This Week In News

Music Fans Will Buy Songs, Says Head of Free Online Music Site Spotify
Record sales are down, illegal file sharing persists and a whole generation is getting used to enjoying music for free. But Daniel Ek, the man behind Spotify (still not available in the US), the world's fastest growing online music service, is convinced that fans will still pay for songs they love if they are packaged in the right way.
Alexandra Spotting, Guardian UK

CD Baby Payouts Cross 100 Million
Sometimes, simplicity pays, and in the case of CD Baby, artist payouts have now passed $100 million. ... The critical question now is whether avenues like CD Baby can generate serious artist salaries, instead of just impressive aggregated payouts. [FYI, CD Baby founder Derek Sivers is also FMC Board of Directors] Digital Music News

Next Generation iPhone & iPod Touch to offer Low Power & Wireless Radio
The next iterations of the iPhone and iPod Touch are likely to have 802.11n wireless radios inside, offering lower power consumption, longer range and faster data rates. More importantly, it will mean that you can hook your handheld up to your n-enabled home network and not slow everything else down. Wired.com

Is MP3HD the Future of Digital Music?
For all its joys, MP3 is an old format - and it's lossy, which means no matter how high the bitrate you never get a perfect copy of the original audio. Thomson, the firm that helped invent MP3 in the first place, has come up with a solution - MP3HD, and you won't need to bin your existing kit as the file format will still play on normal MP3 players.
Techradar.com

The YouTube DJ Cutting Up Copyright
Kutiman has become an Internet sensation with his mash-up tracks and videos culled from YouTube clips. There is indeed something new about Kutiman's approach to making music: all his songs, and the accompanying videos, have been painstakingly clipped together from YouTube clips of disparate, mostly (defenseless) amateur musicians. YouTube.com

Obama: Stop Filling Administration with RIAA Insiders
Nearly two dozen public interest groups, trade pacts and library groups urged President Barack Obama on Thursday to quit filling his administration with insiders plucked from the Recording Industry Association of America. Groups such as Public Knowledge, the Electronic Frontier Foundation, the Consumer Electronics Association, and the Wikimedia Foundation and, among others, the American Library Association, are demanding Obama to look outside the content industry when filling up his administration.
Wired.com

Drama on Top of Drama: Ticketmaster Scrutiny Keeps Intensifying
The concert industry's favorite bad guy is now getting pummeled. After a Springsteen-inspired flare-up, the investigatory and legal flurry surrounding Ticketmaster keeps intensifying, across several fronts. [For more info on the proposed Live Nation and Ticketmaster merger, check out our earlier post.] DigitalMusicNews.com

Let the Fans Decide: KISS Practices Touring Democracy…

Why not let the fans decide where a band should tour? That is exactly what KISS is now doing, a novel concept that could reshape live gigging. The band has now announced a partnership with Eventful, specifically for upcoming North American dates. "No matter where the fans say - from stadiums to cornfields - if there are enough votes, KISS will be there," the group declared. DigitalMusicNews.com

D.I.Y & the Death of the Rock Star
The industry has long theorized that the current media landscape is simply unable to create the mega-bands of old, on the order of Guns N' Roses, Kiss, Van Halen, Led Zeppelin, or Black Sabbath. Why? DigitalMusicNews.com

FMC Releases "Artist Principles"

You don’t have to be a super-genius to notice that the music economy isn’t exactly stable at the moment. (Then again, neither is the rest of the economy). One thing is certain — sales of compact discs continue to plummet, and it’s tough to predict which of the new music services will thrive — or even survive — in this period of transition.

Check out this article in Digital Music News for a thoughtful look at the state of digital music in 2009, and a few salient predictions of where things might end up a little further down the road.

Launching a music site or service that’s simultaneously affordable, appealing to music fans and fair to rightsholders is clearly difficult, especially in today’s economy. It’s a tough time for many of these new sites and services, but articles like the one above always get us thinking about those who create the music itself. From the beginning, FMC has stood for the right of musicians to be paid for their work, so we want make sure that artists aren’t overlooked in the ongoing experimentation with new music business models.

This is why today we’re releasing “Principles for Musician Compensation in New Business Models” (or “Artist Principles”) — a set of guidelines for ensuring creator compensation in an evolving music landscape. Crafted by Ann Chaitovitz with input from over a dozen industry experts, the Principles represent an important first step in ongoing discussions about musicians’ revenue streams.

We’re called the Future of Music Coalition, so we like to look ahead. In fact, the Principles are primarily meant to apply to music services that have yet to be brought to market. But, FMC also knows it’s important to learn from the past. The majority of the Principles are based on what we’ve observed from the launch of existing services. For example, you might recall our earlier post about the launch of MySpace Music, which saw the major labels enter a joint venture with the social network that reportedly included a cut of the advertising and equity stakes in the enterprise. Yet it remains unclear if or how the labels plan to share that equity or ad dollars with their artists.

And that’s just one example. With music moving beyond the physical (and even download) model, it becomes increasingly important to make sure that musicians are fairly compensated. Regardless of the system, artists deserve to be paid for their work — especially considering it’s their music that’s attracting listeners (and hopefully, dollars) to that service.

But without reasonable guidelines, creators could be excluded from any revenues generated by these new models. Hence, the Artist Principles. We’ve even drafted a point-by-point explanation of each principle, offering examples and what we think are possible ways forward, which you can read here. Just trying to be helpful.

Clearly, there’s no silver bullet solution to the challenges currently faced by artists, musicians and entrepreneurs. Yet, as always, we think the best thing to get a conversation going. And the Artist Principles surely will.

The New DIY?

There's been been a couple of online articles recently (that's one shy of three, which almost makes a trend!) about what "do-it-yourself" means in the era of digital music. So we figured we'd do a little thinking out loud, then turn the floor over to the experts — in other words, you.

