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Document uploaded 08-06-2003 08:47 PM ET (US)

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 [General Comments]
  Roger Martin  02-08-2004 09:32 PM ET (US)
 
The most boring grammy I ever did see.
You call that music a lot of junk to put it mildly. You want good music go back to the 60's 70's 80's and even early than this. This here is not music at all.
1Creative LicenseSome analysts are proposing compulsory licenses as the answer to digital piracy
  Kevin Marks  08-06-2003 08:52 PM ET (US)
 
Question-begging summary - 'digital piracy' is framing the whole debate in the existing publishers' terms
  xeni  08-07-2003 03:51 AM ET (US)
 
I agree 100%. I didn't write the title. I don't like using the term "piracy" in that context -- it's too emotionally laden, and not accurate. As a reporter, it's not my job to assess a value call on the story. Just tell the story.
3Pay artists fairly. Give fans convenient and affordable access to online music. Sounds simple enough, but millions of downloads and dollars into the digital music dilemma, these fundamental issues are still unresolved. Despite millions spent in legal fees to combat illicit filesharing, audience demand continue strong, as demonstrated by the rising popularity of P2P networks like Kazaa and BearShare. Early attempts at subscription services like MusicNet and Pressplay have resulted in only limited success. Now an increasing number of technologists and music industry executives are talking about an alternative they believe might be the answer: compulsory-license models.
  Kevin Marks  08-07-2003 02:10 AM ET (US)
 
Whereas the low-restrictions iTunes store & emusic are doing well.
4Here's how "compulsories" might work. Music fans would pay a sort of "download tax" on services and devices (computers, Internet access, MP3 players), then download, listen to and share all of the online music they want. The collected funds would form a pool of revenue from which musicians and rights holders are paid.
  Kevin Marks  08-06-2003 08:55 PM ET (US)
 
At least the word 'Tax' is used - this is a clear attempt to nationalize music publishing, for the benefit of incumbent rights-holders, at the expense of the millions of people who find value in the many possibilities available online. Why only pay Rights Holders in music? How about paying all those people in chatrooms and mailing lists that are the real attractions that we pay our monthly subscriptions for?
  John Schuch  08-07-2003 03:46 AM ET (US)
 
I'd like to think that by persistently referring to the ISP proposal on the Pho List as a tax, I've helped in my own small way to change the terms of the debate, so that ISP customers will know how this implicates them.
  Matthew Morse  08-15-2003 06:00 PM ET (US)
 
There's a misleading statement here that hasn't been explicitly corrected, so here goes. Xeni says that music fans would pay the "download tax." In practice, most likely everyone would pay. Kevin is concerned about payment to everyone other than the musicians, and I agree that payment should to extend to everything anyone puts online. Whether that is feasible or desirable is a different question.
6Compulsory schemes aren't a new idea. Earlier precedents in broadcast-media history include radio licensing, in which standard rates are set with ASCAP, BMI and SESAC. But the buzz around compulsories as a way to generate revenue from downloadable music and movies is sparking a new wave of discussion among policy makers, technology developers, artists and others. Prominent academic voices in the debate over compulsories include law professors such as Lawrence Lessig of Stanford and Neil Netanel of the University of Texas, as well as computer science professor Ed Felten of Princeton.
  John Schuch  08-07-2003 03:53 AM ET (US)
 
Performance licenses aren't compulsory. No songwriter/publisher is compelled to join a performing rights organization, so not every copyright is available to be performed through a blanket license. Also, blanket performance licenses aren't "one size fits all," as the ISP tax seems to be in its current incarnation. They are tiered and variable, depending on the revenue of the licensee and the nature of their business. Also, one can contract around the PROs for performance licenses, through an organization such as Music Reports/Royalty Logic. The ISP tax proposal offers no such flexibility, as far as I can tell. I admire Professors Lessig and Felten very much, but, with all respect, I don't know if they've ever run businesses or done research in microeconomics. I think we need other voices in this debate.
7Hundreds of millions of dollars in profits are already being earned each year through digital music distribution, so the pro-compulsories argument goes, but not by artists or labels. Instead, digital music fans pay ISPs, blank-disc manufacturers, and PC- or software-makers: each a necessary component in the digital-music food chain.
  Kevin Marks  08-07-2003 02:13 AM ET (US)
 
And the vast majority of the musicians involved are independents, who use the web to spread the word, and the blank discs to record their own work.
This is a Sheriff of Nottingham tax, that robs the poor of the musical world to pay those already rich from CD sales - which, after all, are only down 10% from the peak on the most wild estimates. Many industries would consider that doing well.
  Matthew Morse  08-15-2003 06:06 PM ET (US)
 
So for music fans who run AOL on their Sony computers when they download files, at least two of the big five record companies are already getting paid because of digital music distribution. The payments may not be proportional to the use, but they don't owe any of the money back to the actual artists, so what are they complaining about?
9But the devil is in the details, and no matter which model you choose, there are plenty of details to sort out. How would usage be tallied? How would audience size be estimated? If you apply the compulsory model to music, what about movies or books? What about international territories? Would they participate, and would a compulsory system here in the U.S. work if other countries didn't participate? How would revenue be divided, and who would pay what to whom?
  John Schuch  08-07-2003 04:12 AM ET (US)
 
Perhaps the biggest detail to be sorted out is how you provide incentives to artists, entrepreneurs, and customers to participate in the business of digital music with an inflexible price structure determined by how high the ISP tax is set.

