[rumori] Here we go... (fwd)

Steev [rumori] Here we go... (fwd)
Thu, 2 Jul 1998 21:51:17 -0700 (PDT) (00899470277, Pine.LNX.3.95.980702215052.24339C-100000ATflotsam.detritus.net)

Technology News

Digital Music Threatens Record
(07/02/98; 6:08 p.m. ET)
By Malcolm Maclachlan, TechWeb

SAN DIEGO, Ca. --Technology will be the new driver
behind the music industry, according to the companies
at the first annual MP3 Online Music Conference here
Thursday. But moving the medium forward may involve
convincing powerful record companies to take a smaller
piece of a bigger pie.

The recording industry is stagnating, said Brian Litman,
CEO of software company AmpTech, who told the
conference that U.S. sales fell 2 percent last year.
Physical distribution imposes a bottleneck, Litman said,
allowing only a few marketable artists to reach a large
audience. Internet distribution could change everything.

"The CD replacement boom is over," Litman said. "The industry needs new drivers. Internet music is going to be
that driver."
Litman encouraged record companies to see this as an
opportunity, not a threat. They feel threatened by
developments like customization, where Net consumers
buy only the songs they want, not whole albums. The
labels should go along with such developments, he said,
because they would increase overall sales for everyone.

However, with the legal rules of online music still in
gestation, the record labels are doing everything they
can to make sure they are not left out. The Recording
Industry Association of America (RIAA) wants
streaming-audio websites to pay record companies for
the right to transmit their recordings, even if their sites
follow the rules of radio. These rules, designed to make
commercial radio a low risk for preventing record sales,
include no pre-announced playlists and no transmission
of entire albums without permission.

Holding the Web to different standards is disingenuous,
said attorney Ken Herzt of Hansen, Jacobson, Teller & Hoberman, which represents artists such as Will Smith
and Alanis Morrisette.

"Record companies market their products primarily through free transmission on radio," Hertz said. In fact, he said, they were instrumental in creating hit-driven
stations that play a limited list of songs, a system
designed to maximize the power of labels.

The difference is websites transmit digital music, said
Steve Marks, legal counsel with the RIAA. Digital
recordings, if captured, can make an infinite number of
perfect copies. The RIAA wants to create a
clearinghouse where websites can quickly and cheaply
license songs for webcast.

Such a site would also provide a system of keeping
track of such sites, and provide a framework for
prosecuting sites that misuse material. The RIAA has
been in the news in recent month for its legal battles to
shut down sites distributing digital copies of music in

format, which gives the listener a high-quality recording
that can be reproduced on CDs.

Marks did not find a receptive audience at the
conference, however. Online technology companies
banded together to form a rival organization last month
called the Digital Media Association, whose members
include RealNetworks, Liquid Audio, and CDNow.

The RIAA might not get much support in Congress
either. Representative Brian Bilbray (R-California), who
was at the conference, said Congress would be
reluctant to impose many new rules in such a
fast-changing area. Legislation now could turn record
companies into "artificial monopolies" in the future, he said. Bilbray, a member of the powerful Commerce
committee, has been one of the pioneering legislators in
this area, working closely with the late Congressman
and recording artist Sonny Bono.

Lawrence Comras
Green Home
850 24th Ave.
San Francisco, CA 94121
(415) 282-6400