media content they want to listen to.

11:46 AM EST - CM: When looking at making podcasts, there are three aspects you need to look at. Will it be utilized as entertainment, is it educational, and/or communal? Does your podcast provide enough information to the listener under any of these aspects?

11:57 AM EST - CM: On issues with rights and clearance with podcasting, you will see with new technology, laws aren't always in sync with laws that already exist. The definition of a podcast also effects this issue as well. If it is seen as a download, there are publishing issues. If it is seen as internet radio, you have to deal with performance rights.

CD: There is no issue yet about a podcast being a public performance. Right now there aren't any clear rules. The best thing to do is give credit to the music you're playing. At least then you have the argument that it is a promotional tool.

Exploding Niches: how is technology increasing niche music discovery?

As the internet increases the potential to connect emerging artists with potential fans, some niches of music that have been largely relegated to specialty stores or only available via mailorder have achieved new and unexpected levels of commerce and popularity. Musicians from a range of genres will discuss how new technologies have helped them develop their fan bases and build legitimate new musical communities.

Jean Cook
Outreach Director, Future of Music Coalition
Henry Harris
President , Spirit Enterprise Inc, Spiritco1.com
Ariel Hyatt
President, Ariel Publicity & Cyber PR
Rachel Segal
Artist Relations/Marketing Manager, MusicIP
Molly Sheridan
Managing Editor, NewMusicBox.org/Producer, Counterstreamradio.org, American Music Center
Billy Zero
Program Director, XMU, XM Satellite Radio

11:34AM EST
- JC: What inspired you to start your radio station?

HH: I decided in 2003 to start my station after meeting with a number of independent gospel artists who were having a hard time getting terrestrial radio play.

AH: Ariel Publicity is a purely digital, social networking PR website. We work with a ton of bloggers, podcasts, internet radio stations, fanzines. It's been fun going fully digital, because we can pinpoint exactly who likes our fans.

MS: We started as a monthly publication with a handful of articles. We had interviews that get deep into the art in ways that other publications cannot. The magazine now works on a daily publishing schedule, and we've launched a radio station.

BZ: When I started at XM, I was playing CDs from my personal collection. Nobody sent us anything. Now we get about 500 packages a week.

RS: MusicIP started as a recommendation engine, but we've developed identification and reporting services in more recent years. We can give an artist a snapshot of where their music is being heard, and give them an idea of what the typical users music collection looks like. This helps artists to figure out who else they can target.

11:34AM EST - JC: Do you consider yourselves gatekeepers?

RS: Quite the opposite. I think we open music up to more and more people.

BZ: We call ourselves filters to find that good music and put it on the air. We have now an ease to enter the marketplace that simply wasn't there before.

HH: We think the internet has opened the gates for everyone. We used to take everything that was sent to us, put it on our playlist, and let the audience decide. We don't do a lot of filtering.

AH: I gave up on traditional media, on behalf of my clients, because the results were constantly diminishing. As broadband becomes more ubiquitous and people get unhappier with radio, they will turn to the net.

11:50AM EST - Questions from the audience

Q: Billy, if you are playing a hundred new tracks a week, what kind of familiarity are you really getting with these new artists?
BZ: At XM we have 170 channels. We are like internet radio stations in that we are people who care about music. We're not taking limo rides to steak dinners with major labels. We are opening packages and listening to music. Granted, we're not going to play music that isn't ready for the radio, and a large majority of what I receive is not. But I came to radio because of a fire in my belly to expose unsigned, unknown bands.

Q: Ariel, what baseline budget would you recommend to an artist for publicity?
AH: Our campaigns are flat-fee, there's a $500 package, a mid-level, and a $2500 package. There are no other PR firms that I know that are doing exclusively internet PR like we are. Put yourselves out there as a human, and you'd be surprised how many people become interested in you as an artist.

Q: How can we grow a niche community for our artists?
AH: Get on Eventful, JamBase, Upcoming.org. Brand yourself across these sites with a single username. Myspace and Facebook of course. Conquer these one at a time because its easy to get overwhelmed with all this stuff.

RS: And get a track on where your fans are. Target to their local markets.

BZ: Make sure you have your own domain. Even if it just directs to your myspace page until you get something up, you need to have a homebase as well as being spread across all these social networking sites.

AH: Get people on a mailing list, have your own personal database. Get a bribe on your homepage that will convince people to give you their email address. Create an interesting, engaging and fun newsletter. Update it regularly.

Music Meets Media: DIY Licensing

A well-placed song in an ad, videogame, film or on a popular television show can bring an artist an enormous amount of attention and income. But how does the music get from your hands to prime time? How do the songs get chosen? What resources are available to you?

Jonathan Eaton Musician, The Spinto Band (not present)
Michael Hausman President, Michael Hausman Artist Management Inc.
Dick Huey CEO, Toolshed
Richard Jankovich Director of A&R and Licensing, Rumblefish
Nick Krill Musician, The Spinto Band
Chuck Walker Director of Licensing, Muzak

12:30 PM EST - DH: Lets start with the rights involved with licensing.

CW: If you look at copyright law section 1-6, those are your rights as artists/composers. You need to be familiar with those rules. Rights include parts of the original composition, making copies of those works, and those for the public, and the new right to performance rights. The copy and distribution is the mechanical right. My best advice to an artist is you need to know what rights you are giving up.

MH: Also, licensing to film, tv, commercials, is a separate issue to think about.

12:33 PM EST - DH: What kinds of licensing rights are available?

RJ: There are tons of ways for music to be used. Syncronization, a service we provide (Rumblefish) makes it easier for the licensee to use the song. Usually it's separate, and you have to negotiate them separately. We are taking your songs and getting them licensed, more as an agent. We don't own the licenses to the songs.

CW: Advice is to get a plan together and figure out how you want to get your work out there because there are so many choices. Music Choice for example have promotions on cable all the time. Licensing on that is simple, it's a public performance. Musak will license the sound recording and the reproduction and the composition.

12:45 PM EST - Q: If an artist has a cowriter, how can she/he make decisions on ownership?

RJ: For Rumblefish, we require permission from all parties.

NK: In our situation, it depends on the song. It's understood that the person who wrote most of the song should have the final say but it is still discussed with the group as a whole. There is a common understanding question asked whether or not the license with help or hurt the band.

