The only panel I attended yesterday was a corker. Coming off the back of news that labels are warming to the idea of an ISP surcharge to pay content creators (an idea proposed by one of the panelists, Jim Griffin) there was great anticipation for the panel at SXSW. Here’s what went down:
Peter Jenner – IMF (International Managers Foundation)
Dena LaPolt – Entertainment Attorney (Estates of Motley Crue, 2Pac Shakur)
Jim Griffin – Digital Music Strategist
Eric Garland – Big Champagne
Sandy Pearlman – McGill University (Producer of the Clash and Motorhead)
Moderator – ?
Given the way things have changed, how do we move forward and compensate rightsholders?
EG: In the US alone there 110 million households with a PC, 1/3 of which have an active P2P software connection. 25 million people are actively taking music for free to the tune of billions of files a month. You can’t now try an install a system whereby they must ask permission – that ship has sailed. It’s a huge marketplace that’s not a marketplace.
Moderator: Jim, give us your reaction to the Wired piece.
JG: Well, I think that a lot of the “facts” are inaccurate. I didn’t cooperate with the piece. But the overall thrust of the idea is there.
That said, I’m against government involvement at all. I also don’t favor a tax. The underpinnings of the idea are basically a network licensing model. If you examine all media today, but the Music Industry in particular, it’s become voluntary to pay. The whole industry currently functions as a tip jar. I don’t think a culture can function on a model such as this, but neither can we condition access to the size of one’s wallet. It’s not just the internet – it’s the exponential growth of networks over the next 3-5 years that presents a major challenge.
We have to make it roughly involuntary to pay. The sports industry, although a valuable cultural commodity, is roughly free to watch the world over. Again, what I’m proposing is not a government but a BUSINESS deal. A kind of volutary blanket license. Build a base of income to replace that which we’ve lost.
The biggest switch is from a product based model to a service based one. You simply can’t get 5c for every copy of a song on the internet – it’s not scalable. In 7-10 years there’ll be 750 mil people with a Wi-Fi connection, and that’s only the US and Western Europe.
I believe a process like this needs to start with Universities – the place to change the net is at the Universities.
DLP: At the end of the day I’m in favor of whatever pays artists for their work. We can’t give way to every new technology that comes along. We must pay creators. I’d propose a new copyright model that new business models can build into their plans. But today we’re not in the recorded music business – we’re building brands and for the first time in 80 years, recorded music is ancilliary to that.
MOD: So what do we do with the people who survive purely on recorded music revenues?
DLP: Get a new manager to re-invent you! I also think the fact that the US doesn’ t pay a performance royalty, given the fact that the even North Korea does, is a disgrace and it’s important now to have that implemented.
JG: (in response to DLP) Publishing companies have seen their revenues double, triple year-over year. We need to stop thinking like a product company. If music draws a crowd, there should be some kind of compensation for the creator, but we need to stop thinking on a unit-by-unit basis. The answer to each dilemma is to license.
MOD: How do we get each party on board?
PJ: It’ll be on a case-by case basis. I thought the most interesting thing about Radiohead’s experiment was the realization that there were different markets for the same record. To be #1 on iTunes, Amazon, Limewire at the same time as giving away your record is amazing. We need to be smarter in understanding how and why people use music.
JG: Music 2.0 is about starting relationships that never end. It’s about the fans…in a product model, when you sold a record, you were reducing the number of copies in the marketplace, but when you share a file you’re actually increasing the availability of the music exponentially but you, as distributor, don’t lose anything.
DLP: The access to the artist is very important also. LiveNation is the biggest competitor to the labels at the moment because it’s embracing new models and empowering the artist. Labels never saw the artist/label relationship as a partnership (they’d withold information on stores, contacts etc.). Now I feel like they came in and took a shit on my desk, and I have to figure out how to get rid of it.
MOD: Eric, how do we get all the parties together?
EG: Strange bedfellows are made on a cold winters night. It’s no coincidence that ISPs are meeting with labels – even tech companies (Imeem, LastFM) are realizing that they have a core product that is being devalued.
MOD: Can you track and pay on this kind of scale we’re proposing?
EG: Absolutely. It’s actually easier to account for track movement online than off. Big Champagne tracks 20 million IPs per month that are active file-sharers and you can not only filter the files by artist and album but by song and version of song. The technology is there to do that.
MOD: How do you get an ISP tax without Govt. involvement?
JG: Before we get involved with the government, we need to get our own house in order. I think any governmental involvement would be an absolute last resort – as any lawyer will tell you, something you agree to is always better than something imposed on you.
I was lucky enough to have dinner with Jim, Sandy and Brian Zisk (Director of the Future of Music Coalition) after the panel -the conversations I had in that two hour span were the most informed, entertaining and downright enlightening I’ve had in my 6 years in the business. The short version is that I’m convinced that Jim’s plan is not just a theory, but will before too long become an actuality.
I plan to blog more about it when I get back from SXSW, but I’d advise any musician, music business or music entrepreneur to seriously re-examine their business plans in light of the strong possibility that such a surcharge will be introduced in the not-too-distant future.