With the advent of user-friendly digital distro services, musicians now have a wide array of relatively inexpensive tools to get their tunes out there. Of course, with fewer gatekeepers and the "democratization" of technology, it also means you probably have to work harder to get noticed — there's no slick suit who can make it magically happen for you. (And if there is, maybe s/he can give us a call?)

All of this upsets the traditional artist-record company relationship, which we've seen borne out by the increasing number of established acts who have ditched their labels in favor of more "experimental" approaches to marketing and distribution. (Insert tired Radiohead/Nine Inch Nails analogy here.)

But can an up-and-coming artist really be their own label? Superstars clearly have an advantage in terms of the critical mass needed to achieve success with direct-to-fan schemes — most have already benefited from "traditional" label arrangements during their developmental phase. So what does DIY mean for the struggling artist/part time barista?

It kind of depends who you ask.

Digital Music News published a piece this week called "DIY and the Death of the Rock Star." This paragraph basically explains their take:

Major labels no longer have the ability to generate huge blowouts, thanks partly to media fragmentation. Then again, direct-to-fan relationships have never been easier to build — one dedicated fan at a time. Indeed, those that toil to super-serve a core audience can reap the rewards, perhaps enough to quit the day job.

The article also cites indie-punk-cabaret goddess Amanda Palmer, who has become quite the Twitterer lately:

. . .despite the hype surrounding DIY, big questions continue to surround the ultimate payoff for unknown acts. Either way, artists can expect to dedicate extreme efforts and lots of connected time to achieve traction. "I'm spending a lot of time connecting with fans... and I don't feel as much of an artist as much as a promoter of Amanda Palmer," Palmer relayed. "All of this instant connection has taken the place of making art. An idea that might have translated into a song before might now go into my blog instead."

The quasi-snarky music/biz blog Idolator recently published a post with the awesome title, "Is DIY Just Another Word for Nothing Left to Lose?" FMC's founders can no doubt identify with this section:

The do-it-yourself attitude, conceived out of a combination of ambition and necessity, was revelatory to a particular generation who may have grown up with punk but still saw the movement's bands releasing albums on major labels; what started as adding a lower rung to the ladder became an end goal in itself, with labels like Dischord and K insisting that DIY techniques represented a way of making music that was anti-hierarchical, inclusive, and democratic. Artists who chose to subscribe to that particular philosophy became part of a system of mutual assistance which, at least theoretically, enabled them to make music without the need for a major label's resources.

In the current age, DIY seems to have reverted to being a stepping stone to greater success, whatever that might mean. Except that, instead of being a lower rung on the ladder, the DIY rung is rapidly becoming the entire ladder, at least to hear a lot of folks tell it.

The fragmentation of traditional gatekeepers, the changing role of labels, tough economic times and rampant file-sharing are all factors in what can only be described as a major paradigm shift in the business of music. But it's not all doom and gloom: increasingly artists can make their own career choices, from DIY tour booking to stocking music with digital retailers. Although it's probably too early to predict how all his will play out, FMC is planning a study of musician income streams that will hopefully provide a clearer picture about how these disruptions/opportunities are affecting artists' bottom lines.

We wouldn't want to call ourselves prescient or anything, but the other day (before the aforementioned articles were published), we conducted a non-scientific, "just for fun" experiment with our Twitter followers. We asked them "What does DIY mean to you?" and received a ton of interesting responses. Here's a handful:

ANTIQCOOL: Freedom! no suits telling me what to release.

talegends: DIY to me means "you know you can't afford to hire anyone, so if you want anything to happen you have to DIY!"

oastem: DIY means forging your own tools to follow your vision wherever it takes you be it over/underground.

travisnorman: DIY for me = The Freedom to pursue your vision precisely as you imagine it, without compromise.

Interestingly, no one said "too much damn work." Although one person seemed to take the question a bit too literally: "DIY means 'do it yourself,'" they said. Well, we're glad to have cleared that up!

If you haven't already chimed in, tell us in the comments what DIY means to you!

Jill Sobule and Josh Freese Have Fun With Marketing

You don’t need us to tell you that economic times are tough — musicians are feeling the financial pinch just like anyone else. On the upside, they're getting really creative about how they make music and market themselves. From a personal "lunch date" at the Cheesecake Factory to a live performance in your living room, today's artists are doing whatever it takes to establish a fanbase and hopefully sell some music.

As David Byrne (who actually appeared at our 2006 Policy Summit) once sang, “same as it ever was.”

Or is it? Musicians like Josh Freese and Jill Sobule are taking the artist-fan relationship to a whole new level. Both musicians have had pretty solid careers — Freese is a drummer who’s recorded albums with Nine Inch Nails, Devo and A Perfect Circle ( to name a few); Sobule is a songwriter who sang about “kissing a girl” back when Katy Perry was still in Junior High. And both have new albums out and are inviting fans to play a more direct (and atypical) role in their success.

Like many musicians, Sobule has had a rocky relationship with record labels. After being dropped by two majors and living through the bankruptcy of two indies, she decided in 2008 to take matters into her own hands. Sobule started a fundraising drive to help record her next album. And what rewards her benefactors would receive: t-shirts, a personalized voicemail theme song, live performances at fans’ pads and, for the right price, the chance to contribute background vocal to her album. ”If you can’t sing, no problem — we can fix it on our end,” she said. Sobule raised an astounding $75,000, which she used to make her record and is now hoping the buzz will help generate CD sales. (Check out an interview with her here.)

In-demand drummer Freese claims his last CD sold somewhere between “three to five copies” but he’s hoping that his latest disc will do a lot better, thanks in part to his new marketing strategy (somewhat old news, but still awesome).

Freese is counting on his connections with industry vets and a passion for “fine dining” to help move units. Ever wondered what Pearl Jam guitarist Stone Gossard’s favorite song is? Well, if you cough up $500 for Freese, he’ll have Stone personally write you a letter letting you know. Crave a three-course meal at the Cheesecake Factory with Mr. Freese himself? If you can cough up $250.00 your dream can come true. And if you have $75,000 that Bernie Madoff didn’t get to, you, Freese and Danny Carey from Tool can all trip on ‘shrooms and ride around in Carey’s Lamborghini (people, we are NOT making this up!) What hedge-funder wouldn’t jump at such a unique opportunity?