12:55 PM EST - DH: what are the different considerations for bands as the individuals or under the label?

MH: With licensing in general and as also discussed in one of yesterday's panel, artists are having to do more work. It's not a new model or but an old one, seen more as a straight licensing deal.
With Aimee Mann it has been a success because she owns a lot of her songs. I also work with artists who don't own their own masters (label owns it), and the money just doesn't trickle through.

01:07 PM EST - DH: Are the compensation models for this part of the industry all the same?

MH: The price people are paying for music is going down. TV has also been using a lot of music. Now everyone wants everything forever and has put people in a difficult position. Before it used to be a small part of the song for a certain media. At this point it has gotten to a take-it-or-leave-it attitude.

NK: The more finite, the better the terms will be. A lot of the stuff we do is weird and low key, where film makers will talk to us directly. Things are sometimes agreed on a handshake. It may not be smart business wise, but for band promotion, it has been great. It has also helped our friend's bands as well.

01:25 PM EST - Q: What is the value of licensing in adds?

RJ: ASCAP/BMI value adds more than actual programming. You'll make more money when it's on a tv show esp. when it comes into syndication.

Disintermediation 2.0: how technologies are flipping the music business on its head

Representatives from cutting edge technology companies and musicians will discuss the new wave of digital DIY technologies and services that are empowering musicians, removing the middle man, and bringing artists and fans closer together.

Paul Anthony CEO, Rumblefish
Brian Dear Founder & Chairman, Eventful, Inc.
Pinky Gonzales Director of Business Development, Echomusic
David Harrell musician / blogger, The Layaways / Digital Audio Insider
Tim Westergren Founder, Pandora
Brian Zisk Technologies Director and Founding Board Member, Future of Music Coalition

02:20 PM EST - BZ: How have things changed over the past 7/8 yrs?

TW: We've been doing this for about 7 years, and have seen things really hit the fan. For streaming audio, it has made a tremendous difference.

PA: I feel that we exist in the new music commodity. It has been more of a service business now.

BD: I want to bring in a different perspective on the idea of digital distribution of music, since we don't do that. We're trying to address the digital distribution of events. In the past, we were told that we wouldn't be making money with technology changes, yet we are seeing all these issues coming up with how to pay artists.

02:26 PM EST - BZ: Where do you draw the sample music line so that you make your fans happy
but still end up making the money?

PG: When you manage one of those communities, you really need to know your community in order to who to sell. There is a need to understand how many touch points exist before the consumer vote with their dollar.

DH: There is a line where the promotional value exceeds the value of "money lost".

TW: We're moving more towards the importance of an artist's relationship with their fans. If they don't have a loyalty to you, they'll steal it. This idea lends itself to that evolution.

02:32 PM EST - BZ: How do you feel about the physical CD?

DH: It can be seen as the lowest level of acceptance. You still need that physical disk to be taken seriously. From a promotional standpoint, it's not going away anytime soon.

02:46 PM EST - BZ: Targeting and segmentation. On the high end to be really easy to implement. How would you go about getting the information targeting to have success?

TW: I think every band should include themselves as an online person. Their job should be to help exploit their band online. Musicians don't tend to be business people. There are tons of enthusiatic fans to help you. Find an online savy person and make them a part of the band.

PG: Use a system like surveymonkey.com and have targeted questions and email fans. Figure out what the fans want. Know your fans and communicate with them as specficially as you can. It's hard to do it free but there's tons of services online you can do with a little.

02:52 PM EST - BZ: With all the growing websites to help musicians, disintermediation services also increase which can get complicated. How do you go about this?

PA: You have a choice now. Rights are more to the advantage to the creaters now. Maybe it's less about disintermediation and more about choice.

TW: I wouldn't sweat the percentages you're giving up from intermediaries. In the future, those figures will be more streamlined. If I was a musician, I would be more worried with building a fanbase. It's hard to say to avoid them when we don't understand fully what is out there ourselves.

03:02PM EST - BZ: With music recommendations, how is that going to come about? Is it what
your friends like? How does it shake out?

PA: Music supervisors don't search for genres, they look for emotions and characteristics. We tag all of our work, so yes it is personal as well.

TW: I don't think there is a right way for recommendations. People like to get music recommendations in different ways. In our case, we're trying to instantly create a radio station they will like.

DH: I think music recommendations are harder than anything else because it is so emotional.

Finding Music: dealing with out of print and orphan works

Out of print and orphan works -- copyrighted works whose owners may be impossible to identify and locate -- present a big challenge to archivists, librarians, and creators. How much due diligence do archivists and creators need to do seeking out the correct owners? How can copyright owners protect their rights? Is there a better way to identify ownership to increase both the circulation of musical works and compensation for creators?

Mario Bouchard
General Counsel, Copyright Board Canada
Peter Gutmann
Member, Womble Carlyle Sandridge & Rice, PLLC
Walter McDonough
General Counsel, Future of Music Coaltion
Oliver Metzger
Policy Planning Advisor, U.S. Copyright Office
Michael Taft Head of the Archive, American Folklife Center, Library of Congress

03:26PM EST - MB: Orphaned works are becoming a greater issue daily. In Canada we call them "unlocatable copyright works." Very few countries deal with this issue directly.

OM: In 2005, Congress asked us to do a study on orphaned works. We identified four categories of potential use: large scale access users (museums, archives, etc.), enthusiast uses, subsequent creators, and personal uses.

WM: I see this issue as being on a spectrum. The copyright office proposal is in the middle, the Canadian copyright board is on one end, and people like Peter are on the other end. Could you explain the Canadian system?

MB: In order to use an orphaned work, you have to get a license from the Canadian Copyright Board. We sometimes require that licensees pay a collecting society, who will pay the copyright owner if they show up within five years of the period designated in the license.

PG: I'd like to suggest a very simple approach. Copyright just lasts way too long; it's become virtually perpetual. Under the current law, an unpublished work gets 120 years of protection. The blame lies on Congress. When works are about to pass into the public domain, Congress slaps another 20 years on them. As many orphaned works are so old, limiting copyright to a reasonable degree would solve the problem by relegating these works to the public domain.

