Commerce secretary: Music industry needs new business model

Tuesday, August 31, 2010 at 2:13am

The music industry injects about $4 billion annually into the Nashville economy and employs tens of thousands of residents, but piracy is crippling an industry where only one out of 20 songs is purchased legally.

In an effort to find ways to combat the rampant problem, U.S. Commerce Secretary Gary Locke met with Mayor Karl Dean, Gov. Phil Bredesen, Congressman Jim Cooper, and a who’s-who of the music industry at Belmont University on Monday for a town hall-style discussion.

Juxtaposed with tales from the crowd of the financial effects of illegal downloads on Nashville residents, Locke, Obama’s chief adviser on intellectual property issues, assured the administration’s commitment to global enforcement of laws protecting intellectual property.

But while veteran songwriters cried for federal enforcement of copyright laws over the Internet, Locke noted that the primary change must be in the perception of illegal downloads. Bredesen advocated for a change in semantics from “piracy” to “ stealing music.”

Big Kenny, of country hit-making duo Big & Rich, echoed the governor’s sentiments in a much cooler fashion: “I don’t like to give good pirates a bad name — it’s [illegal downloading] stealing.”

There was also a good bit of anger at the music industry’s failure to be progressive with the rise of digital media over a decade ago. Mark Montgomery, who serves on Dean’s Commission on Music, was vocal about the need to adapt to an evolving marketplace rather than try to stop the bleeding with traditional industry models.

The commerce secretary agreed.

"We need to enforce against big-volume distributors, and at the same time look at a new business model that adapts to changing technology," Locke said.

7 Comments on this post:

By: gdiafante on 8/31/10 at 6:26

"Music Industry needs new business model"

LOL

Yeah...for about the last twenty years...

By: nash615 on 8/31/10 at 6:43

Yeah, the horse has been out of the barn for at least 15 years. The same digital infrastructure that makes it possible for the industry to streamline production and distribution is the same technology that makes it trivial to pass along the digital product. Chuck D from Public Enemy has spoken for over a decade on how the industry has to change radically but ultimately the middle tier (and probably top tier) of useless fatcats in the industry would rather scream and litigate than consider creative ways to be valuable.

"Piracy" / "[illegal downloading] stealing" aren't going away, in fact they'll only become more pervasive and efficient. Ignoring that fact, presuming the Feds are going to stop the Interstates and bring back the horse and buggy, and punching at the wind are all signs that the creativity in the industry hasn't just evaporated out of the music.

By: shinestx on 8/31/10 at 6:57

Yep, let the government "fix" this industry now!

By: JaiboiTV on 8/31/10 at 8:52

I have an idea... how about the industry restructuring itself by cutting the FAT in the middle. I personally prefer supporting artists who support me by putting out good music and promoting it by visiting me regularly. WHAT?!!! You mean, do autographs signings/photoshoots at local retail outlets, performing live at smaller venues, selling merchandise direct to the fans (onsite), and kissing the execs high salaries goodbye!

Intellectual property, sure I believe that writers, musicians, and artists should be compensated for creating popular art. However, the real sharks in the industry are the ones who sit behind desk and formulate schemes on how to maximize profit for what they do with the intellectual property including the artists. And often that contradicts the nature of the relationship between artist and fan.

Ultimately, the fans are going to shape the marketing of the industry. We will get the material in the most economical and efficient way possible, legally or not. Its the responsibility of the artist to communicate with the fans. The best way to do that is hit the road! Stop parading through the media like a maniac prostitute and get your butt in the studio and communicate with your fans. Afterwards, go visit your fans and create new ones based on your ability as a performing artist. Once you have collected your earnings, pay your songwriters an agreeable fair share. Then let the rest of the insignificant executive vultures squabble over the scraps!

Do that and I will say that you as an artist is true to your fans as you wish they were true to you. The problem in the music industry has always been keeping control of the middle man, i.e. the corporate record labels, publishers, lawyers, accountants, and such. Those salaries consume most of the revenue generated by artists and fans. Yet they have very little to do with the relationship between artist and fan. In fact, how many artists "sell their souls" to these sharks who prey only for financial profits. So yes, face the facts if you want to fix the problem of one fan giving away a few copies of your work. Besides that really is the way you find popularity because one fan felt so great about your art that they SHARED it with a future fan. An artist can get paid major bucks for performing LIVE, and release new music for pennies just to deliver the hottest version LIVE. Subsequently, after gaining the trust and admiration of fans try delivering a special recording of them LIVE with you for purchase. This is how you rebuild the relationship and make it properous.

By: MattCollins on 8/31/10 at 2:56

Sooo much nonsense in this article... where to start?

How does anyone know that 1:20 songs are purchased legally? I don't think there is any way to even measure how many songs are pirated first off. Secondly, just because someone has made copies of songs that they didn't pay for, doesn't mean revenue is lost. I might download Brittney Spears albums for example but I would never pay for them, thus there is no lost revenue.

