Congress: Labels face off against music publishers and songwriters

By Richard Menta - 5/15/01

It seems a tad ironic, but listening to the dispute between the record companies and the people who write and publish music you would think you were listening to the Napster trial. That's because some of the arguments the record companies used on Napster have been turned against them. Thursday these entities get to square off before Congress in yet another hearing on Net Music.


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The House of Representatives Subcommittee on Courts, the Internet and Intellectual Property has called a hearing on May 17th to again investigate the issues of music delivery over the Net. As the record companies ramp up their own services to siphon off Napster's waning, but still huge, audience they are confronted with claims from the artists, songwriters, and music publishers that they too possess digital rights to the music they created or represent.

Prior to the rise of Internet file trading you won't find mention of digital rights in any record contract because they didn't exist (such rights are included now). Because these rights were not prearranged in older contracts there is an argument that they were therefore never awarded. Lyle Lovett is one of the artists scheduled to speak at the hearing in support of the digital rights claims of songwriters and performers.

The music publisher's are also making claims. They are presently suing Universal Music Group claiming the company violated copyrights by not first paying them for the rights to use their songs on its FarmClub.com site. Universal says those rights are already covered by its existing licenses from publishers and no additional payment is merited.

The truth is we are witnessing the great land grab for control of Net music with each of several parties looking to have the rules on this new playing field molded to their advantage. The Net is technically an open book right now and practices in the old analog arena don't necessarily have to apply. Each side only wants to bring in that which best serves them, instigating a slew of conflicts.

For example, publishers are claiming that to stream music - unlike regular radio - requires reproduction of a composition. Since a reproduction carries a higher royalty payment than a performance there is more money to be made by defining it as such.

Both the record companies and Net radio companies argue that defining streams as reproductions would put undue burden on profits. They insist streamed music should be treated the same as traditional radio, as a performance.

``Companies are trying to build legitimate online services to compete with Napster and the music publishers are the biggest stumbling block to that,'' said Jonathan Potter, executive director of the Digital Media Association, (DiMA) a trade group representing Webcasters.

Already, a significant percentage of traditional radio stations have temporarily pulled the plug on Net streams of their broadcast shows because of another conflict with actors who appear in radio commercials. In a recent agreement, the actor's union won the right for additional payment to actors when commercials are simulcast on the Internet. Since little revenue is earned from Net radio at present, some broadcasters have chosen not to pay, closing their streams. They are now looking for a way to cut out those audio commercials, planning to replace them with non-audio ad interstitial. The playing field is getting rougher, even when aggreements are supposedly hammered out.

Do you know what the record companies are requesting from Washington? The labels have asked the copyright office to set rates for these licenses.

This from the same labels who fought that very notion when representatives from MP3.com and Napster made a similar request for a rate chart from Capital Hill to pay the labels. It was heresy then, but now as the conglomerates ramp up endeavors to feed off of Napster's 60 million present and former users they too need to come to closure with these conflicts over digital rights. The courts take years and while the decisions have mostly favored the major labels, the time factor has not.

Indeed, time seems to be the one balancing factor against the record industries' advantage in money, influence and power. Napster would never have achieved such a large user base if the lawsuits from the recording industry didn't give them free front page visibility for over a year. That's how long it took the Recording Industry Association of America (RIAA) after filing suit to get judgments in their favor and force Napster to filter. When the RIAA first sued Napster, the service only had 200,000 users. Now, despite a drop of 40%, that number is in the tens-of-millions.

More time is what all this tangle of digital rights claims and litigation will take. No one side is ever going to be truly satisfied and that is why this week's hearing is just another step towards a conclusion that is a long way off.

 


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