03:48PM EST - MB: Such a solution would not make the orphaned works problem disappear. We issue a large number of licenses for works that are less than 30 years old.

MT: One common misconception is that any folk recording is public domain. Almost all the material in our archive was recorded by anthropologists and journalists. It was meant as documentation. Until very recently, we didn't secure release forms from artists.

WD: And there's a whole cottage industry of people releasing compilation recordings of these orphaned works.

MT: The Oh Brother Where Art Thou? soundtrack is a famous example.

04:00PM EST - Q: Who is prosecuting the people making these types of compilations?
WM: Usually some nephew who didn't get along with the rest of the family (laughter).

Finding Music: discovering, cataloging, and increasing access to culture

How can we use digital technology to not only preserve music, but also catalog them in a way that facilitates discovery? Panelists will discuss the new ways that institutions are using technologies -- meta-tagging, MP3 stores, streaming radio -- to increase access to our cultural heritage.

David Beal
President, National Geographic Music & Radio
David Freedman
General Manager, WWOZ New Orleans
Robert Kaye
Mayhem & Chaos Coordinator, MusicBrainz
Jon Kertzer
Senior Music Producer, Zune/Microsoft
Atesh Sonneborn Associate Director, Smithsonian Folkways Recordings

04:55PM EST - AS: We mediate content at Smithsonian Global Sound in a way that the commercial market does not want to. Our genre and language list is enormous, and localized from the place where the music originates. Our fundamental promise is to make everything available always and forever.

DB: We feel that music is a great way to inspire people to care not just about the environment of this planet but also the people that live on it. We're launched the new division that I'm heading up to do just that.

[about 20 mins of technical difficulties in showing the NG promotional dvd]

05:20PM EST - RK: MusicBrainz is essentially Wikipedia for music. We have about half a million releases logged...we don't have the music itself, just the metadata concerning the music. We keep track of title, artist, label, release, barcodes if we have them. We try to get music from all time periods and walks of life. We archive everything, even if we don't like it. For example: skinhead music.

Audience poses a question regarding the expansion of metadata.

DF: The issue with metadata is being able to standardize it on an industry-wide basis.

JK: There are efforts on the part of all the major label software departments to standardize metadata; who knows how far these discussions will go.

RK: MusicBrainz is hoping to become the baseline standard, because we're out there using it.

05:42PM EST - AS: What worries me is back-up of the information. When the equivalent of the Hiroshima bomb is dropped inside the internet, what will happen to this data?

RK: We back up regularly, but more importantly, our data lives on a lot of developers' machines all around the globe. When an update is made here, its on a computer in London seventy-five minutes later. The more people are using our data, the more valuable it becomes, and allows us to supplant people like Gracenote and AMG.

Wireless Media and Super-Portability: what will ubiquitous wifi mean for the music industry?

iPods revolutionized the music industry, making it possible to carry hundreds or thousands of songs in your pocket, but emerging technologies are now promising to serve up your complete personal music library, wirelessly. What will this new level of portability -- or place-shifting -- mean for the consumption of music, and how will it affect artist compensation?

Whitney Broussard Owner, Whitney Broussard Consulting
Bryan Calhoun Owner and Founder, Label Management Systems
Jim Griffin CEO, Onehouse
Skip Pizzi Manager, Technical Policy, Microsoft Corp.
Patrick Sullivan Principal, RightsFlow

04:30 PM EST - BC: What do you think are some of the bold new initiatives going on now?

JG: Discussion of the application of the carter phone principle. It was applied to the telephone networks at one time. Essentially said, if the network did no harm, you can get it from anywhere. If wireless networks can be open networks is an exciting concept.

SP: The ymac's deployment, we'll start seeing more ubiquitous network connections on a wider scale. This will effect internet radio. When you can make internet radio portable, it then serves like terrestrial radio. Another area is mobile multimedia, devices are being developed that also have digital receivers. "Media flow" devices actually receives digital TV and radio, but not through phone network, but will be through a separate receiver. Moving music directly to an handheld device, has a lot of untapped potential. Could be an impulse buy or people who don't have computers a way for them to access music. In the next generation, you will be able to dl straight to the handheld. That is a big inflection point that reflects this industry.

WB: What is really interesting to me is how cell phones are used to interact in real time. For example, I've worked with Verizon with their tours and have seen how cell phones can interact with shows. People videotaping parts of the show and send it to their friends and help spread the word about the band--this is something that has just been touched.

04:40 PM EST - BC: With this new technological world, is there even a place for terrestrial radio?

SP: It's definitely changing. It's really in their game to lose if they don't adapt to the changes.

JG: If we change the way we use radio, we will listen to what we want without changing the station at all. On a technical matter, there is no need to allocate spectrum at all.

Monday, September 17, 2007

State of the Union

For the seventh consecutive Summit, FMC brings together leaders from music, law, technology and policy for a top-level discussion about the state of the music industry. How are copyright holders embracing new technologies? What is the status of the DRM arguments and licensing negotiations? And most importantly, how are artists and creators impacted by these changes?

David Bither
Senior Vice President, Nonesuch Records
Rosemary Carroll Esq.
Partner, Carroll, Guido & Groffman
Jim Griffin
Chief Executive Officer, Onehouse
Mac McCaughan
Musician and Co-owner, Merge Records
Bob Mould
Ralph Simon Chairman Emeritus & Founder, Mobile Entertainment Forum Americas, Mobilium Group & The MEF

09:50AM EST - JG thanks Jenny Toomey and the other FMC founders, introduces the panelists.

09:58AM EST - JG: David, how is business? 30% down is a scary figure. How bad are things, at your label?

10:01AM EST
- DB: When something like Tower Records goes out of business, it affects all of us. At the same time, there's more vitality in the music community than there has been in a long time. As a company, we follow our hearts with the music that we love. Our business has been pretty steady within this dynamic context; that can be attributed by the quality of the artists we work with. The fact that we exist 40 years later, doing the things we do...that's my answer.

10:05AM EST - MM: I don't think that's the industry standard, though. I think Nonesuch could survive without Warner. What do they provide you?

DB: Well, we could probably do what we do without Warner. That's just how we were born and raised.

10:07AM EST - JG: Mac, how does your perspective differ?

