The tribulations of the burgeoning online music industry have made it to the US House of Representatives. The House Committee on Small Business will hold informal hearings on May 24th to gauge the influence digital music and MP3 co-ops such as Napster on SMALL record labels and other online music entities.
"A lot of people have been saying that the Net would level the playing field for people putting their music online," said Dwayne Andrews, a committee spokesman. "But if you give the music away, how are people going to make their money?"
The goal of Andrews, and the other members of the committee, is to make sure that these small businesses will survive the mercurial change brought on by the MP3 rush. Their job is to look at both the pluses and minuses of the medium and evaluate not only the elements that can hurt small business, but the opportunities that could help them.
For example, CD and cassette singles - singles being the medium of downloadable digital music - are money losers after printing and distribution. Nonetheless, they are the most effective to used to promote a record album where the profit is made. Because of the distribution efficiency of the Net, a promo MP3 single can be posted on the web at almost no cost at all, leveling the playing field for small independent record labels against the huge conglomerates that make up 90% of the industry today.
This hearing, informal as it is, is more an exploratory for information. The committee has no power to draft legislation pertaining to the issues brought about by online music distribution.
But, this serves as warning that legislators are beginning to take a hard look at the court battles involving Napster and MP3. The big record labels are obviously poised to lobby, and lobby big on this.
Still Congress - as proved by its recent legislation barring any taxation on the Net until 2006 - does not want to kill the golden goose by applying premature legislation that would stifle the Net music industry before it has time to evolve. Indeed, MP3.com's recent deal with BMI may show that the market will be able to handle many of these disputes themselves, long before a Congressman or Senator will get a chance to place their vote.
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