All jokes aside, the “new DIY” is changing the way musicians are selling their wares and getting attention in a noisy media landscape. It's also cool to see musicians finding humor in an industry saddled with declining sales and finger pointing. Maybe even laughing all the way to the bailed-out bank.

ISPs Join RIAA Strategy to Combat Illegal Filesharing

In late 2008, it was reported that the Recording Industry Association of America (RIAA) was working with Internet Service Providers (the folks that make your internet go) on a new strategy to combat the unauthorized sharing of copyrighted material. Instead of suing individual infringers, the RIAA said it would focus on a "graduated response" to unauthorized uses.

This new copyright enforcement concept goes something like this: the RIAA would give the ISPs info about suspected infringers’ IP addresses; the ISP would then locate the subscriber and send notices telling them to quit it or his/her account could be “deactivated.” Personally identifying info about the user — name, etc. — would supposedly not be shared between the ISP and the RIAA.

When the RIAA announced that it had signed “voluntary agreements” with major ISPs in December 2008, no actual ISPs were named. With details scarce, the reporting tended to focus on the fact that the lawsuits against individual infringers — which had generated an enormous amount of negative publicity for the major labels — would cease.

Well, news broke earlier today that Comcast and AT&T are officially entering a “trial” phase for their “notification” strategy, but didn’t provide details on when and where it will be rolled out, or whether it contains a punitive component (like “three strikes, you’re out”). Keep in mind that some ISPs are already sending out similar notices independent of the RIAA.

Comparable approaches have been kicked around in other countries for some time now. In Britain, a voluntary arrangement between the RIAA and/or BPI (formerly known as British Phonographic Industry) and the ISPs is already in place, although there is no compulsory penalty for alleged infringers. In France, New Zealand and Canada, there has been increasing debate about whether violators should get the boot.

The entire concept raises some questions. First, what due process provisions could customers use to defend themselves from accusations? And how do you deal with a situation where the person whose name is on the ISP bill is sent a takedown notice because their neighbor used their connection to illegally download the new Britney jam?

Then there are questions about how the RIAA determines that a file is being unlawfully shared. So far there haven’t been any specific details regarding filtering or digital watermarking (which could raise privacy concerns). And what are the criteria for determining an infringing behavior? If you buy an MP3 at home and send it to yourself at work via a file-sharing program, have you broken the law, or is this a “fair use?” What if you’re the composer, songwriter or performing artist but not the copyright owner? Do you have any rights in regards to how your music is digitally transmitted?

In 1996, Congress passed the Digital Millennium Copyright Act (DMCA), which included “safe harbor” provisions for the ISPs, meaning they weren’t held responsible for infringing content moving through their networks. In other words, they were “dumb pipes.” If the ISPs take a proactive role in policing their networks for infringement, are they leaving themselves open to possible litigation from other rights holders (photographers, movie studios, etc)?

Working with ISPs is probably a better strategy for the RIAA in terms of PR. Yet remains to be seen whether this scheme will have its intended effect. We’ll be keeping our eyes on any and all developments.

This Week In News

Online Music Retailers Slashing Prices
The Boston Globe has a solid piece on the recent trend in falling prices for online music. Services like Amazon MP3 have been aggressively cutting prices, including a $3.99 deal last week for U2's "No Line on the Horizon," with some other album (not track) prices as low as 99 cents. AppScout.com

Counting Crows Leave Label for a DIY Approach Online
The Counting Crows have ended their eighteen-year label relationship with Geffen Records (now part of Universal Music Group), lead singer Adam Duritz says on the bands website. Duritz says the band will go it alone, saying "the internet opens a world of limitless possibility, where the only boundaries are the boundaries of your own imagination." Apparently UMG didn't approve of breaking down some of those boundaries. Duritz added "Unfortunately, the directions we want to go and the opportunities we want to pursue are often things that our label is simply not allowed to do." Michael Arrington, Washington Post

What’s the Real Cost of Free Music?
SpiralFrog met its end just days ago, and already, operators of other ad-supported music services are rushing to put distance between their business models and that of the doomed site.

Greg Sandoval, CNet News

SXSW: Social Networking Rocks-But Only for Some Bands
Two years after South by Southwest bands first embraced Twitter to reach out to fans, many of them are taking every opportunity to use social networking. We expected that. What caught us off-guard was other artists' reluctance to embrace these tools despite expert assertions that such activity grows a band's fan base and, ultimately, its revenue. Van Buskirk Eliot

The State of the Music Business According to John Mellencamp
John Mellencamp argues the decline of the music industry is not P2P file sharing, but rather SoundScan. Huffington Post

As Rights Clash on YouTube, Some Music Vanishes
In early December, Juliet Weybret, a high school sophomore and aspiring rock star from Lodi, Calif., recorded a video of herself playing the piano and singing “Winter Wonderland,” and she posted it on YouTuBE. Weeks later, she received an e-mail message from YouTube: her video was being removed “as a result of a third-party notification by the Warner Music Group,” which owns the copyright to the Christmas carol. Tim Arango, New York Times

FMC's South-By Drop-By

South By Southwest has rightfully earned its reputation as one of the most raucous music conferences in the country. Held yearly in Austin, Texas, SXSW is an over-the-top celebration of music, booze, and networking that can take a while to recover from (in a good way). In between the live sets and Tex-Mex, there's also panel discussions about where this whole music dealie might be headed.

FMC is no strangers to these discussions, having been going to SXSW for years. This year saw FMC technologies director and founding Board member Brian Zisk appearing on two panels — "Fan Based Marketing" and "Policy Trainwreck: How Copyright Law Failed the Digital Age," while FMC General Counsel and co-founder Walter McDonough spoke at a discussion called "Is Collective Licensing for P-2-P File Sharing a Future Source of Income for the Music Industry?"