MM: Business is great, the last few years have been the best ever. I attribute it to the artists we have and the records they've put out in the last few years. People may be buying less bad records, but I don't see them buying less good records.

10:10AM EST - JG: Rosemary, what's your perspective on the difference between the majors and the independents today?

RC: Five years ago, a buzzed band today would immediately want to go to a major.
I don't think a major label is a good place for an artist to be today. It's a combination of the majors not doing a good job and being engaged in a contractual land-grab for rights and contracts. Now an artist has to cut the label in on his merchandising, touring, and more in addition to his masters

10:15AM EST - JG: Bob, are you able to make a living as a musician?

BM: I'm blessed to say that I can. When I was a kid, buying music was a sacred ritual. Today, somebody downloads a hundred songs in a day, they are icons on a desktop, and maybe five end up in their iTunes folder.

JG: Where do technology and music meet?

10:21AM EST - DB: Obviously we live in a world full of technological change, but our focus is someplace else - the quality of our artists.

MM: It is sad to see the devaluation of art, but Merge sells records to music fans, people who feel sad about the same thing. Nonesuch does as well, regardless of who the parent company is. I have a hard time caring about ringtones. We're more focused on putting out good records.

RS: Ringtones have evolved in a similar way to radio edits. The ringtone has its place in promoting an artist, but it should be seen in a wider landscape of graphics and other tools.

10:26AM EST - JG: Hasn't technology made it voluntary to pay for music? What kind of future does that leave the business?

DB: Wilco is a classic story. When they were dropped by Warner and came to Nonesuch, we had emails from hundreds of fans saying they were glad to purchase Yankee Hotel Foxtrot, though they had already owned it for months.

RS: Isn't a new role of the record label to find that trigger point, and inspire that?

DB: There's a difference between creating a hit and a career. One lasts five minutes, and another hopes to last a lifetime.

10:30AM EST - JG: Rosemary, is there something legislative that can be done?

RC: I don't think you can stuff the genie back in the bottle. Restrictive laws wouldn't work, and they wouldn't be passed.

JG: Bob, how will we listen to music in the future? What do you think of the recent Rick Rubin piece in the Sunday NYT?

BM: New gadgets are fleeting. You can't break a band with a ringtone. Social networking is big right now, but those come and go as well. Five years ago, the music world was full of skyscrapers. Now you can see the horizon.

10:30AM EST - MM: I don't think the ubiquity of music access is especially beautiful. I don't want to listen to music on myspace or a computer. MP3s sound terrible. There is so much music out there, that you still have to work to find the good stuff.

DB: That being said, I think part of the role of a company like Merge is to be a curator of good music.

RC: Major labels are becoming more flexible. Lucinda Williams just did five nights, her manager wanted to record one night, press a few hundred CDs, sell them the next night, then sell the remainder on her website. I never thought they would go for it, but they did.

10:40AM EST - JG: Bob, you DJ in clubs, and the club pays the performers. Is it time for terrestrial radio to start paying a performance right?

BM: I don't think that's going to happen.

JG: David, how do you feel about radio stations taking your music and playing it without paying you?

DB: I wish they were taking it and playing it. Independent and college radio helps, but its never been a big interest for us. We don't have a radio promotions department. We built our business without it.

RC: I've long thought that there should be a performance right for terrestrial radio. I think it's obvious. The performer brings so much to the music; not just the songwriter.

10:40AM EST - Questions from the audience:

Q: What's the ratio between physical and digital sales at Merge?
MM: It's definitely greater today than it was a few years ago. Then, digital sales would start at 30%-40% and then taper off to 10% or so. More recently, it tends to stay around 30%. It's artist by artist, however. Caribou is still around 40%-50% digital, whereas the Arcade Fire is 20% to 25%. But we've seen things settling around 30%.

Q: Going back to the question of people's willingness to pay for music, do you think that's a demographic thing? (Tim Wu)
DB: I think it's definitely different, a case where a lot of older fans have more money than time, and aren't interested in spending hours seeking out free music.

JG: To wrap up, an axiom I've come across is that if some kind of technology happens in the first 13 years of your life, you think its quite normal. If it happens between 13 and 40, it's so interesting it might just become your career. If it happens after you turn 40, it should be illegal. We'd all better move quickly to keep up.

Creative License: how does the sample license clearance process work?

Popularized by the hip-hop movement of the 1980s and 1990s, sampling is the latest manifestation of a rich musical tradition -- one particularly prevalent in jazz, bluegrass, and blues -- where artists have borrowed from, referenced, riffed off of, or ripped off artists of the past. But sampling as we know it today represents a different form of borrowing, a more literal appropriation made easier through digital technologies. This leads to bigger questions about sampling, copyright, compensation, licensing, and creativity. This session will cover the pros and cons of the existing sample license clearance process, and whether it's possible to maximize compensation for artists while also encouraging creativity.

Whitney Broussard
Owner, Whitney Broussard Consulting
E. Michael Harrington
Professor Of Entertainment & Music Business, Belmont University
Peter Jaszi
Professor of Law , Washington College of Law
Lady Miss Kier
singer/songwriter/producer, Dee-lish Publishing/Deee-lite
Kembrew McLeod Assistant Professor, University of Iowa

11:22AM EST - KM: Public Enemy's older work is mixed up with literal hundreds of samples, similar to a more current artist Girl Talk, who released an album last year with over 150 samples. We're here to talk about artists like this and the bigger questions surrounding sample licensing.

WB: It's funny to hear people say that hip-hop died when samples needed to be cleared, because I was right there at Capitol Records in 1981, where I interviewed a bunch of people in the sampling world at the time and published it in my law school entertainment journal. From there I became the licensor at Capitol.

LMK: I got really popular because of Herbie Hancock sample on "Groove is in the Heart." We didn't know anything about the business, we looked at sampling as a new instrument.

PJ: To me, fair use seems to say that certain uses of copyrighted work are defensible, because they add to the greater culture they draw from. Why aren't these defenses always being made? Because of the difficulty that artists have in figuring out the doctrine out. The solution to that is collective self help. I've worked with different groups to help them define collectively their own relevant fair use doctrine.

11:36AM EST - KM: How could the industry legitimize an album like Girl Talk's Night Ripper?

