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Technology and Intellectual Property Policy Day 2007 – Washington, DC

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May 2nd was Technology and Intellectual Property Policy Day – a conference sponsored by the Future of Music Coalition (FMC) and the American Constitution Society (ACS). Most of the day centered on a single question, posed by Lisa Brown of ACS as she kicked off the event: “What happens when a century old body of law like copyright is applied to new technology?” 

Simply put, all hell breaks loose.  The Internet is wrecking havoc with traditional understanding of how music can be distributed, and therefore how it can be legislated.  And this isn’t just about the few evil, evil folk who get their music from less-than-legal sources.  Downloading took a back seat to bigger challenges that face legitimate outlets for music – both terrestrial and digital.   

Most of these challenges stem from the nature of the way that copyright interacts with music.  There are a number of different royalty structures in place for music – those to the songwriter, to the artist, to the record company.  Some of them only apply when you’re dealing with an actual copy of the music – a CD or record or whatever. Some of them apply to the broadcast of the music.   

But there are catches.  First of all, terrestrial radio has for a long time been exempt from paying some of these royalties.  And these days, while radio likely has a URL instead of a number on the dial, figuring out where the webcasters and satellite fit into the big picture is causing some problems.  With the new set of fees just handed down from the Copyright Royalty Board (CRB), the rates that non-terrestrial broadcasters were paying are going way up retroactive to January 1, 2006, and with no change for normal everyday broadcasters. 

Since this news was handed down just days before the conference, it colored most of the discussions.  But the panels and speakers covered a wide variety of issues beyond broadcasting.  These included Net Neutrality and intellectual property and the web, as well as the roles of copyright and consumer electronics in the world of music and music policy.  The panel discussions alternated with keynotes from Congressman Mike Doyle, Gary Shapiro of the consumer Electronics Association, Jenny Toomey on the FMC’s initiative Rock the Net, and David Carson of the US copyright office, and gave attendees an incredibly diversity of points and opinions, and enough information to make one’s head explode.

Panel One – Radio Waves

In a panel on broadcasting, the disparity between terrestrial radio, satellite, and web broadcasting was obviously the centerpiece of the discussion.  It was one of the more diverse panels during the day – Mike Holden topped the billing with the title of “musician”, while he was flanked by Joe Kennedy of Pandora, Eric Logan from XM, Patricia Polach as the lawyerly presence, Dick Huey from Toolshed digital media marketing, and John Simpson from SoundExchange.  With this group, the moderator was ready to rumble.

SoundExchange is an organization that collects royalties on behalf of artists for web distribution, and so it’s not surprising that a higher royalty rate would be attractive to them.  “Yes, I’m happy with the CRB rates – I think they recognize the value of music.”   Whether or not that’s true, he did make a valid point when comparing the startup and maintenance costs between companies.  He talked about the differences in investments that needed to be made (running and operating a terrestrial station as opposed to webcasting from a PC) and the potential for subscription services to turn a profit.  The question becomes – should that matter?

Certainly some of the other panelists didn’t think so.  Eric Logan who is a VP from XM satellite radio said, “Listen…I wish we were a profitable business, believe me!”  Given that XM pays 90 million dollars for their FCC licensing (while terrestrial radio gets theirs for free) and also launched a huge infrastructure of satellites, their costs are already astronomical –  with changes in legislation they are only going to get higher.

And while it might be hard to have great pity for a group that provides a service that seems somewhat narrowly luxurious like satellite radio, the future of all broadcasting on the web also hangs in the balance.

Of course, smaller broadcasters like the ones featured on live365 are in big trouble, given that many small broadcasters are often in default of any attention to procedures and royalty payments.  But even larger groups like Pandora could be affected.  Joe Kennedy, the CEO and President of Pandora said that even a business like theirs, which boasts 6 million listeners, might have troubles paying up. “We’ve gone from being nothing 18 months ago to probably being the 3rd or 4th largest payer of royalties to SoundExchange. With our economics, under the proposed CRV rates, we can’t continue to exist.  We will go out of business… so it is an absolute crisis for us.”

In all of the discussion here, and throughout the entire day, it was easy to forget that the point of higher rates wasn’t necessarily to penalize broadcasters, but to benefit artists.  And this is a noble goal.  But musician Mike Holden got a chance at the end to express the disconnect between fees that benefit artists but destroy the outlets for their music. 