The latter just got written up by Wired's Eliot Van Buskirk, who called it "among the more interesting panels I've attended." We can see why. In addition to Walter, the conversation included FMC advisory board members Sandy Pearlman, Jim Griffin and Rick Carnes, as well as entertainment lawyer Dina LaPolt.

Pearlman is a legendary producer whose visionary predictions about the music industry have a tendency to become focal points well after they're originally introduced (case in point: collective licensing, which he was talking about at the beginning of the decade.) Is Sandy the Nostradamus of music? Well, he does sometimes speak in prose, but we're not ready to call it either way.

In addition to his work with FMC, Walter is also an entertainment attorney in Boston, a professor of copyright law at Suffolk University Law School, and a SoundExchange Board member. (Walter moderated one of the most feisty and interesting panels at our February 2009 Policy Day — check out video and audio archives here.)

Jim Griffin is managing director of OneHouseLLC, and is currently working with Warner Music Group to help universities and then ISPs license music so that college kids can download tunes (without getting sued) for a small monthly fee. Proceeds would be split among rightsholders, but as LaPolt puts it, "the devil is in the details." In other words, this subject is gonna be debated for a while yet. For its part, FMC hopes that this system — if implemented — properly compensates musicians. We'll keep continue to keep our eye on this and other developments in how artists would get paid in emerging digital models.

Rick Carnes is the president of the Songwriters Guild of America, and often appears on panels to discuss the impact of filesharing on his profession, as well as offer his views on possible solutions.

So yeah, there's some brains there.

SXSW often archives panel discussions; our advice for the curious is to keep checking their site. In the meantime, you can read Buskirk's take on the collective licensing discussion. (We also think it's time to get Walter and Brian on another podcast interview, so watch this space!)

If you're interested in music and technology issues (and why else would you be reading this?), you won't want to miss Brian's next SanFran MusicTech Summit, which takes place at the Hotel Kabuki in San Francisco on May 18, 2009. SFMT brings together the best and brightest developers in the music/technology space, along with the musicians, entrepreneurial business people, press, investors, service providers, and organizations who work with them at the convergence of culture and commerce. Space fills fast, so get your tickets now!

The Public Performance Right--Which Side Are You On?

We don’t know about you, but last weeks House Judiciary Committee hearing on the Public Performance Right for Sound Recording is still very fresh on our minds. With support and opposition coming from all sides, the issue is very much at the forefront of music-biz discussions. Radio Ink recently published a roundtable Q&A with industry professionals who voiced their opinions about the public performance right for terrestrial radio – which would compensate performing artists and sound copyright owners (usually the label) for over-the-air plays of recorded music. FMC’s Ann Chaitovitz was a part of the conversation and offered some clear and valid reasons as to why the performance right is fair and should be supported:

Performing artists breathe life into the songs that we all love and want to hear, and they should be compensated when corporate radio uses their work to attract listeners to sell advertising. Just about every other country in the world pays the performance right.

The lack of a reciprocal right leaves millions on the table for American artists. The fact that satellite radio and webcasters already pay the rights but traditional radio doesn't gives an unfair advantage to terrestrial broadcasters. Music is popular, and will no doubt remain so. Right now, radio does pay when it broadcasts talk, sports, and syndicated programming — it is only sound recordings that are at a disadvantage.

The debate over a performance right for terrestrial broadcasting has been going on practically since the dawn of radio. Currently performance royalties are paid only to songwriters and composers through ASCAP, BMI and SESAC. But what about performing artists, whose signature talents help to attract listeners and advertising dollars? Consider that not paying a performance right puts us in the company of Iran, China and North Korea — countries not exactly known for their fair treatment of artists.

Broadcasters claim they will not be able to afford to pay a performance right, but the proposed legislation actually includes a rate cap. This means that small commercial and non-commercial stations shouldn’t be adversely affected. If a station makes less than $1.25 million in revenues in a year, it will pay a maximum fee of $ 5,000. And any public broadcasting entity, religious broadcaster or noncom educational station would pay a maximum of $1,000 per year — many would be exempt from paying anything.

Opponents of a performance right also argue that performing artists and record labels benefit from the “free promotion” of having their songs played on the air. But broadcasters pay talk talent, who use their radio shows to boost book sales and television viewership — should Sean Hannity not be paid because his radio program is likewise “promotional?”

Often, the big broadcasters try to make it seem like a performance right is just a ploy by the major labels to eke out more revenue for themselves. Well, a performance right for terrestrial radio would pay the performing artist 45 percent of the royalty directly — it wouldn’t go through the label at all. 50 percent would go to the owner of the sound copyright (which could be a major label, indie or even the artist themselves), and the remaining five percent would be split among the supporting players.

Some suggest that if a performance right were enacted, broadcasters would stop spinning tunes completely. As Ann counters in the Radio Ink piece, “As long as great artists that listeners want to hear create great sound recordings, broadcasters will keep programming music.” We just think they should pay something for the privilege.

We’ll continue to keep you posted on developments; in the meantime, you can check out our public performance right fact sheet for more info.

HINT at SXSW — Podcast Interview with Alex Maiolo

Just wanted to let all you Austin-bound peeps that Alex Maiolo, project coordinator for FMC's Health Insurance Navigation Tool (HINT), will be at South By Southwest this year, rocking out and spreading the word about this free service for musicians.

What's this HINT thing all about? Well, it's an information resource for musicians to learn about their health insurance options. After scheduling an appointment on the HINT website (which also contains lots of useful, musician-friendly info), artists get a call from health insurance experts Alex or Chris Stephenson, who'll go over an individual's options on case-by-case, state-by-state basis. Alex and Chris are also indie musicians — no stuffed-shirt nerditude here, just solid, (and free!) info.

So, as we were saying. . . Alex will be at SXSW this week, talking to musicians and managers about HINT. He probably won't have time to do one-on-one sessions, but if you're in Austin and want to to catch one of his informal group chats, shoot him an e-mail here.

