"The notion that the music industry is suing its customers is, "as specious as Winona Ryder meant to stop at the cash register on her way out of Saks".

This interesting statement came from Sony Music Entertainment ceo Andrew Lack at the $100-a-plate ‘Entertainment Law Initiative’ for 400 entertainment attorneys, law students and key music industry professionals last week.

Lack is, you’ll recall, the man who, on the subject of online pornography and file sharing, once said:

"As a guy in the record industry and as a parent, I am shocked that these services are being used to lure children to stuff that is really ugly" …

… while Sony Music is vigorously marketing CDs replete with lyrics such as Little young thing go around my d**k with your tongue ring / Deep throat my nine inch.

Among other bon mots he came out at the luncheon with were:

• "Most analysts think when it comes to racing into any new technology, the music business is just slightly behind the Amish";
• "We can take the perception off the table that we are often arrogant, greedy, and ill-informed as a rule, particularly on the digital stuff";
• "The idea of the paid digital download is only about one year old";
• "… the Kazaa’s of the world want to get away with a token payment that essentially undervalues our rights and content in the name of new technology";
• "… the technology necessary to identify copyrighted material has been available for several years.
• "There’ll always be hackers, and software piracy that poses all sorts of problems for society. But so too will there always be drunk drivers and stolen cars."

But you need the whole thing for the full flavour.

Now read on >>>>>>>>>>>>>>>>

An infant in the music business
By Andrew Lack

I stand before you today literally an infant in the music business – I’m a one-year-old, which doesn’t make me an expert on much, musically speaking. But let me give you, for what it’s worth – which is precious little – a few observations on our business from an outsider in his infancy.

Two issues especially relevant to your particular skill sets struck me early on. First, the way the industry keeps score. Market share. There is a nutty obsession with market share as if it were the only indicator of success. Profitability, of course, is the singular measurement of success for most mature businesses. He who sells the most records can be, at times, seriously misleading. We can never spend enough money in my view on A&R, or supporting and developing new artists and their good music wherever we can find it. That is the heart and soul of what we do, and we will always do well as long as we are committed creatively and intelligently to that process. That’s true for smaller independents as much as larger majors. Where we screw up as a business, it seems, is renegotiating deals that are driven by ego, crazy self-indulgence, bad arithmetic and that old nutty market share.

A great challenge for me looking forward to the Sony/BMG merger is how to invest much more constructively in new talent. Personally, I can’t say it enough, the discovery and development of young artists is far and away the fundamental you-have-to-be-the-most-focused-on.

Fair to say the Sony/BMG transaction as a whole represents our companies’ response to long-term changes in the competitive landscape and the prolonged crisis in recorded music that has seen retail sales plummet in value by more than 25% globally in the last three years.

Which leads me to my second issue.

How detached it appears to me attorneys in our profession are from taking action against online piracy. You understand because of your essential responsibilities, better than anyone, the distinctions between what is legal and what is illegal, what is legitimate and what is illegitimate, what is right and what is wrong. You understand better than anyone that intersection between creativity, commerce, and community which can only survive with the rule of law.

At this time and in this industry, there is confusion where there should be consensus about how companies, creators, and consumers ought to behave towards each other. We still need to do much better with the difficult work of education and enforcement surrounding copyright infringement.

I think the RIAA lawsuits are not only the right way to go from a legal perspective; they’re the only way to go from an educational perspective. This notion that we are suing our customers is as specious as Winona Ryder meant to stop at the cash register on her way out of Saks.

Certainly, there are those academics who believe that the controversy around "swapping music" doesn’t really hurt anybody. There are those parents who believe that illegal "file swapping" is just adolescent behavior empowered by technology. And there are those cynics who devoutly believe that, even if it’s stealing, the record companies and their stars can afford it or deserve it.

Nonetheless, we know realistically society can’t afford to let lawbreaking become casual or accepted. We know we can’t afford to accept the theft of copyrighted recordings any more than retailers can allow rampant shoplifting or runaway vandalism. We know when people routinely break the law, our social fabric is torn apart, which has happened in the music business.

That is why the late great Senator Pat Moynihan warned against tolerating even seemingly minor offenses – which he called "defining deviancy down." But we can dramatically change the tone and direction of this conflict by being honest brokers of information.