“The questions I ask myself when I look at the new rates is, will as many people be hearing my music?  And I think the answer is a definite no.  Pandora shutting down alone would take me very close to zero people playing my music. And I ask myself – will the revenue that allows me to record my music go up or down?  And if no one is playing my music, the answer is definitely down… I think if businesses like Pandora or live365 are going to shut down because of new rates, then we have a serious problem.”

Panel Two – The Net Effect

Of course, the debate goes far beyond broadcasting. The idea of Network Neutrality, or Net Neutrality, offers a whole new issue for the potential of music on the web – being able to hear it at all.

The basic issue is this:  ISPs have control over the bandwidth that users receive.  Proponents of Net Neutrality want it to be legislated that ISPs cannot discriminate the resources given to one site over another.  The ISPs and those that represent them feel that strictures on their ability to operate constitutes infringement on their rights as a business, and that these restrictions discriminate against them and their ability to compete. 

The discussion was heated, though hard to determine the point being made.  It devolved fairly quickly into a tennis match of sound bites between Scott Cleland, who is the president of netcompetiton.org, a site that supports the business rights of ISPs, and Gigi Sohn, president of Public Knowledge, a group that supports Net Neutrality.

The writers and musicians who also sat on the panel had a chance to speak at the beginning.  The basic message on their part was this – there has never been a time when artists of whatever variety have had more access to more people quite so easily.  Duncan Black, writer of the blog Eschaton spoke of it this way:

“If people in power had realized what was going on with the Internet, they probably would have tried to stop it.  The Internet as we know it is not a logical infrastructure development – it was a combination of genius and chance. 

"What has evolved is that barriers of entry for self-publishing and self expression have declined.  In the old days of the Internet you could just express yourself in text – now you can express yourself in audio and in video.  It’s not only inexpensive, but practically free – anyone can do it.

"Now, what happens is that in all these areas the gate keepers have been going away… with any social change those gate keepers will try and rise up and reassert their power.  The Internet has been extraordinarily resistant to that, and it would be very dangerous to let them reassert themselves.”

It was this idea of gate keeping that finally made all of the legal and business aspects make sense.  This idea that certain people control our access to information – the way newspaper editors deciding what news is important, or a website writer deciding which facts are most necessary for their readers – can potentially extend to ISPs.   If the ISP has control over bandwidth, they can make the decision to allow faster access to one site, while effectively restricting access to another.  This could compel users to use one fast site by reducing the speed of a competing one, thus affecting users’ ability to access information from particular sites of their own choosing. 

So if the stream from one Internet radio station keeps breaking up, you switch to another one.  If that second choice happens to be from a service that belongs to the same corporation as your ISP… well, isn’t that just peachy?

Much of Scott Cleland’s defense centered on both the legality of competition in a free market and also that user choice would prevent companies from doing anything so stupid as to prevent their customers from accessing certain pages.  There may be some legitimacy to ideas that companies that don’t provide the direct services, like Google, Microsoft, and others, should have to pay for their greater use of bandwidth.  (Though advocates of these open market might hurt their cause through creepy websites like Don’t Regulate)

The problem, as Gigi Sohn articulated, was that if legislation changed so that companies could control the speed of information at their discretion, there would be less question of whether or not they should.  And that potentially slippery slope could be avoided with a clarification of the legal protection of neutral networks. 

The basic idea was best put by Bertis Downs, who is the manager of R.E.M. “We’re trying to create policies to make sure that those who control the distribution pipelines don’t control the content that goes through them.”  Hard to argue with that.

Panel 3 – Stocking the Celestial Jukebox

With any discussion of music and copyright, there are a handful of acronyms that come to bear: ASCAP (the American Society of Composers, Authors and Publishers), BMI (Broadcast Music, Inc.), NMPA (the National Music Publishers’ Association), and HFA (the Harry Fox Agency).  These guys are the ones who manage the various rights and regulations on music, and who collect the royalties paid by the broadcasters or distributors of the music.   