Oh, and we almost forgot — Alex recently talked to us about HINT, why health insurance is important to musicians (even if you think you don't have time to learn about it), and why Austin during SXSW is probably the most unhealthy place in the world. Fun as hell, though. Check it out here.

LPFM Push Still Going Strong!

We told you a few weeks ago that the Local Community Radio Act of 2009 — which would allow more Low Power FM stations in towns, cities and suburbs across the United States — is currently making the rounds in Congress. In the meantime, we wanted to keep you up-to-date on the growing support for LPFM.

For those unfamiliar, LPFM is 100-watt non-commercial radio that can be broadcast at low cost to a small community area. FMC supports LPFM as an alternative to homogenized commercial radio, which has seen shrinking playlists and a loss of local focus over the past couple of decades. LPFM could also make broadcasting a real possibility for schools, labor unions, churches and non-profit groups. On the music side, these "microstations" would create an outlet for developing and local artists to get their music heard. And lets not forget those already-successful acts that for some reason never get any play on the corporate dial — non-commercial and LPFM stations can help bridge that gap.

Last week, FMC Communications Director, Casey Rae-Hunter was interviewed on Pacifica Radio along with Geraldo Reyes from the Coalition of Immokalee Workers and Cory Fischer-Hoffman of the Prometheus Radio Project to discuss how LPFM can help diversify the airwaves and serve local communities. Listen to the segment here.

So where is all of this LPFM stuff headed? Well, with the reintroduction of the Local Community Radio Act and bipartisan support including Representatives Mike Doyle (D-PA) and Lee Terry (R-NE) many think this is the year for LPFM. We’re keeping our fingers crossed, and will let you know how it all plays out. For more info, check out our LPFM fact sheet.

Public Performance Right Hearing on the Hill

Yesterday (March 10, 2009), the House Judiciary Committee held a hearing on the Public Performance Right for Sound Recordings, which featured testimony from folks on all sides of the issue, including one bona fide rock star (no, President Obama didn’t stop by).

Billy Corgan of Smashing Pumpkins joined Mitch Bainwol (Chairman and CEO, RIAA), Paul Almeida (President, Department for Professional Employees, AFL-CIO), W. Lawrence Patrick (President, Patrick Communications), Stan Liebowitz, Ph.D. (Ashbel Smith Distinguished Professor of Managerial Economics, University of Texas at Dallas) and Steve Newbury (Chairman of the Radio Board, National Association of Broadcasters) to present their views on the Public Performance Right.

This Performance Right would pay performing artists and sound copyright owners for the use of their music on terrestrial radio. Here’s an example: if you hear Aretha Franklin’s version of "Respect" on U.S. radio, only the songwriter (Otis Redding) and the publisher receive payment; Aretha (and her label) are left out. Compare that with the situation in just about every other industrialized nation, where performing artists receive payment for the use of their work on over-the-air broadcasts.

FMC supports a Public Performance Right for terrestrial radio for a number of reasons — it would compensate deserving performing artists; it would establish a better balance between new services and traditional radio; it would create another revenue stream for copyright holders and performers, including the thousands of independent labels whose songs receive airplay every year. It would also enable U.S. artists to get paid when other countries broadcast their work. Millions of dollars of foreign performance royalties that could be distributed to US performers are currently left on the table – or go into other countries’ arts and culture coffers — because the US has no terrestrial performance right. For more information, you should check out our Public Performance Right fact sheet, and Ann Chaitovitz’s Op-Ed in Huffington Post.
This issue goes back to practically the dawn of radio. The broadcasters have long held that the airplay creates “promotional value,” which in turn drives record sales; therefore, they shouldn’t have to pay for using performers’ music. The debate has gotten even hotter in the digital era due to the fact that satellite radio, webcasters, and cable music stations pay the performer and recording copyright owner via SoundExchange, as well as paying the songwriter and publisher through ASCAP/BMI/SESAC.

Like the royalty breakdown for the digital Performance Right, the royalty breakdown for the terrestrial Performance Right goes like this: for non-interactive licenses, the featured performing artist receives 45 percent, the sound copyright owner (again, usually the label) gets 50 percent and the backing musicians and vocalists split the rest. This money does not come from the songwriter and publisher’s portion; it cannot be recouped and does not even go through the label.

It’s worth noting that Billy Corgan, who supports the Performance Right for terrestrial radio, is not only the featured performer, but also the songwriter and co-copyright owner for most of his band’s material. In his testimony, he was clear about how terrestrial radio benefited his own career, but didn’t mince words about what he sees as a skewed compensation structure. “From my perspective, this issue is one of fundamental fairness,” he said. “If the performance of a song has value to a particular terrestrial radio station in its airing, I believe it is only right to compensate those performers who have created this work. Simply put, if a station plays a song, both the author and the performer should be paid. These particular performances must have value to the stations or they wouldn’t be playing them.”

Steve Newbury, representing the National Association of Broadcasters — who have so far successfully beat back attempts to enact a performance right for radio — invoked poor market conditions and promotion for artists as reasons to keep things as they are. “Local radio stations provide new and emerging artists with needed exposure and access to a listening audience,” he said. “Record companies and their artists benefit not just from radio airplay, but also from on-air interviews and promotions of local concerts and new albums.” Yet one of the fastest growing segments of commercial radio is classic rock, which plays music that long ago passed its promotional “sell-by” date. There’s nothing saying that all music would even have to have the same rate — oldies formats might end up paying less then the stations that spin the latest cuts. The rate set for an artist’s debut might be lower than the rate for an established superstar.

It’s also interesting that whenever the Public Performance Right is discussed, the broadcasters bring up their supposed commitment to localism and diversity, which, in this era of hyper-consolidation and cookie-cutter playlists, smells a bit fishy.

