Media Relations: media commentary and criticism

Friday, March 01, 2002

the artists versus the academy versus the consumer

Viewers of the 44th Annual Grammy Awards, in the midst of what started out as an encomium to Grammy Lifetime Achievement Recipients, were treated to this startling fulmination by National Academy of Recording Arts and Sciences President and CEO Michael Greene:

In recent years, industry consolidation combined with the unbridled advance of the Internet has created a disturbing disconnect in our relationship, and trends say it promises to get worse. No question the most insidious virus in our midst is the illegal downloading of music on the Net. It goes by many names and its apologists offer a myriad of excuses. This illegal file-sharing and ripping of music files is pervasive, out of control and oh so criminal. Many of the nominees here tonight, especially the new, less-established artists, are in immediate danger of being marginalized out of our business. Ripping is stealing their livelihood one digital file at a time, leaving their musical dreams haplessly snared in this World Wide Web of theft and indifference. [...] Songwriters, singers, musicians, labels, publishers - the entire music food chain is at serious risk. The RIAA estimates that - now listen to this - an astounding 3.6 billion songs are illegally downloaded every month. This problem won't be solved in short order. It's going to require education, leadership from Washington and true diligence to help our fans - that would be you - to embrace this life and death issue and support our artistic community by only downloading your music from legal Web sites. That will ensure that our artists reach even higher and, deservedly, get paid for their inspired work.

You'll note that the Lifetime Achievement awards and the speech are on different web pages. While this is an accurate reflection of their subject matter, it is an entirely deceptive presentation of their occurrence. Mr Greene's fulmination took place directly after the listing of honorees, so closely that it appeared to be part of the same speech -- and, in fact, he closed with a request to applaud the inductees for that year's class.

Timing aside, the speech is remarkable for all the things it doesn't say, and how it clouds the issues in what it does say.

First, it is not entirely clear that the record labels actually own the copyrights to the music they're selling. In normal business practice, the copyrights to work done under these circumstances would be owned by the artist and/or their publishing company, and not the labels; the labels would be granted a license to compile and sell the music, but it would still belong to the artist. The record companies have mostly gotten around this type of issue by forcing artists to use their publishing companies as a matter of contract. The contract terms themselves are under dispute as onerous and unconscionable.

To compete with Napster and illegal downloads, the record companies created MusicNet and PressPlay, where you could stream or download music that you paid for. However, most of those downloads are restricted to one computer, which contains key software to play them, and they won't play anywhere else. Most also cannot be burned to CD, because of the key software issue. When they do produce a downloadable format, you generally have to pay an extra fee -- in other words, you get to pay for the same material twice. This, of course, means that the record companies solution is entirely nonresponsive to the problem. Moreover, they may have caused themselves even more legal problems. You remember the contracts I mentioned in the last paragraph? Because those very contracts were generally executed under older terms, they didn't include streaming and downloadable format rights; they weren't conceived of at the time the contract boilerplate was written. This produces a two-way whipsaw effect: because the format wasn't included in the original language, the record companies feel they aren't necessarily required to pay the artists; however, they may have no legal right to place the artists' music into those formats in the first place, because of that very same lack in the contracts. Thus, the artists involved are furious because the record companies themselves are effectively stealing their music.

When Mr Greene refers to "leadership from Washington", what he means is that the recording industry is lobbying Congress to require that all computer and recording equipment include digital rights management software and hardware. Said equipment will thereby prevent illegal copying. All good, right? Except that it also prevents legal copying. Consumers, even now, have the right to make copies of their own items for backup and a few other entirely legal purposes. Videotapes, blank audio cassettes and even blank CDs have contained a small surcharge for the entertainment industry for years to allow some compensation for that. This specific requirement, to include such hardware and software by default, has finally made Intel and others say "enough". (Microsoft, as usual, is hedging their bets. They're a member of Intel's advocacy consortium, but they've also built fairly aggressive rights management into Windows XP.)

The problem is that it's difficult to have sympathy for an industry known to gouge the consumer -- it's a matter of record that the cost of producing a CD is a very small fraction of the final price -- an industry that cheats its primary producers and which wants to abridge consumers' legal rights that have nothing to do with them.

The record industry is right about some things. Mr Greene is quite correct when he talks about downloading music files from the internet as theft. In general. Leaving aside the issue of whether or not downloading encourages purchases, when you download a file you haven't paid for, and it comes from a commercially available source, you have stolen the song. What is not clear is who you have stolen it from. Unfortunately, the method by which the consumers are doing this also reduces the income to the artists themselves, which isn't really what the consumers want to do. After all, art for art's sake is nice, but these people want to make a living from their art.

The related problem is that, surprisingly enough, the record industry actually does do what it says it does, to some extent, if possibly not as much that it says. It develops and promotes talent, and subsidizes sector portions such as jazz and classical. After all, if Clive Davis and J Records hadn't had its hooks into various distribution channels, how many people would even have heard of Alicia Keys? Jazz and Classical recording only barely pays for itself. Especially for new artists and odd segments of the market, the labels do have some function. The problem is, the way they function amounts to robbing Peter to pay Paul: using money from existing artists' sales to support development and promotion. (The record industry also has some fairly odious promotion practices: the classic version is payola, of course. However, they also require artists to pay for a fair amount of their own promotion, which would seem to be in the record companies' own interests. For example, artists who make videos actually pay the costs. Since you can't get anywhere in popular music without videos these days, it essentially forces artists to pay for access to their audience.)

That said, consider this: two days before the industry's biggest night of the year, the Recording Artists Coalition held a series of benefit concerts. Who, you might wonder, were the concerts benefiting? The RAC's legal fund, which is supporting suits by Courtney Love, the Dixie Chicks and others, as well as supporting lobbying efforts in both the California legislature and Congress to force the record companies to alter their contract terms. The Industry is fighting back by saying that allowing artists to change the contract terms will hurt the state and hurt the industry by pulling money away from development. Hmm. In the meantime, the artists themselves are saying that RAC isn't directed at the labels. Hmm. (You know, what the artists and consumers need is for the RAC to somehow sponsor or purchase a record company of its very own. Contracts that work the way the artists want them to, with the clout that an actual company can have to get its product publicized. The monoliths control the current distribution chain, but if you can get enough publicity out, you can start a different type of distribution.)

The sophistry on all sides is truly astonishing. After all, if you're altering contract terms so that they're no longer so one sided, how is that NOT directed at the labels? And if the money isn't going to the artists who are actually producing, how is that NOT directly hurting those artists? Basically, the industry is saying that it operates like Social Security, and the artists are saying that it shouldn't. The consumers are saying that they're tired of paying so much for things, and the industry is saying that the money goes to the artists, who are saying, "What money?" The artists are saying that the consumers are stealing from them as well, and the consumers are saying, "It's not stealing! It's just downloading!"

An industry which is under attack by its producers and its consumers at the same time would seem to be an industry that cannot survive in its current form.

(An aside: it seems that NARAS allowed their old domains, and, to lapse. now points to something called THE HIGGINS BUILDING. The Grammys themselves are now on an AOL subdomain -- which can't be good business -- and the formerly separate site has completely disappeared, being redirected to the Grammys AOL site. Speaking of protecting intellectual property ... Oops.)

Posted by iain at 11:58 AM in category