Face the Music!

Music Tech Conference Brings Issues into Focus

Volume CVII, No. 11November, 2007

Joel LeFevre

Music and technology continue to electrify the industry and the public. Here’s my report on the Future of Music Coalition Summit conference that took place in Washington, D.C. this fall.

Ninety presenters from the music and electronic industries, government copyright officers, attorneys, musicians and politicians presented their views of recent activity in the industry and what is coming next.

Here I’ll review points on changes in the business and what political developments there are on the horizon that will affect musicians and consumers alike. On the Local 802 Web site, I’ll report on some of the copyright issues that take up more space than is available in these pages.


Every major record label wants what iTunes already has: open accounts with consumers that allow planned and impulse purchases.

That means e-mail addresses and credit card numbers on file to enable one-button purchasing of storable audio files.

Industry observers reported the following:

  • Most college students continue to view music as free. In their view it’s part of their network access charge. Right now what you pay for music on the Internet is a kind of voluntarism.
  • Record labels have always regarded the retailers — like Wal-Mart and Best Buy — as their customers. In their shift of focus to the consumer, the labels now have difficulty in “customer facing” — a marketing term that, on the Internet, simply refers to how a user interacts with a Web site. I don’t mean to give free publicity to Apple, but one might say that the Apple iTunes store is easy to use — and it works seamlessly with an iPod, of course. Can the record labels face their customers in a similar, friendly way? Can they develop good Web sites to sell music directly to consumers? Can they figure out how to get their music to work easily with MP3 players, cell phones and other devices? That’s their challenge.
  • Currently, labels are giving away singles in pre-releases to get consumers to their sites and collect e-mail addresses. The labels then follow up with e-mails that contain links to purchase off their sites. Their goal is to enable impulse purchases by groups of customers. Wireless devices will play a key role in that strategy.


Senator Byron Dorgan, Democrat of North Dakota, was the conference keynote speaker.

Senator Dorgan is the chair of the Interstate Commerce Subcommittee of the Senate Committee on Commerce, Science and Transportation. As such, legislation affecting the Internet will come before his committee.

Senator Dorgan sees guaranteeing equal access to the Internet for all users — “net neutrality” — as politically doable. There is tremendous support for this in rural areas.

Basically, net neutrality means that everyone is entitled to the same level of Internet service, with no preferential treatment for higher-paying or corporate customers. In short, even though connection speeds might vary a little bit, everyone’s e-mails should be delivered at the same rate, the way they are now.


Right now when music is broadcast on Internet or satellite radio, musicians earn a royalty. But when music is played over traditional (or “terrestrial”) radio, musicians don’t earn anything.

Senator Dorgan opened his remarks by saying that there should be a terrestrial radio performance royalty like every other industrialized country in the world. This action is a top legislative priority of the AFM.

On the digital side of radio, smaller Webcasters have complained that they will go out of business if they have to pay musicians high royalties. The Internet Radio Equality Act would lower the royalty rate. It’s O.K. if the goal is to save the small Webcasters, but we shouldn’t allow the mega satellite radio companies, like Sirius or Rhapsody, to get out of their obligations to pay fair rates to musicians.

Senator Ron Wyden, Democrat from Oregon, spoke about his focus on keeping the Internet “free from punitive, multiple and discriminatory taxes.” The senator then blew a smoke screen by saying that his immediate priority is to continue the exemption of Internet sales from local sales taxes. (This exemption just expired on Nov. 1.)

That’s well and good, but in the question period, Senator Wyden was asked why he referred to “taxes” when addressing the issue of paying royalties to musicians whose music is broadcast digitally. Royalties to musicians are not taxes!

In his answer, the Oregon senator — who is the prime sponsor of the Internet Radio Equality Act — ignored the question and repeated the lines about the importance of keeping the Internet “free from punitive, multiple and discriminatory taxes.” To me, dodging that question spoke volumes.

It turns out that Senator Wyden — according to his campaign finance filings — received $354,514 from media, computer, telephone and Internet service companies in his last election campaign. It’s no wonder he’s arguing against paying musicians their fair share. His money comes from the other side.