Future of Music Policy Summit '09 Wrap-up

Yesterday I returned from Washington where I spent two days attending the Future of Music Coalition's annual policy summit. This was my first time out to FMC and my hat's off to them for putting together some engaging panels, but more importantly, for attracting a really great, diverse crowd. There are few other places where you can have a long lunch talking about sampling with Hank Shocklee and a little later chat with someone about the challenges of distributing Christian musicals to India. This conference comes highly recommended.

There were a few themes that seemed to dominate this year's meeting:

- Net Neutrality was discussed relentlessly. Obama's FCC has been unambiguous in its support of net neutrality so it was no surprise to hear current FCC Chairman Julius Genachowski speak at length on the importance of keeping the internet a level playing field throughout a Bruce Springsteen pun laden speech ("The Internet is a telecom Thunder Road... It was a network that was Born to Run in a land of Open protocols"). Somewhat surreal: seeing an FCC chairman played into the room by a brass band blowing "When the Saints come marching in". It was a bit heavy handed but I guess after Kevin Martin, whose legacy includes increased media consolidation and nipplegate, everyone was happy to see this guy.

- Performance Royalties for Radio came up quite a few times and given that the FMC is primarily an advocacy group for musicians trying to make a living it is no surprise that almost everyone there favored them.  The United States is the only country in the Western world that only pays songwriters (and their publishers) when music is played on terrestrial radio while the rest of the world also compensates the performer of the songs. Senator Al Franken was the only person I heard express any concern at all for broadcasters in this debate and at least took a somewhat even handed approach that while performance royalties should be paid out to artists, smaller and non-profit broadcasters (like us), should be protected from having to pay out exorbitant fees.

Despite all the love for performance royalties at FMC, politically it seems unlikely to pass. The NAB has already secured 246 co-sponsors for a House resolution against it according to the Wall Street Journal. Perhaps the moral of the story here is that you shouldn't mess with the NAB... according to the record industry they are the same evil cabal that has conspired to keep Bono from selling a million copies of his last record.

- "Promotional Value" is dead - Steve Marks, an RIAA representative and others* declared that there is no promotional value whatsoever to getting music played anywhere and an entire room seemed to nod in agreement. None of these same people apparently made it out the NPR Music panel later in the day where NPR was lauded for breaking new music to audiences and All Songs Considered host Bob Boilen talked about the daunting task of sifting through the countless mail tubs of cds that are sent into him every week (presumably by the same industry that says he provides no promotional value).

(* Update: In the original post I ascribed this view to Peter Jenner but he claims that this misrepresents his opinion. Read the comments below for clarification)

It's a bit sad that the recording industry continues to see radio stations, journalists, blogs, and services like Pandora as adversaries trying to exploit their content rather than partners that are trying to help them move product.

- Music as Service / the move away from an ownership model also came up quite a bit and I'm sorry I had to skip town before I had a chance to hear Daniel Eck from Spotify speak though I did catch a bit of it on the live webcast. As much as I like the service I really wish somebody would have asked him about Michael Robertson's claim that there's no way Spotify's business model will be sustainable but he was instead tossed lots of softball questions. Similar assertions have been made in a Guardian article and attributed to a unnamed source close to Spotify.

In what was hands down the best panel of the conference, Tim Quirk from Real's Rhapsody service made a compelling case that music as a service should be the RIAA's dream come true: imagine a model where the consumer pays over and over again every month to play the same music. Instead of embracing this model, he argued, the RIAA had instead gone to great lengths to make it all but impossible to make such music services possible by requiring exorbitant rates that make them impossible to sustain.

Peter Jenner, a manager for Pink Floyd, the Clash and others, agreed claiming that no venture capital firm in Silicon Valley will even consider funding a company based on legal music as they are convinced that it is impossible to turn a profit when you are required to legally license the music.

Consider Spotify again: it's a wildly popular service which is adding 25,000 people per day and in which the majors own an 18% share. If anyone should be having a reasonably easy time licensing music from the recording industry, it should be them. Of course licensing music is never easy, but even with the four major labels as partners, Spotify's US launch has kept getting pushed back due to licensing problems according to Eck.

On the Crystal Ball panel the animosity between Quirk from Rhapsody and Marks from the RIAA was very much out in the open and the RIAA did itself little favors in the debate. Addressing the RIAA's extremely slow start out of the gate since the days of Napster Marks said something to the effect of "To those that have been asking where we (the RIAA) have been for the past 10 years I ask where have you been for the past five? We have been trying to license everywhere and be everywhere".

All the comments I heard throughout the conference about the difficulties of building a sustainable business model around legal music licensing seem to suggest that the recording industry has perhaps not made as much progress in the last five years as they like to think. One need only look at ASCAP and BMI's decision to go after Apple for royalties on 30 second clips of music that are meant to entice people to buy full tracks to see that the idea of a symbiotic relationship between the music industry and those that try to deliver their content to consumers may never come to pass.

I am rooting for Spotify, first and foremost, because they have a really great product but also because if they can't make a go of it, even with the major labels on board, then it's safe to say that nobody can. The road is littered with companies that have tried and failed.

On a final note, be sure to check out Greg Kot's post on the  on the Social Networking panel led by Cyber PR's Ariel Hyatt and Well Rounded Radio. Kot also did a superb job moderating the DIY panel.

Congratulations to the Future of Music people for putting on a great event.

Comments

[jason {macedonia}]

man, wish i could've been down there for this...heard nothing but good reports so far. the industry definitely needs to do more to lock down a good distribution model for music within the digital age. it it's spotify, then so be it. it can only help the industry (more than they realize, apparently...)

[WHT]

saying "Senator Al Franken" still sounds weird.

[Peter Jenner]

I am getting annoyed by your misquoting me. Either that or I am incredibly inarticulate. Of course I did not deny the promotional value of radio play, but I did also point out vigorously that music promoted the radio stations. No recorded music, no modern radio. We need each other, yet we do not get paid, and even pay sometimes for radio to play the very thing that gives them the audience they then sell to advertisers (or funders).

[doron]

Hey Peter,

It is entirely possible that I misunderstood your comments and I wish I had some video to go back to in order to double check... I recall you making a short and somewhat unambiguous comment stating that the idea of promotional value was ridiculous (I forget the exact wording) and I believe those comments were made in the context of someone else expressing a similar view.

To be fair your comments were probably not specifically about radio but they were consistent with what I believe to be a prevailing view in the industry: that there is no use under the sun which can be construed as "promotional" or helpful in selling records.

As mentioned in my post, ASCAP/BMI going after iTunes for royalties on 30 second clips that are supposed to help people pick which songs they want to buy is a pretty clear example of this view in action.

You were one of the voices of reason on the panel by rightly pointing out that the current system is hopelessly broken and I couldnt agree more that we need each other.

For the record, I personally believe that a performance royalty is a good idea as long as the rate is fair.