WB: Most major record companies would just throw up their hands and say "we're not going to do it, it's just too much work." Each license can be a few thousand dollars just in transaction costs. Added up, most companies probably wouldn't do it. Majors aren't in it for the art. On an underground level, Dangermouse's Grey Album for example, is successful.

LMK: Look at the break from "funky drummer." That guy never got paid. It's bad creative karma to not clear your sample.

MH: I had this crazy idea in 2001 about a compulsory license to sample sound recordings. I thought that with a recording from the last 10 years, you could take 10 seconds or 10%, whichever is less, and pay 25% to the sampled artist.

11:44AM EST - KM: We often think of Fair Use as applying in an educational or journalistic context. How can we think of it in terms of sampling?

PJ: A somewhat unified theory of Fair Use has emerged. What courts are asking is: was the original material transformed, or significantly re-contextualized? This applies to the full-range of cultural practices, including music-making, for commercial and non-commercial uses.

WB: A forgotten aspect of Fair Use, is that its not the only way you can use copyrighted works, for example using such a small sample of the piece that it doesn't rise to the level of infringement, period.

11:52AM EST - WB: It's important to not that there are different standards for advertising than art, even if the art is being sold. We don't want to see people conflating the problems of advertising and music copyright.

11:58AM EST - KM: There are all these licensing land-mines out there to be aware of. There was a while, on Rhapsody and Napster, where you would only see partial albums, because they couldn't secure full rights.

11:58AM EST - Questions from the audience

Q: At iTunes, we generally don't distribute a record unless we have blanket clearance from the label. Once it has been cleared for commercial distribution, why must it be re-cleared for digital distribution?
WB: It's a contract issue, not a legal issue.

PJ: It's risk-assessment. The copyright owner wants to make sure he is not giving too much away.

Q: Without insurance and indemnities, almost nothing will work. if you are the owner of a right, its incumbent on you to get the splits cleared. The song "Grillz" has 29 different publishing clearances, but congrats to them for doing it.
KM: But can independent artists afford the lawyers to clear these things, or are we excluding the middle and lower tiers of recording artists?

Q: Can someone define de minimis use?
WB: Unfortunately there isn't a clear definition, much as there isn't for Fair Use. A major label isn't going to want to rely on either of these; they will take the position that if you can recognize it, you have to clear it.

Another point is that the tools of production are so accessible. It's one thing to talk about industry practices, but its another thing to tell kids what to do. Part of me thinks we should have less stringent licensing requirements for sampling, but another part of me thinks that there is nothing cooler than listening to a record that shouldn't legally exist.

Q: Does the music from sample clearances ever make it back to the artist?
WB: The sad reality is that it almost never does. At best they will see 50%, but generally they don't see any of it.

Q: Peter, am I inferring correctly from your previous comments that if, say, a local hip-hop coalition were to state its intentions for Fair Use sampling, this might indemnify them against infringement suits?
PJ: Essentially, yes. The larger the community backing such a document, the more credence the courts will lend it if an infringement suit comes along.

The Hill was Alive with the Sound of Music: a policymaker roundtable

Webcasting rates. Copyright clauses. DRM technologies. Broadband policy. Today's policymakers are dealing with everything from farm subsidies to NASA spending, and it's up to their staff to keep them on top of these complicated issues. Join top congressional and FCC staffers for a discussion about the impact of policy decisions confronting the music industry.

Michael Bracy Policy Director/Co-founder, Future of Music Coalition
Rudy Brioche Legal Advisor, Federal Communications Commission
Aaron Cooper Counsel, Senate Judiciary Committee
Kenneth DeGraff Senior Policy Advisor, Vice-Chairman Mike Doyle
Jessica Rosenworcel Senior Communications Counsel, Senate Commerce Committee
J. Michael Schmidt Legislative Assistant, Office of Senator Feingold

On panel from left to right: MS, AC, JR, KD, RB
MB as moderator

11:34 AM EST - MB: Radio, there are a lot of issues, new platforms. The big question is concerning media ownership, where are we in the process of it?

RB: We are trying to move the item up to the end of this year, earlier next year. Studies were released about ownership and they need to look at the questions more deeply. How far are we willing to go and to make sure we have a fair process. If we think about consolidation, what impact is that going to have on the diversity on programs? The public is an important influence in order to help move things along.

11:39 AM EST - MB: They are saying in order to compete, they need more stations. How does that hold at all?

RB: Members of congress support that idea. On one hand, in order to compete they need more stations, on the other hand, it can be seen as a separate market. If we deal with this idea, we necessarily don't have to have that divide. Diversity is a big issue at hand as well.

11:44 AM EST - JR: We're dealing with major changes right now. Things have really changed because of the1996 with the telecommunications law. As a result, the top four corporations own 50% of radio share, of the top ten, they have two-thirds of the market.

Speakers make it a point to emphasize how important the public's voice is.

RB: If it wasn't for organizations such as FMC, with the federal state to get independent stations in the open, however this is only the first step.

11:51 AM EST - MB: Any thoughts on LPFM?

KD: These stations can really help groups such as churchs, schools, targeted to specific audiences that do not compete with the majors. In 2001 Congress chose to limit those stations. The majors thought LPFM would interfere with their station; number of studies that have been done reveal that this is not the case. These stations can also play and support the independent bands.

AC: One thing that doesn't happen enough is the communication between content and audience. There are 2 major issues at this. First, the protection of IP rights. It is valuable and the industry has been very successful. The bigger picture is how it helps the country. Second, there is a need to take a step back and look at the issues at hand: look at who/what gets paid from digital music. Are the rate structures adequate? It's about finding the right balance, having the stations that can serve the audience where traditional radio does not.

12:03 PM EST - On the topic of broadband, net neutrality.
KD: We need to find out where potential abuses are happening. Defining abuses in the future can also get more technical for the future.

12:05 PM EST - Audience questions.

HS (Prometheus radio project): For net neutrality, Congress has started discussing the issues at hand. Department of Justice has denied problems with net neutrality; what can people do to help bring awareness and specifically make sure the issue with D of J doesn't happen again?

AC: There are 2 policy issues they are looking at. One is labels/artists should be compensated and how. Two, they don't want to impede on creative restrictions that following with internet. It needs to be recognized that if rates can't be met, it's everyone's problem (artists, webcasters labels).