As expected, the RIAA (and by extension, the major labels) took a bit of a bashing from both members of the Committee and those witnesses who are against the Performance Right. But it’s important to mention (as RIAA CEO Mitch Bainwol did in the question-answer period) that the big labels are only one segment of the industry — there are a lot of indies out there. The American Association of Independent Music — an indie label trade group — actively supports the enactment of a performance right, too.

The language in the House bill contains some notable improvements over the legislation introduced last year. First, it includes additional language to protect songwriters’ royalties and to ensure that these royalties cannot and will not reduce the amount of songwriter royalties. This is important, as songwriters depend on radio play as a major source of revenue.

It also closes an important loophole that the labels could have used to hurt performers. The current bill requires that terrestrial stations pay the designated collecting agent (probably SoundExchange) 50 percent of royalties due under any license granted by a copyright owner. The designated agent will then distribute the 50 percent directly to the artists. This provision prevents the labels from doing direct license deals with the broadcasters and collecting the artists’ portion. Unfortunately, this provision is limited to direct licensing of terrestrial stations and not internet, satellite and cable transmissions. We strongly support this provision but believe it should be expanded to include ALL direct licenses of music transmissions otherwise subject to the statutory license.

All in all, it was a fascinating hearing, even if it didn’t hint at any forthcoming compromises between factions. Head to the House Judiciary Committee site to see testimony from all the witnesses. You can also read a nicely balanced play-by-play at Coolfer.

Street Sweeper Gets Active!

Guess what? Street Sweeper — a supergroup featuring Tom Morello (Rage Against the Machine/the Nightwatchman) and Boots Riley (The Coup) — will be the opening act for this summer’s Nine Inch Nails/Jane’s Addiction “NIN/JA” tour. (Riley and Morello were part of the FMC-organized Tell us the Truth Tour in 2003.)

Which reminds us of the cool things that can happen when artists come together for a cause. Like our Artist Activism Camps in New Orleans, where up-and-coming and established musicians from around the country come together to talk about ways to incorporate activism into their lives as artists. The gathering culminates with an all-star benefit concert for Sweet Home New Orleans — a non-profit group that helps musicians displaced by Hurricane Katrina return to their communities and hopefully start making music again. ‘Cause we all know that New Orleans is about the music. (The gumbo’s pretty good, too.)

AAC vets OK Go and Bonerama collaborated on a EP in 2007 called You’re Not Alone — proceeds from which went to put Mardis Gras legend Al “Carnival Time” Johnson in a new Habitat for Humanity home. They also played a few benefit gigs together and appeared on David Letterman as an indie-rocking, brass-funking monster.

Street Sweeper have an album on the way; you can check out the band’s “in-progress” website to get a taste of their stuff. Head here for the NIN/JA tour dates. (There’s at least one FMC staffer who’s beyond psyched to relive their cherished Lollapalooza ’91 memories!)

Oh, and this years’ Artist Activism Camp will be take place in the Big Easy from May 20-22. We’ll definitely keep you updated on that.

DIY Digital – An Up Close Look

FMC pal Charles McEnerney of Well-Rounded Radio (a very cool podcast site that conducts interviews and connects listeners to what’s happening outside of mainstream music) recently spoke with Jeff Price, founder/CEO of TuneCore — a service that allows musicians to distribute their music to all the online retailers and on-demand streaming sites such as iTunes, Amazon MP3, eMusic, Rhapsody, Lala and Napster. Both McEnerney and Price were at our "What's the Future for Musicians?" event last year in New York, so we thought it would be a good idea to share with you some of the highlights from the latest Well-Rounded podcast.

The interview focuses on how artists can use a service like TuneCore to get their music to fans. The way we discover and access music these days is different from even five years ago, and, while CD sales are in decline, digital sales are climbing. Today’s musicians no longer need the backing of a label to digitally distribute their music, thanks in part to new services that do it for a fairly nominal charge.

With TuneCore, you pay around $35 (not bad considering you keep all of your rights and revenues), then uploads your audio files. After a short processing time, voila! your work is on sale to the 1.5 billion people online. Other perks include TuneCore’s relationship with Guitar Center, which gives artists the chance to have their music played throughout the retailer’s 220 stores (that is, if it can be heard over the fumble-fingered renditions of “Stairway to Heaven”). TuneCore also emails revenue updates and even has its own chart in Billboard.

But the real question is, is TuneCore worth it for musicians? According to Price, the answer is yes. As he says in the podcast interview, TuneCore releases more music in a day than traditional labels put out in a year. Waiting around for an A&R executive to discover you may no longer be necessary — if you can cultivate an audience, you can sell to them directly. Then there’s the limitless “shelf space” offered by digital, meaning you don’t have to press thousands of CDs and ship them out (of course, you can still do this if you want to — TuneCore also offers small and large-batch CD duplication).

And it’s not just unsigned musicians on TuneCore — mainstream acts like Nine Inch Nails and Paul Westerberg have also used the service. In fact, Aretha Franklin will be using TuneCore to distribute her performance of ‘My Country Tis of Thee” (you know, when she wore that crazy hat at President Obama’s inauguration?)

We at FMC are impressed by the growing number of digital music services available to artists. (It’s important to remember that all of this is made possible by net neutrality, which lets start-ups and indie artists exist on an equal technological playing field with the big companies). Which means that TuneCore, while very cool, is hardly the only DIY game in town. CDBaby — an online record store that has sold more than five million CDs from independent artists — also services to digital stores like iTunes, Amazon and eMusic. Then there’s ReverbNation, which started out as a marketing service/streaming player but has recently gotten into the digital distro game. For artists on independent labels, there’s companies like Iota and The Orchard.

If you want to hear more from TuneCore’s Jeff Price, you should check out the audio/video archives from our “What’s the Future for Musicians?" event, which took place in New York City on October 6, 2008. Well-Rounded Radio’s Charlie McEnerney was also on hand for a breakout session on podcasting. You'll find them both right here.

Feel free to let us know in the comments what sites and services you use to get your music out there!

LPFM Gains Momentum!