We can take the perception off the table that we are often arrogant, greedy, and ill-informed as a rule, particularly on the digital stuff.

You know most analysts think when it comes to racing into any new technology, the music business is just slightly behind the Amish. That said, by the way, those companies that did race ahead breathlessly believing the internet and technology was the Holy Grail also paid a price. It cost AOL/TW shareholders about 54 billion dollars. So we ought to cut the music industry a little slack.

Though it’s going to take a long while to nurture, the industry has come a long way in the licensing of music online. The idea of the paid digital download is only about one year old.

Fact is, at the end of the day, we are finding ways to offer consumers all the music they want, in the formats they want, where they want it, when they want it, and at prices they can afford without any friction.

To do this, of course, we need to develop more viable business models for online retailing. And then we have to put those business models to work. But we are making progress.

The legitimate downloading services are getting more traffic, and the illegal ones are getting less. And we’re bringing prices way down. That’s the key. The average price for a single song online is exactly what I paid in 1955 for a Chuck Berry record – 99 cents. There aren’t many other things that my nine-year-old son can buy for the same price that I did when I was his age – almost a half a century ago.

We, all of us, have to articulate that message thoughtfully and respectfully everywhere. Most CDs don’t cost $18.99 anymore. But the Kazaa’s of the world want to get away with a token payment that essentially undervalues our rights and content in the name of new technology. I know I may be preaching to the converted on some of this but here’s some more technology baloney brought to you from a tax haven somewhere in the South Pacific.

Nikki Hemming, the CEO of Kazaa was asked by USA Today’s reporter Jefferson Graham last November the following question:

"Q: The labels, which are suing Kazaa for copyright infringement, call you a "pirate." Why should they talk to you when so many people use your software to download songs instead of buying them?

A: We don’t have the technical capability to stop that."

That’s what she do say and I say "nuts". Nonsense.

Contrary to the claims of Ms. Hemming, the technology necessary to identify copyrighted material has been available for several years. There are also now fully functioning systems, which are commercially available, that can quickly identify and filter our copyrighted material from P2P systems like Kazaa.

None other than Sean Fanning is doing some ground-breaking work in this area. An interesting solution from a software company called Audible Magic was demonstrated on Capitol Hill just last week. It proves that the filtering of P2P content is not only technically possible, but that it is also feasible for P2P operators to integrate these solutions into their products today.

That’s the cold unvarnished truth.

Only by doing this, can they show us that their intent is not to perpetuate the illegal distribution of copyrighted works and deny content creators their livelihoods. No, you can’t shut down all illegal file sharing forever.

There’ll always be hackers, and software piracy that poses all sorts of problems for society. But so too will there always be drunk drivers and stolen cars. And there’ll always be kids who would love a world where music and movies and games could be downloaded for nothing.

That’s life. Sorry, we can’t quite give them that but I think – and here’s another headline – this year we should get a service and a price point that every kid in every college in America can afford. A cheap smart student discount. This is a particular passion of ours at Sony Music. We’ve contacted, in the last couple of months, dozens of colleges and universities to introduce them to legitimate music services that can set up an easy student offering on their campuses and filter out the pirated material. I need your help to spread this program to wherever you went to school or where your kids are going now. We call the program CAN – that stands for Campus Action Network. It’s something each and every one of us can advance. It’s cool, it works and we should get it going Fall of this year.

One last thing: Your strongest relationships and first responsibilities as attorneys obviously are to your clients. The center of gravity in this industry is the creators – the people who write and perform the music.

Piracy is everyone’s problem, not just the record companies. Educate your artists about piracy issues, legitimate services, filtering. Encourage your artists to license all their content for legitimate services and to support new product offerings in emerging markets.

The biggest knock on legal services versus Kazaa is the lack of content that makes you think you might as well steal because you can’t always buy what you’re looking for legitimately.

Wherever I go, from Washington DC to Walmart in every city across the country, people tell you we can get our arms around this piracy problem if we’re disciplined and responsible and devoted to explaining to all Americans, especially young people and their parents, why piracy of any kind is immoral, dangerous and wrong.

We need to step up and stand up in rooms like this and push programs like CAN and we need your wise counsel and extra efforts on this front.

It was Churchill who said the price of greatness is responsibility. This business can be great again only if we all take responsibility for it.

This entry was posted on Monday, February 16th, 2004 at 5:02 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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