Though they are not-for-profit agencies, their mission is to collect the largest amount of money owed for the products they are responsible for.  This money largely goes to the artists, which is a beneficent enough goal.   But as was discussed in the first panel, that may not always be a good thing. There are a lot of problems facing smaller broadcasters right now, compounded by the confusing nature of copyright classifications come into play.  For royalty purposes, music is divided into two categories – broadcast and distributed music.  As it is now, that’s the line between what you hear on the radio, and the stuff you buy in a store.  It would seem like this should be pretty simple to apply to Internet technology – streaming, the stuff you hear but can’t keep, is broadcast, and downloads, the stuff you hear and can keep, is distributed. 

But technicalities complicate the issue.  With streaming, small packets of information are downloaded to the computer to make the stream flow more easily.  This also makes it so that it could be defined as both broadcast and distributed, and makes the broadcaster liable to pay a whole host of different organizations.  Similarly with downloading, the music is received over a period of time, and could be considered a broadcast. 

As Jule Sigal, attorney for Microsoft put it, discussions boil down to “Is it a download, or is it a stream?  Is it a particle, or is it a wave?”  And that’s precisely the problem – it’s both… sort of.  It’s only in taking a practical look at the application technology that the divide becomes clear.  And since the interests of the royalties organizations lie in collecting money from every resource possible, it’s unlikely that that will happen soon.

But besides the interactions between artists, companies and broadcasters, the royalty collections occasionally extend to users directly.  Michael Petricone, from the Consumer Electronics Association was brandishing a new toy for XM radio, one that allows users to locally record songs off XM.  He compared it to “taping songs off the radio 10 years ago.”  That might work if listeners had to sit at the ready, finger on record to catch their favorite song.  But this thing lets you pre-program the songs you want recorded, and as soon as they go out over one of the hundred station, it gets it for you.   And that makes the other boys upset. 

It’s these kinds of devices that have been mightily protested as copyright violations by all of the royalty groups and the RIAA (Recording Industry Association of America) alike.  And so the debate over what is individual fair use begins – can we copy music for our own use exclusively?  Broadcast from device to device within our own homes?  Or will these, like most new technologies, fall within the gray areas of royalty laws?  The answers are still being decided. 

After Party

Questions upon questions were the rule for the day.  And as always, the party after any conference was where a lot of the real discussion happens – people have a chance to put away their notebooks, grab a beer, and start sorting through what they actually THINK about what was said.  I was lucky enough to encounter Michael Bracy, policy director for the Future of Music Coalition.  He had been the moderator for the Net Neutrality panel, and helped answer some of my questions. 

And there were many of them, of course.  But one that I couldn’t shake was: “why are we even asking these questions?” 

Not that issues of policy and neutrality and copyright are unimportant.  But some of the basic understanding of what the Internet is and how it is used by people of a certain age seemed to be lacking.  Downloads are downloads, streams are streams, music should be available instantaneously and through a huge variety of sources.  What was the problem? 

The accord we came to was that, in about a decade, half of the issues we discussed simply wouldn’t be issues at all

Not that anyone would actually reach a sensible conclusion.  It may just end as the generation that will be stepping up and taking control is one that has the Internet as a central part of their life.  They accept the “new media” as simply “media”, and current media as archaic.   

The issue becomes not allowing regulations and controls to get out of hand to the point where real barriers are being placed on artists ability to distribute their work, and listeners ability to hear it.  And even in the conference, for all that the core issue is always cited as being the welfare of the artists, they were sorely underrepresented.  It was a meeting of gate keepers of various positions, strengths and sizes.  And their position is important to the flow of information, as long as a balance is created so that the flow remains steady and doesn’t slow to a trickle. 

The fact that you’re reading this on a web-based publication, and that I write for one probably puts us both on one side of this debate.  Internet good, companies bad.  Free access good, limits bad.   But what the conference did do well was to present a variety of views and viewpoints within each panel – people who were or represented artists, the industry, the broadcasters, the law.  Whatever your opinion on the issues, it gave a real picture of the debate going on outside that small conference room.  The information flowed freely, and listeners were given choice to make up their own minds.   

Isn’t that what technology and intellectual property should be all about?

For more on the conference, and streaming video of all the panels, head to the Technology and IP Policy Day 2007 site.

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About Claire Marie Blaustein

  • bliffle

    Why struggle to enforce old monopolistic business models? Let them die, and then form new business models.

    The whole concept of copyrights has been so abused that it no longer serves a useful purpose.

  • Eric Olsen

    super job Claire, thanks so much!