If the tax is too low, artists and entrepreneurs don't have sufficient motivation to provide the music that would be the backbone of this business. If the tax is too high, customers will be lost.
  Kevin Marks  08-07-2003 05:07 AM ET (US)
 
I agree John - incentives are the key to this. I believe that building an payment and incentive structure that will get artists promoters and customers involved voluntarily will win out over any compulsion-based regime.
11Jim Griffin, cofounder of the Pho digital entertainment discussion list and CEO of L.A.-based consulting firm Cherry Lane Digital, says the current case for compulsories traces back to the economic and cultural sea change that a then-new technology — electricity — created in the 1920s.
  Matthew Morse  08-15-2003 05:52 PM ET (US)
 
As John Schuch indicated, compulsory licenses aren't tied to radio. The original compulsory licenses were introduced in the Copyright Act of 1909. They were mechanical licenses, i.e. licenses for mechanical reproductions of music. Today that applies to CD recordings. Back then it applied to piano rolls. Since then compulsory licenses have been applied in other areas of copyright law, but mechanical licenses are still the canonical example.
14"It's too late to put the genie back in the bottle, because the anarchy already exists," Griffin states. "Monetizing that anarchy is the problem now. A new system might function like insurance systems do. Everyone pays in, and each of us draws out as needed."
  Kevin Marks  08-07-2003 02:18 AM ET (US)
 
Sorry, Jim, but this analogy just doesn't work. Insurance is paid by people facing a common risk so that those harmed by it have some money to help.
Jim's scheme is a tax on something else entirely, for the benefit of a few who are already doing well from music sales.
  Adina Levin  08-07-2003 08:45 AM ET (US)
 
"for the benefit of a few who are already doing well from music sales..." wouldn't this be for the benefit of a few whose music gets played a lot? If so, the money's going where it should.
  Kevin Marks  08-07-2003 03:15 PM ET (US)
 
That is wrong on two counts, Adina. Firstly, assessing what is actually played is enormously problematic, and with a Power-law distribution most methods of sampling will significantly overweight the 'top 10' musicians, compared to the larger number with a few plays at the bottom end of the curve.
Secondly those few who are achieving sales of 500,000 will be happier with a per-download payment of a very small amount, which helps squeeze out the smaller creators where the payment does not amount to much. They are more likely to do well from a voluntary system, where the happy customers will willingly pay.
15Critics fear that compulsories could amount to "taming" the Internet, unnecessarily introducing regulation over a global network of communication and commerce that has so far evolved without standards or a central regulatory body. But advocates in favor of compulsories argue that with rights holders not being paid for work they own and fans effectively being punished for downloading music, it's time to take a fresh look.
  Kevin Marks  08-07-2003 02:22 AM ET (US)
 
A fresh look would be a fine thing. I've advocated a very fresh look over at http://mediagora.com.
But a new earmarked tax on computing to be distributed by the RIAA illuminati and the legislators their new $1m salaried professional lobbyist CEO sounds like the stalest of smoke-filled rooms to me.
16One prominent California venture capitalist, who asked not to be identified, told GRAMMY.com he believes many VCs are wary of investing in new technological advancements that could potentially run afoul of the Digital Millennium Copyright Act (DMCA) because the boundaries of DMCA legislation remain unclear. Until there is a solution, the logic goes, an important area of potential economic growth is being held back.
  Kevin Marks  08-07-2003 02:23 AM ET (US)
 
Indeed. So lets follow that logic, and repeal the DMCA.
19"We've heard people favorably comparing the way that ASCAP, BMI and SESAC administer rights in musical compositions, but why not first try giving exclusive rights to sound-performing copyright owners and seeing what happens?"
  Kevin Marks  08-07-2003 02:26 AM ET (US)
 
Which people are these? The independent musicians? The instrumental composers who get unfavourably paid by a ratio of 9:1 compared to songwriters by ASCAP?

Or could these people be the RIAA's paid ear-benders who loiter round Washington proposing new cartels, with implied sinecures for the current band of legislative aides?
21"Compulsory-license models take this into account," von Lohmann says, "creating a situation where the more people do what they're already inclined to do — download and share music — the more artists and copyright owners benefit. We need to be careful about accepting present-day legal solutions that turn tens of millions of Americans into criminals and use fear as a motivator to change behavior," von Lohmann maintains.
  Kevin Marks  08-07-2003 02:30 AM ET (US)
 
I think Fred has also been spending too much time close to the RIAA lobbyists. He needs to talk to Shannon Campbell and Scott Andrew, independent musicians who are grasping the power of the net to create music together, and sharing it with the rest of us.

http://www.scottandrew.com/blogathon/
22"What if the cure is worse than the disease? There's a growing cry for a better solution, and compulsories might just end up being an effective bridge between the downloaders and the rights holders."
  John Schuch  08-07-2003 04:07 AM ET (US)
 
A look back at the history of regulation only demonstrates that it tends to reinforce the status quo, stifle competition, keep prices artificially high, and, in general, is bad news for consumers. That is a cure worse than the disease

The proposal also would provide a boondoggle for commercial p2p enterprises on the backs of ISP customers without obliging them to take on any of the risks or responsibilities of those involved in creating and marketing music.
23(Xeni Jardin manages conferences and executive summits exploring technology, media, finance, and culture, and writes for a variety of print and online publications.)
  John Parres  08-07-2003 03:17 AM ET (US)
 
Xeni rawks. She has an eye for art and a nose for news, and in her own subtle way speaks truth to power. All hail Xeni.
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