There is no such thing as an illegal download either. The copyright infringement occurred at the point of upload, not downloading. Copyright law is based around transmitting or making copies or distributing copyrighted material, not receiving or being given, or witnessing copyrighted material.

Also copyright infringement is NOT the same thing as theft. Stealing deprives the individual of the object in question, copying doesn't deprive anyone of anything. And the idea that copyright infringement is "stealing" is nothing more than FUD or propaganda put out by the content industries. For a brief demonstration to those who are intellectually impaired here is a short video explanation: http://www.youtube.com/watch?v=IeTybKL1pM4

In this article Mr. Montgomery seems to be the only individual who is reasonable as he points out that since the content industry refused to innovate and instead rested on an obsolete and outdated government granted monopoly of copyright, they got left in the dust at the turn of the millennium. It's basic economics: as supply approaches infinity price approaches zero. Instead the content industry decided to attempt to be propped up by the government's artificial scarcity until technology made this irrelevant. The ONLY way to enforce copyrights in the modern digital era is to turn the country into an authoritarian police state.

How much longer can the government and the content industry collude to kick a horse that has long since died, rotted, and has now turned to a pile of dust?

And before anyone thinks my opinion is without merit- I'm an accomplished audio engineer and have worked for some of the most popular acts during the last 15 years holding a degree from MTSU's Recording Industry Management program.

By: music-maker on 8/31/10 at 3:05

Although it is ridiculous that it has taken several years for both the federal government, state & local governments, and the music industry to have a forum on how to combat the issue of massive across-the-board stealing of music around the world, it's a good thing that they are finally starting to realize that this is a huge problem that is deeply hurting the livelihoods of tens of thousands of people (if not more).

I don't have much faith that the federal government will fix this problem. They seem to make bigger messes out of everything they touch; but the government should UPHOLD LAWS. It is illegal to steal and it is certainly up to the government to enforce the law and to strive to come up with a way that disables the ability for people who would steal music. It is illegal to walk into a store and take something of value of $10-$20. The argument that 'piracy' is just going to happen and that people should accept it, is a flawed argument. It is immoral to steal but unfortunately we live in a time that more and more people simply don't care; they're going to consume whatever they can get their hands on and to many, if they can do this for free, the rest be damned. Just go to your local store and see the things that they have locked up behind a case that used to be right out there for the honest consumer to pick up and purchase.

Stealing music is hurting EVERYONE from the one-time fat cats on Music Row to the independent artists who are in the trenches, traveling the world from festival to festival, coffeehouse to coffeehouse, nightclub to nightclub from town to town, recording new works as their creativity puts forth. The more the music artist gives away, the more these people will take and at the cost of true art-appreciation. The big questions are: How does any artist sustain oneself with the massive stealing that is going on? How does this artist pay for their recordings? How does this artist keep their instruments in working condition? How does this artist keep themselves healthy? How does this artist keep their vehicles running and on the road? How does this artist eat? How does this artist pay all their bills? You see, STEALING IS STEALING and it's hurting all of us.

Getting screwed over is all the same, whether it be by the proverbial crooked music executive - or by the fan who shares the music a few of their friends who put it onto websites that "share" it with millions of their "friends" worldwide who "share" it with millions of their "friends" as well. And what does the artist get? One 1/2 of 1% of the income that artist would have gotten if people were not stealing their music in masse.

If an artist records a live show and then takes it back to a studio to have it mixed. That costs hundreds of dollars. If this artist has his/her fans' best interests in mind, he/she wants it to be a recording that has good sonic quality, so then the artist has it mastered. That costs hundreds of dollars. If the artist wants the CD's packaging to look decent, he/she must hire a photographer and a graphic artist. That costs hundreds of dollars. Then the artist has the CD mass-produced. That costs thousands of dollars. Well, if the artist doesn't promote this recording, it goes nowhere, so that costs thousands of dollars. If the artist simply wants a website, that costs hundreds of dollars per year.

Fans shaping the "marketing" of the industry; come on! Marketing is when people purchase products or services, not stealing products and services. We don't go to the market and steal all their goods & services. That is immoral and illegal. Sharing samples as a marketing tool is one thing. Giving it all away is yet another and it is NOT a healthy thing for neither the artist, the fan, the industry, the country, the world, and especially the art form.

By: REC on 9/9/10 at 7:08

The entire structure needs a complete overhaul. For starters, no matter what kind of airways, whether it be radio, internet, or any other kind of wire. If that music is getting plays, it should be generating pay, no exceptions.
In 1996, while reading the stock market, watching huge monies being moved to technology, I personally made a trip to Nashville to talk to a few key players about the protection of music and all who make it. They said "oh, we have this under control".
That was then, and now we have to figure out a way for pirates to be blocked from any future theft. With all of this new technology there has to be a solution.
Our world would be very boring without the arts and culture. It should definately be protected along with creators of that art. All businesses, websites, radio stations or any other outlet of music, should pay the creators. Period.
The closed door, unfriendly atmosphere of our leaders in the industry has also caused a decline in traffic to our "Music City USA". It's a "Wake Up" call to the very fiber of the business.