Earlier this week, we told you about the re-introduction of Low Power FM legislation in the House of Representatives. The Local Community Radio Act of 2009 would bring more LPFM stations to cities, towns and suburbs across the United States — something we all should get behind.

On Wednesday, February 25, members of Congress, public interest advocates and community organizations participated in a national conference call to talk about the bipartisan bill. Joining the discussion was Reps. Mike Doyle (D-PA) and Lee Terry (R-NB), Cory Fischer-Hoffman of Prometheus Radio Project, Shawn Campbell of the Chicago Independent Radio Project, Ben Scott of Free Press and our very own community radio champ Michael Bracy. You can listen to an MP3 of the conversation here.

Our friends at Free Press scored another cool point for LPFM this week with a Huffington Post article by Timothy Carr, brilliantly titled "Celine Dion is Stalking You." They also created a page where you can tell your representative why Low Power FM matters to local communities.

Low Power to the People!

The Live Nation/Ticketmaster Merger: A Look at Possible Impacts

The music industry is currently abuzz about the proposed merger between concert ticket giant Ticketmaster and the world’s largest concert promoter, Live Nation (which also sells tickets.) On February 24, the U.S. Senate Judiciary Committee held a hearing on the matter that included representatives from both Ticketmaster and Live Nation, as well as the independent promotions/ticketing and public interest sectors. The House Judiciary Committee took up the case today (February 26).

The hearings examined antitrust concerns raised by the possible merger. Committee members seemed skeptical that the deal — supported by witnesses Irving Azoff and Michael Rapino — would lead to $40 million in “efficiencies,” lower ticket prices, and create more revenue streams for artists, as the two men suggested. You can watch the CSPAN video archive of the Senate hearing here; read witness testimony here.

Consider the playing field. Until the end of 2008, Live Nation had a deal with Ticketmaster to handle the ticketing for their US events but began selling its own tickets after their deal with Ticketmaster expired. This means that Live Nation had recently moved from being a Ticketmaster customer to a Ticketmaster competitor.

The field has also changed on the superstar artist side. In 2007, Live Nation began experimenting with so-called “360-degree” deals with a handful of top-tier artists, including Madonna, U2, Nickelback, Jay-Z and the Jonas Brothers (These deals vary from contract to contract, but they typically give Live Nation a slice of merchandise and/or concert and recording revenue.) On Ticketmaster’s side, a recent merger with Azoff's Front Line Management Group put Azoff — a powerful music manager with a star-studded roster that includes The Eagles, Christina Aguilera, Guns N’ Roses and many others — in charge of the combined company.

Some are concerned that the proposed Live Nation/Ticketmaster merger would create a monopoly force with influence over ticketing, promotion, venues and artist representation. Live Nation and Ticketmaster counter that the arrangement would create stability in an ailing industry, drive innovation and ultimately reward fans. Although there’s plenty of evidence that consolidation in the music industry benefits few in the long-term, some, including music biz curmudgeon Bob Lefsetz, are suggesting this merger might help move the industry forward.

Since this proposed merger would likely affect the entire industry, we’ve been paying close attention. In the interest of providing a balanced look at the possible pros and cons of the proposal, FMC solicited statements from a handful of experts, including Stephen Weisz (founder and CEO, In Ticketing), Albert A. Foer (President, The American Antitrust Institute), Peter Jenner (Manager of Billy Bragg and Emeritus President of the International Music Managers Forum), Michael A. Einhorn (Silberman School of Business; former member of the Antitrust Division at the U.S. Department of Justice), Eddie and Wolfgang Van Halen, Journey and Seal (the latter artists provided by representatives for Azoff). Click here to read them all.

It remains to be seen how the merger will impact the industry if and when it goes through. For now, we thought it would be constructive to present a few different sides to the debate.

We’ll be inviting everyone who commented to submit replies in the coming weeks. We’re also interested in what you have to say — send your comments to casey@futureofmusic.org, and we’ll consider them for publication on our site.

New LPFM Legislation to be Introduced

It was only a matter of time before the new Congress saw the reintroduction of a pro-Low Power FM bill. If passed, this legislation would create opportunities for hundreds more community radio stations in cities, towns and suburbs across the United States. The House of Representative's new Local Community Radio Act represents a strong step forward towards this goal.

FMC has long advocated for LPFM (and non-commercial, community radio in general) as an alternative to the homogenized playlists often heard on hyper-consolidated corporate radio. LPFM in more areas would be a tremendous boon to local and independent artists who typically find themselves shut out from area commercial stations. We figure that if more people had the chance to hear the talent in their own backyards, it might even have a positive effect on local economies.

But LPFM isn't just good for musicians — new low-power licenses would make radio station ownership possible for schools, churches, labor unions, local governments, emergency providers and other nonprofit groups, who could use the public airwaves to directly communicate with their local community.

Tomorrow (February 25), members of Congress, public interest advocates and community organizations will hold a national conference call to discuss the reintroduction of the bipartisan Local Community Radio Act. The sponsors of this legislation, Reps. Mike Doyle (D-Pa.) and Lee Terry (R-Neb.) will join the call to explain the details of this bill. Here's the details:

WHAT: National Conference Call on Community Radio Legislation
WHEN: Wednesday, February 25 12 p.m. ET
WHO:
Rep. Mike Doyle
Rep. Lee Terry
Cory Fischer-Hoffman, Prometheus Radio Project
Shawn Campbell, Chicago Independent Radio Project
Michael Bracy, Future of Music Coalition
Ben Scott, Free Press
*** Call this number: (888) 792-8352 Call-in Code- 87422899 ***

The last time LPFM legislation was introduced, it won nearly 100 co-sponsors in the House. The Senate version of the bill, sponsored by Sens. Maria Cantwell (D-Wash.) and John McCain (R-Ariz.) and co-sponsored by then-Senator Barack Obama, unanimously passed out of the Commerce Committee. The Senate is expected to reintroduce a new version of the bill in the near future. We'll keep you updated!

