Online Music Execs Ask Washington To Bend the Rules

The ongoing online music wars have taken an interesting turn.

Executives with digital music companies went before the U.S. Congress and essentially asked legislators to change U.S. copyright laws to accommodate the needs of their business.

Apparently, the free enterprise system is not quite free enough to suit the tastes of these companies, including RealNetworks and These and other online music companies have adopted a false sense of entitlement, and are demanding things no other American industry has had accorded.

The Congressional hearing debacle is an example of e-commerce at its worst. It was never the intention of e-commerce pioneers to overhaul the American consumer economy. E-commerce was supposed to enhance and expand consumer opportunities, and thereby bolster the U.S. economy.

For a Revolution?

Now some record company executives, songwriters, music publishers and artists are scratching their heads trying to figure out what is wrong with a system that has worked for many years.

The U.S. copyright law has been in place since 1790. And although we are a culture that seems to stress whatever is best for us right now, the U.S. copyright system has stood the test of time. Here’s a reminder to the executives who journeyed to the nation’s capital last month: The copyright law was originally signed by none other than George Washington.

So we are left with this question. Should we change a centuries-old law to accommodate the emergence of new technology, or should we honor the sanctity of the law and require those using the technology to work within it?

This Is War

The hearings in Washington focused on those who own the rights to music (songwriters and publishers) versus those who need the owners’ blessing to distribute music online, including record companies and online music services. Of course, in many cases, the record companies are the publishers-owners.

This is a nuance in this war, as the record companies and the online music services have become unlikely allies.

Until now, the record companies have always battled the online music services. It appears record companies are accepting the fact that new technology will increase consumer demand for downloadable music – a realistic and welcome step in itself.

However, if record companies begin battling with artists over rights to distribute the artists’ creations via the Internet, consumers will be among the first casualties.

Listen to the Music

The hearings included a demonstration of RealNetworks’ latest online music delivery technology, called MusicNet, a collaboration of three record label giants, Bertelsman, BMG and EMI and software manufacturer RealNetworks.

To paraphrase an old song, the previously opposing sides found they could pool their resources by joining forces.

The technology operates something like the Napster music file-swapping service, except that the company’s intention is to license the service and operate in a more lawful fashion than Napster has. In fact, the former renegade signed a licensing agreement with MusicNet on Tuesday.

MusicNet will likely operate as a subscription service, as will Duet, a similar service being readied by Universal Music and Sony.

Change, Change, Change

There’s just one problem. Some of the new services have decided their product does not fit in with a supply-and-demand tradition of consumer sales.

At the congressional hearing, executive Robin Richards essentially told legislators that the task of securing permission from so many songwriters is too much trouble. His solution? He wants the government to dictate a flat fee per song to be used as a royalty rate.

If the arrogance were not so unsettling, it would be funny. Richards is saying that the law, including negotiation with the rights holders, does not work for online music. Therefore, he believes, law and customs should be altered.

To his credit, Representative Howard Berman (D-California) saw the folly in Richards’ suggestion, and responded, “We’d also like a guarantee of gasoline under two dollars a gallon.”

Song To Remember

Lost in the mix seem to be the true providers of intellectual property — the artists.

The big music companies and online technology providers need to take a giant step back and remember that without the artists, they have no product to bring to market.

Like it or not, once compensation is legally limited for artists, but unlimited for distributors, suddenly the free enterprise system becomes anything but free.

What do you think? Let’s talk about it.

Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Times or its management.


  • George Washington also agreed with the right to keep and bear arms, but would he agree with the right of a citizen to keep and bear a nuclear weapon? The Constitution works because it has been modified many times over the years to accommodate changes in our country’s ideals.

    • Yes, the Constitution is sometimes changed as the culture changes, but not until all other options have been exhausted. So far no one has proven that the Constitution needs to be changed for file sharing technology. It would be way premature.

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