WM: What are the copyright issues with orphaned works?

AC: It is still being addressed, it is the senator's top priority for reform. It is taking a lot of time because so many things effect rates and decisions. There is a need to look at the entire playing field.

MB: Any predictions? Specifically before the next election.

AC:Targeted bills such as LPFM is a big issue for senator.

Change that Tune: will the FCC settlement mean radio airplay for independent labels' artists?

This panel will talk about the range of issues facing independent labels and their artists: performance royalties, market share, and the effect of the payola settlement on airplay. Now that the rules are in place, how are they being implemented and enforced? And what does the settlement mean for musicians, citizens, and radio in general?

Richard Bengloff
President, American Association of Independent Music
Michael Bracy
Policy Director/Co-founder, Future of Music Coaltion
Peter Gordon
President, Thirsty Ear
Portia Sabin President, Kill Rock Stars

01:00PM EST - RB: According to SoundExchange, 37% of non-terrestrial radio spins are coming from independent artists. How are you finding it, Portia?

PS: What radio?

RB: There are two issues in radio: access and results. We're going to focus on results first. FMC recently received a grant from Rockefeller Philanthrophies, and that money was turned over to the New York State Music Fund. A2IM is going to be working with FMC to see what the results are over the next few years.

MB: Commercial broadcasters have been given a license to print money, but you have to follow the rules. Part of this is that you should not be able to turn your radio station into a poker game, where you have to ante in to play. A2IM was able to open the dialogue to what the market should look like. Where is the fair balance? This needs to be an on-going evaluation. We need to let the policy-makers now that the current settlement was not enough.

01:18PM EST - Questions from the audience

Q: Where does the settlement money go?

MB: In the NY decision, the money went to the NY State Music Fund, which I thought was great. I mean, that money went to underwriting a performance in Brooklyn of Lou Reed's Berlin. That's great.

RB: We are moving from a consumption-based industry model to a performance or service subscription model. There's got to be a model that monetizes this listening time.

Q: What do you think about SoundExchange asking for census reporting from stations?

RB: It would be great in a perfect world, but we're not there yet.

Q: Michael, Peter, as a call-to-action, what can I tell artists to do?

MB: The first thing is that artists need to feel that they own a piece of the airwaves. Indie artists like those we here represent, are everywhere except terrestrial radio. My easy answer is to write your congressperson.

PG: You can also supports groups like these, FMC and A2IM.

Music License One Stop Shopping: impossible dream or emerging reality?

How are the existing licensing schemes in the EU, Canada and the US affecting the development of digital music stores/subscription services, and which models seem to be emerging as the most mutually beneficial for licensors and licensees?

Eric Baptiste Director General, CISAC
David Basskin President, Canadian Music Reproduction Rights Agency
Sarah Faulder Public Affairs Director, MCPS-PRS Alliance
Jonathan Potter Executive Director, Digital Media Association
Tim Quirk Vice President of Music Programming, Rhapsody

panelists from left to right: DB(moderator), TQ, EB, SF, JP

03:25 PM EST - DB: One stop licensing, is it the impossible dream?

JP: The problem is complex, starting with simple steps such as finding out know who wrote what song and who owns it. This is not so much of a problem for the consumer but for the "investor". It needs to be simplified in order to make progress. There has to be a way to license music that people want to pay for and investors need to follow the legal process.

03:36 PM EST - SF: There was no competition previously in Europe but now musicians are shopping around. It's up to the "societies" to offer all the needs of rights' owners. This is the first step to the idea of "one stop shop".

EB: Most countries have copyright issues one way or another. There are a few points to keep in mind when dealing with the "one stop shop" idea. One is getting the creator/artist to be represented by a collective. The Santiago agreement was the closest to a "one stop shop" which was eventually stopped because of an European Union.

03:50 PM EST - TQ: Issues also become very expensive. Two separate owners (copyright/sound recorder) entities have to be accounted for. Setting up a system to track all uses is very expensive. Licenses do not overlap 100% in different countries. It becomes legal issues on top of legal issues. Laws exist now where no one can be paid for the music.

04:03 PM EST - SF: Blanket licensing has worked in Europe until now, we need to keep in mind we are in a great transitional period now.

DB: It is the known vs. the unknown. We have all this information, yet for the most part, nothing can be done with it. Frustration comes about when parties are expected to instantaneously follow newly established organizations. There are still many policies undecided or in the process of reaching an agreement.

04:15 PM EST - Audience questions

Q: I am composer and want my music on the internet. However, there are a lot of resources small and large. I would like there to be a law from the government to have a service to do that. What do you think of that?

DB: Most labels have thousands of data of unknown song titles with artists. Someone has to do the work somewhere and find these. Canada has rejected giving this responsibility to labels because they have already done a poor job with it. There isn't a single solution to this concept.

Q: Why would a new musician want to license their music anyways?

TQ: The hassle comes from societies and the collectives that are still developing. In the end, it's promotion that pays. There's no cost to being in the system. You reach an audience that you may not have on your own.

04:35 PM EST - DB: If we come back in 5 years, do you think any of these issues will be solved?

JP: Solve no, progress yes.

SF: Five years not a great deal of time, but will be closer to the ideal.

TQ: It will have become a lot easier.

Performance Right: who gets paid when songs are played on the radio?

When you hear a song on the radio, the songwriter and publisher are paid a royalty, but the performer is not. Recently, a coalition of advocacy groups and artists has organized to lobby Congress to enact a public performance right for sound recordings, but broadcasters have put up a strong fight, calling it a "performance tax" on radio. Panelists will discuss the role of radio, performance rights on terrestrial and digital platforms, reporting requirements, and the status of congressional action on the issue.

John P. Kellogg
Assistant Chair Music Business/Management, Berklee College of Music
Walter McDonough
General Counsel, Future of Music Coalition
Sean Murphy
Treasurer, Princeton Broadcasting Service / WPRB-FM
Patricia Polach
AFM Associate General Counsel, Bredhoff & Kaiser, PLLC
John Simson
Executive Director, Sound Exchange
Gigi Sohn President, Public Knowledge

03:35PM EST - WD: The US is pretty unique as the only industrialized country in the world that does not have a performance royalty for terrestrial broadcasts. Why?