Caught in the Web

For those of you who were there, you already know that Threads and Cred — last week’s final web.illish.us event at Silk City in Philly — was one kick-ass party. For those of you who weren’t there, here’s a brief run-down on what you missed (You can also watch the video archive from the live webcast at http://web.illish.us/).

The jam-packed event saw local fans ready to hear a bracing mix of hip-hop, jazz rock and instrumental fusion. From the mysterious mood lighting to DJ Dirty South Joe’s between-set mix, it was obvious from the start that Threads and Cred was going to be a memorable (and musically diverse) occasion.

Philly’s Drake opened the show, amazingly and deftly combining two MCs, a cellist, a drummer, trumpeter and singer in a progressive stew that got the crowd hyped up and ready to dance.

Next up was rapper Dice Raw, who impressed with his stellar rhymes and unusual beats. Another local, the MC demonstrated serious versatility and creativity in a one-man show that totally rocked the crowd and clearly left them wanting more.

Headliner MJ Project’s was obviously the crowd favorite as evidenced by the wild audience reaction from the moment they hit the stage. Their funky performance was marked by intense energy which is probably why the exhausted crowd still demanded an extra 15 minute encore.

Whew. Talk about a party!

Thanks to everyone who showed up and supported FMC and realizePhilladelphia for our web.illish.us series, which spread the word about the importance of net neutrality. To learn more, check out our Rock the Net campaign. And visit our main website to see the full spread of musician-oriented issues FMC is working on and ways you can plug in.

web.illish.us in Philly City Paper!

We'll post a full report about "Threads and Cred" — the final installment of web.illish.us at Silk City in Philadelphia — in just a few, but for now you can check out this preview in Philly's City Paper. The item includes quotes about net neutrality (the underlying theme of this multi-faceted series of events) from Dejha Ti of realizePhiladelphia, our web.illish.us partners.

Check the web.illish.us site for archived video of the live webcast of this and previous episodes.

Webcasting Royalty rates: Deal or No Deal?

Back in September 2008, we told you about the passing of the Webcaster Settlement Act, which allowed for the implementation of an agreement between copyright owners, performers and online broadcasters on webcasting royalty rates — provided they arrive at mutually-agreed-upon rates by February 15, 2009.

To better understand the situation, a little history is in order. In May of 2007, the Copyright Royalty Board set royalty rates for online broadcasts that many webcasters said would mean lights out for their services. In the wake of this decision, webcasters and SoundExchange (the designated organization that collects and distributes payments to performers and labels for digital broadcasts) have been negotiating rate compromises, to varying levels of success.

SoundExchange seeks equitable payments for its members, which include performing artists and labels, while the webcasters want to broadcast without going bust. So it’s a bit more complicated than “these guys are awesome, and these guys are jerks” (although some may be inclined to see it that way.)

In FMC’s statement on the original CRB rate setting, we called on parties “to adopt reasonable rates and reporting requirements for clearly-defined categories of small, noncommercial and hobbyist webcasters that will ensure the future development of this medium.” We also stressed the importance of properly compensating artists, performers and labels for uses of their work, without which there’d be nothing much to play. We remain hopeful that any final agreement will satisfy these concerns and ultimately lead to the discovery of more music. The latter is something webcasting can play a huge role in, provided there’s a way forward.

Some individual deals have already been made. The National Association of Broadcasters and SoundExchange reached an accord on February 16 that sets a per-song rate for simulcast programming online or stand-alone internet stations through 2010. (The next rate-setting period would cover 2011-2016.) The Corporation for Public Broadcasting came to a February 15 agreement with SoundExchange that sets a one-time payment of $1.85 million together with consolidated usage and playlist reporting from CPB on behalf of the entire public radio system. This settlement covers streaming services from January 1, 2005 through December 31, 2010. Earlier this year, some smaller webcasters accepted a deal with SoundExchange that bases royalty rates on revenues and site traffic; others are still negotiating.

So what happens next? Well, the Digital Media Association (which represents large webcasters like Pandora and RealNetworks as well as tech companies like Apple and Nokia) is free to continue negotiations with SoundExchange. But unlike under the Webcaster Settlement Act, any agreement would only apply to copyright holders that are signed up with SoundExchange — it wouldn’t cover everyone. Meanwhile, the original CRB decision is on appeal. Congress could extend the deadline for a negotiated solution that will apply to all parties, but new legislation would have to be introduced and passed in both houses. So for the moment at least, the future of webcasting is anything but certain. We'll keep you posted.

Live! Tommorow! Final web.illish.us event!

Hard to believe three months have gone by and we’re now at the final web.illish.us event, which takes place tomorrow night (Wednesday, Feb. 18) at Silk City in Philadelphia.

Saving the best for last may be an understatement considering tomorrow’s jam-packed event. Appropriately titled “Threads & Cred,” this installment will focus on how net neutrality strengthens creative culture by facilitating innovation, real-time experimentation and collaboration. “Threads & Cred" refers to dialogue threads (as well as a pun on clothing) and the credibility you need to thrive in online (or real-world) communities.

FMC has partnered with realizePhilladelphia (a non-profit group that promotes social causes through musical and educational events) to bring you these events, which raise awareness about the importance of net neutrality to the musical and creative communities. (For more information on why the open internet is so important for musicians, check out our Rock the Net campaign.)

Tomorrow night’s event is hosted by Philly native Charles Gregory and includes performances from hip hop Grammy winner and Roots collaborator Dice Raw, experimental jazz group Drake and the progressive instrumental band MJ Project.

FMC will have our eyes and ears up in Philly, and we’ll report back all the highlights right here. Of course, you can always watch it live on the web via the web.illish.us site — the live music kicks off at at 10 PM, and there's also a studio-produced panel discussion that was pre-recorded on February 12th. This is the final web.illish.us event, so you really don’t want to miss out! Head here for more information; you can watch video archives of the previous “webisodes” here. Hope to see you there!