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Webcasting a hook into the royalty pool

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Webcasting is another word for Internet radio. Unlike filesharing, listeners only listen. They do not download music. For a list of webcasts visit SHOUTcast and enjoy audio of all imaginable genres - Punk to Middle Eastern.

We began the Future of Music Coalition in 2000 at the time of the debate with Napster and the Recording Industry Association of America (RIAA). No one was advocating for the people who were in the middle: the consumers, the educators – and the musicians. So we put together the Future of Music Coalition to speak for some of those who were not being heard in the debate. The ‘indies’, or independent recording artists, are our constituency – it’s also the background we all come from. We were the first organisation to represent their interests. In effect, we filled a vacuum.

We try to find the middle ground, and we try to present solutions to problems. We do a lot of research, and we’re proposing what we believe will be a solution to this whole dilemma of the United States charging people for how they use recordings on the Internet.

I talk to the RIAA all the time, and I try to impress upon them that if you want to move forward and make the business better, you have to make some concessions. They make the mistake of seeing everything as a battle that they either win or lose. They do not see that there is a collateral political cost to it. As a result, they are not a popular organisation in the United States, and they bring this upon themselves by the attitude they have and the methods that they use.

SoundExchange was created to collect performance royalties. They hold the most accurate database of information regarding the ownership of copyrights. The Future of Music Coalition have proposed to the Senate Judiciary that the Sound-Exhange database be made publically available to webcasters.

Take, for example, the anti-circumvention, copyright protected CDs under the Digital Millennium Copyright Act (DMCA). This is an idea that, on some levels, makes sense, but it treats the consumer like a thief – and that’s not a good thing. You don’t want to alienate the consumer.

We have come up with a solution to the webcasting debate, which we believe could work out for everyone. We believe this might even be an opportunity to resolve more than one matter.

The entire system is computerised, so why not simplify it and, at the same time, try to have a royalty pool that is not based on guesses or estimates? We’re proposing the establishment of a ‘front-end hook’ into the Sound Exchange database, so webcasters can just log on to the database and report what the song is, and what the name of the recording artist and album title are. This would make the royalty pool fairer. With more accurate data, there would be more accurate payments – rather than all the money going to the top recording artists of major labels. We also believe that independent record labels and recording artists would see a bigger percentage of the pool.

It makes too much sense – even the major record labels cannot deny it. They have tended to be confrontational all the time, and it hurts them politically because people see them as the bad guy. They have to make concessions. Brian Zisk is less optimistic.

With Napster, it’s a different issue. There are so many inherent copyright infringement issues. At the same time, it’s becoming obvious that it is a new medium and there has to be some way of making it legal.

If it’s true, that the number of people using peer-to-peer file-sharing systems throughout the world has quintupled in eight months in spite of tens of millions of dollars spent on litigation, then that’s pretty scary. It means the genie is already out of the bottle. This coupled with the fact that it can be a very powerful promotional device – there’s got to be some way it can coexist with traditional notions of retail in record stores or record clubs.

I don’t think there’s any other way this can go. You can’t control technology, only try to harness it.

openDemocracy Author

Walter F. McDonough

Walter F. McDonough is the General Counsel and one of the four founders of the Future of Music Coalition and a recording artist representative board member of Sound Exchange. As an entertainment lawyer he has worked with many artists including Jay-Z, Sinead O’Connor and Richie Zambora.

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