JS: It's historical. The copyright precedent was set with the 1909 act; there was no record industry until the 1920s. Also, by our lack of reciprocity with foreign countries, we are losing over 200 million a year that is not being paid to US performers when their recordings are played in foreign countries.

PP: An exciting new coalition we have is called musicFirst, which hopes to have legislation on the board in this congress.

03:42PM EST - WD: Gigi, what do you think is the likelihood of passing such a right in this congress?

GS: There are some people who think the time is NOW, because the broadcasters have their hands full with other issues. My support however comes with three conditions:
1) We must make sure that small webcasters stay in business.
2) Artists must be paid directly, not through their label.
3) If passed, the record industry must not ask congress to limit technological advancements for audio home recording.

JS: I have no stake in the third of your points, however I can speak for the second. I think that's taken care of - 50% of the money that comes into SoundExchange goes directly to artists. As far as small webcasters, we have extended a settlement that extend the rates from the previous period through 2010. This was received very well. There will be an announcement regarding that later this week.

03:52PM EST - WD: Sean, how does this affect non-commercial broadcasting?

SM: We are people who care about music. We're in favor of a performance right for sound recordings, but it must be a reasonable rate with reasonable record-keeping conditions. The party administering those rights must be doing just that. There should be no lobbying or other agendas. I don't want to see this get bogged down the way that the digital rate proceedings have been.

WD: Does anyone have thoughts on what this license should look like?

JS: I don't think you can put a percent of revenue into the legislation. There needs to be consideration for small and non-commercial broadcasters. Senator Berman is already looking to that. I think that when this bill is introduced, we will see something put in place there. There is a real distinction between online and over-the-air, however. Online has no geographic limitations.

03:57PM EST- WD: What would a reasonable rate be?

SM: From a commercial non-profit standpoint, a reasonable rate is on the order of what I'm currently paying with ASCAP, BMI, SESAC and SoundExchange today. We're paying around $2,000 to $3,000 a year. I want to see the kind of transparency that we see with SoundExchange.

GS: John, how many webcasters have accepted your small webcaster proposal? Is there a technological limitation involved?

JS: There is no technological limitation. I don't have numbers with me, but I can tell you there were about 50 with this license last year.

SM: I don't see these negotiations as a good thing. I would hope to avoid the restrictions you are currently imposing, in the future. There should be a separate entity fighting for the new rates, not the same entity that collects them.

JS: In every country in the world, the collecting society is also the body that fights for the rates. I don't think that's going to change. We are representing everyone in the conversation, artists as well as copyright owners.

04:02PM EST - GS: You don't want congress setting every tiny thing, but a little direction would help, perhaps on a percent of revenue.

JK: As far as the artists are concerned, John, how will you break down those royalties? Because different markets have different audiences with terrestrial radio, are you going to weight different plays differently in different markets?

JS: I think we'll try to replicate what we've done in the internet sector, and that's to follow the dollar. If your song is played X number of times, you will get X amount of money. If it's a percentage of revenue, there will have to be certain allocations, which the SoundExchange board will think about very carefully.

WD: In the event that such a right is enacted, who would collect the money?

JS: It's not a done deal that it would be us, but we are certainly set up to do so already, with 28,000 US artists and over 3,000 independent labels.

04:08PM EST - Questions from the audience

Q: How do you pay performers who have already signed away their rights, perhaps decades ago? (Tim Wu)
JS: That's a fundamental principle of SoundExchange. We don't care who has signed away what - we only pay the performer directly. First and foremost, we let the artist tell us how to pay them. As long as they all agree that is. We never pay some non-performer who may have bought the rights.

Q: Where is the honest work being done to determine the social implications of a terrestrial rate? You seem to be protecting the monetary interest very well.
JS: We have extended various offers to non-commercial and public radio. I think we've spent a lot of time looking at those things.

Questioner: I agree, I think you have thought about these issues.

Q: How many artists does SX represent? How do you pay them?
JS: We have 28,000+ in the US, and tens of thousands overseas. We try to find as many people as we can, whether they are a member or not.

Q: I heard that Last.fm has not paid SX. Is that true?
JS: They paid us under the small webcaster rate last year. Since they were bought by CBS, we no longer will accept them as a small webcaster. $280 million is not small revenues.

04:20PM EST - Q: The webcasting decision did not take into account the financial realities of the webcasting industry. How can the broadcast industry feel safe in having a rate set by the same CRB?
JS: The CRB is three experts. As long as the broadcasters present all the relevant information, they should feel secure in the free-market, willing-buyer/willing-seller rate.

PP: Every performer I know has to pay fair-market rates for their food and their medical bills; their living. They earn their living through their art, and despite the public opinion that performers are rich celebrities, the reality is that they are regular people that need these varied income streams, especially those artists that still need a day job. The core of this conversation must always be the creator, not the other businesses that arise around him.

GS: There is a flip-side though, however. Yeah everything should be about the creator, but if their music is not being played, it helps no-one. You want the small webcasters to survive.

JK: I'm sorry but the distribution systems are built on the backs of the musicians work. People today are reluctant to be involved in music.

WD: In both rate settings, the webcasters cried that they were too high. That's fair, that's valid, that's rational. But in both instances, SoundExchange lowered the rates. We don't want to put anybody out of business. I'd rather have 20% of something than 100% of nothing. We need to learn from what went wrong in the past rate setting procedures.

Leveling the Playing Field: how does broadband policy affect musicians?

Congress and the FCC are currently working a series of initiatives designed to revise the telecommunications regulatory framework, with everything from spectrum reform, to broadband deployment, to network neutrality on the table. How will proposed revisions impact musicians, citizens and technologists? How does broadband policy intersect with concerns about protecting intellectual property? What would a pro-musician Telecom Act look like?

Charles Bissell
Musician, The Wrens
Scott Cleland
Chairman, NetCompetition.org
Peter Gordon
President, Thirsty Ear
Jason Oxman
Vice President, Communications, Consumer Electronics Association
Ben Scott
Policy Director, Free Press
Tim Wu Professor, Columbia Law School

05:00PM EST - KT: Charles, how has the internet affected the way you interact with fans and the greater music community?

CB: We took a break for a few years in the late 90s. Coming back to the game in the early 2000s has been entirely different. We use all the regular web tools to promote and advance our music, but the interaction now is constant and not limited by geography. It's really cool.

PG: Technology has always led our business. Obsolescence of music media has always worked in our favor - until the internet came around. Now it's a very different conversation. The internet gives us everything and it gives us nothing. We need to find a way to go from Point A to Point B without having to justify what's ours. You hear a lot about the doom and gloom of the music industry, but that's on the physical side. The PRO side is quite a different story. How do harness these positives?

05:07PM EST - KT: Ben, what should the baseline requirements for internet access be?

BS: Obviously the baseline is always moving, but one musician's work should matter just as much as any other's. All users with new and innovative ideas for distributing content should retain their ability to do so.

KT: Whether it's service or price, a lot of people are unhappy with their ISP. Broadband deployment needs to be done better on a large scale. Tim, what do you think?

TW: I'd say the state of broadband in the US is not ideal. The ability of bands to reach their audience is certainly affected. Technology is always getting better, except for broadband. Cable and telephone networks were installed in the 1910s. I think that's a failure of government to install the proper infrastructure. Right now we're relying on private companies to build functions that are the state's responsibility to provide. The private sector has done what its can, but we are not spending enough money on broadband.

SC: Representing the cable industry, you might imagine that I disagree. Six years ago, cable was a monopoly. Congress decided to try competition. There has been more money spent on broadband access in this country than anywhere in the world. The cable industry alone has spent $100 billion. Our best states are better than the best countries in Europe. It's not deplorable. It's all going in the right direction.

05:17PM EST - TW: I'm not saying the cable industry did a bad job, I'm saying there needs to be a public role in this. We have to tell the government we want everyone to have broadband.

SC: The internet took off when it was privatized. We don't want broadband to become a public utility. Nobody knew about the internet until it was was privatized. The internet is the greatest deregulation success story of history.

BS: I know a different history. Broadband penetration is falling in the US. It is more expensive and slower here. In Western Europe, its not unusual to have a dozen choices for broadband. In this country we have two.

05:23PM EST - Let's talk about the recent Pearl Jam/AT&T censorship issue. What can we learn from that incident?

TW: I want to try and bring net neutrality to music, which is hard. A lot of it can be understood by thinking about intermediaries, and the problems of large ones. One of the reasons the music world is so complicated right now is because the largest intermediaries (labels, distributores) are changing, and we wonder who the new intermediaries will be. I'm going to suggest that there is a new crop of intermediaries that are counter-productive to the world of music, and these are the large telecom companies. Their interest is not music, but collecting as much money as they can out of each actor in the business. That's where the danger is.

05:29PM EST - JO: The end of the story with AT&T is that they admitted they were wrong. The gateway issue raises one of the broader concerns about the availability of consumer-used broadband. NBC called on the FCC to adopt, as a matter of broadband policy, an obligation imposed on network owners to monitor their traffic, citing piracy as the justifying demon. The idea that broadband companies should restrict their customers' robust use of their service is absolutely the wrong direction to go in.

PG: The music industry has suffered because of the gate-keepers. We don't want to trade one set of them for another. The record industry is so slow to keep up with technology, that quite frankly you have to infringe first and settle later.

05:35PM EST - KT: We can all recognize that iTunes, among others, brought a lot of clarity to a floundering music industry. New interactive webcasting services such as Pandora and Last.fm have relied on a level playing field. How can we ensure the introduction of such similar music platforms in the future?

SC: Musicians should be backing us on this. The diversity of the internet will be maintained by free competition. Why would we want a one-size fits all? Different consumers want different things, and they should be able to get them. Some people don't want to pay, so they go to free wi-fi. Some people want huge bandwidth; they should be able to get it.

BS: That is absolutely wrong. Let's not do anything that hands the keys to the kingdom to the people who control the wires. If you want a clear example, look at your wireless device. Try to get some music on it. The wireless broadband industry is case-in-point for everything we are against - gatekeepers controlling the content you can access. They can tell you what artists you can download, what labels, what songs.

SC: There are off-setting benefits here for the loss in content availability, and those are price. We in this country use our handheld devices 4x more than Europe, and for a lower price. It's a trade-off. What would you rather have?

05:42PM EST - KT: Can you sum up in one sentence what you would ask of the government on this issue?
BS: "We want the internet to be free of gate-keepers, as it always has been."
SC: "Don't regulate or tax the internet, let it evolve the way it is right now."

TW: The internet should be non-discriminatory, and should treat everything that passes through their networks the same. The internet should not be like commercial radio, where providers can decide what content the whole country gets.

PG: Most of us here create content, and were under the illusion that content is king. There is a need to on a capitalist front to say we must intercept content. We all have to make a living. Let's imagine a world without content. Without music. Will you be here? [gesturing to Jason Oxman and Scott Cleland] I don't think so.

05:42PM EST - KT: How do you deal with the unauthorized distribution of music? Whether legal or not, file-sharing puts a strain on networks.

JO: Of course, commercial piracy is wrong. However, let's not conflate that with the problem of network neutrality. You wouldn't outlaw the autmobile because some people use it to speed. We should not harm broadband as a result of anti-filesharing measures. This goes back to the Grokster case.

PG: I would disagree. The responsibility lies on all of us to monitor these activities. We have to all work together.

TW: I think it's sort of the challenge of our era. The point of a copyright system is to compensate authors and provide an incentive to create. If that's the point, the question is: are our current means the best way of doing that? We've had a ten-year experiment in copyright law in the age of the internet. It's kind of a mixed picture. Copyright law is obviously not very good at stopping everybody from downloading music illegaly. However it has been effective in keeping commercially pirated CDs and DVDs out of our stores, in this country. Certain people, more and more, will never pay for music. How then, do we compensate authors? The conversation should not revolve around killing the internet. It's here to stay. Suing the customers is also not the solution. The conversation should focus honestly on compensating content creators in a fair way.

05:54PM EST - Questions from the audience

Q: Is there a role for the state legislatures to play in net neutrality?
SC: It's a federal question. Of course the states have a law enforcement role for those committing crimes on the internet.

BS: States can make it clear to their federal representative that they don't like what is happening.