FIG. 1: Consumer Electronics Association vice president Michael Petricone says that the major record labels are stifling technologies that could benefit recording musicians.
The first time I heard Michael Petricone (see Fig. 1) speak was at the CMJ Music Marathon in New York City last fall when we were both on a panel there. Petricone is a vice president at the Consumer Electronics Association, an industry group that represents manufacturers of consumer technology products. He talked about how the major record labels, through their industry group the RIAA (Recording Industry Association of America), were attempting to suppress certain types of digital technology, and how that could have a negative impact on musicians, especially recording musicians. Petricone's speech piqued my interest and led me to request an interview with him for this column.
Digital technology is at the center of many disputes between the major record labels and the manufacturers of consumer products. Can you give some background on that?
What you see today is a situation where creativity is becoming democratized. All of a sudden, everybody can be a creator. You can make media, make movies, take pictures — you can make these creative works and then distribute them. And for a recording artist, the situation is even more advantageous.
Absolutely. The technology has opened up more avenues of creativity for musicians than ever before.
Huge. Unprecedented. If you think back over the past ten years, it's astonishing. And when you do what the major labels are trying to do — that is, put limitations on the ways that lawful people can create and distribute music and on what those devices can do — it hurts consumers, and it hurts the vast majority of musicians, who aren't affiliated with major labels.
When you talk about things that restrict a musician's ability to distribute, do you mean from a hardware standpoint?
Yes. For example, there's a lawsuit and a lot of legislation right now that's aimed at limiting and severely restricting the satellite-radio services XM and Sirius. XM is being sued by all the major record labels, and there's pending legislation that would try to prevent XM and Sirius from marketing receivers that allow you to record programming for later listening.
Why are the major labels doing that?
Because they want to squeeze every last penny out of the relationship. And XM and Sirius are startup businesses — they have huge overhead costs. Any time you have a national service that's based on launching satellites, it's very costly. [At press time the two firms announced a proposed merger.]
If the suit is successful, how will it harm independent musicians?
Surveys say that satellite-radio subscribers are spending more money on purchasing music and going to concerts; they're finding out about new bands from XM and Sirius, and then telling their friends. Services like XM and Sirius actually enable smaller artists and independents to finally get on the air. So any major-label initiative that would significantly limit or harm those services is not in the interests of artists.
Are the labels doing this to protect their monopoly and stifle indie competition?
They're in a business that's changing very fast, and that makes them nervous, understandably. That's what technology does; it is inherently disruptive. You see that happen every time a new innovation comes out that empowers consumers, starting with the player piano at the beginning of the 20th century. John Phillip Sousa literally went to Congress and said it was going to be the end of the music industry. He demanded that music publishers have a monopoly on building player pianos. All the testimony is out there. And the arguments that he used sound eerily similar to the arguments that are being used by RIAA today.
The major labels claim that digital technology is adversely affecting their business. What do you say to that?
Are CD sales going down? Sure. But look at ringtones. Ringtones now make up an $8 billion global business that didn't exist four years ago. And who would have thought that you could charge people $1 to download a song and $3 to download a 15-second snippet of a song? The point is that what happens in so many of these cases is that even as the business changes, digital technology opens up new opportunities.
But piracy is unquestionably occurring with regard to downloading and peer-to-peer networks.
There are certain things that we all agree on. One of them is that commercial piracy is wrong, illegal, and needs to be stopped. The other is that mass indiscriminate redistribution over the Internet — sending somebody's copyrighted work without their permission to a million of their “closest friends” with a push of a button — is wrong. Where my organization parts company with the major labels is on things like the satellite-radio issue, where we're talking about the consumer's right to use and enjoy their lawfully acquired music privately and for noncommercial purposes. That is legal and that's okay.
Can you give me some examples, in addition to satellite radio, in which they're trying to stifle technologies?
First of all, the satellite-radio issue is also important as a precedent. Once you establish a precedent that recording something for noncommercial purposes within the privacy of your home is something that can be regulated or stopped, that has all kinds of implications for products like TiVo. Right now, there are a large number of lawsuits against a variety of technology companies that are engaged in activities that are clearly not piracy. A lot of them are small companies. One of them is Kaleidescape, which builds a DVD jukebox that will allow you to load up your DVDs and then network them around your home. Another one is a company called Sima Products, which makes video-editing software. Everyone from small companies to large companies is facing litigation. Google is facing a lawsuit by publishers because of its project to index books. You see a lot of this litigation on IP [intellectual property] grounds. If you're a big company, you've got a hefty litigation budget and you can have the philosophy of “Whatever happens, happens.” If you're a small company — even if you will probably prevail in the end — and the lawsuit goes to a decision, the legal costs are ruinous. That can be a very intimidating factor. We've heard firsthand from venture capitalists who are reluctant to fund new technologies; the last thing that any venture capitalist wants to invest in is a potential lawsuit.
Are Podcasts and services like YouTube under attack from the labels as well?
For Podcasters, there's a potential intellectual-property issue, and you need to be quite careful to clear the rights. And some major labels are more accommodating than others. For a lot of these technologies, the major labels are in a situation where their business model is shifting quite rapidly. They're transitioning from a time when selling music meant selling little plastic discs to a very different business, and they're trying to figure out how to deal with it. For example, if you're a major label and one of your artists posts a music video on YouTube and more people are seeing that video, is that a good thing or a bad thing? If somebody is using your song in a Podcast or posts it on a music blog, is that a good thing or a bad thing? I think they are honestly still trying to work through that.
Can you recommend anything for musicians to do to make their voices heard about that?
There's a new coalition called digitalfreedom.org that recently started up. The coalition says that artists need to be compensated and that piracy is wrong. But it also says that we need to avoid imposing limitations on new technologies; that they are immensely beneficial to artists, independent musicians, and the public at large; and that we should safeguard and promote them. So I would encourage musicians to get on digitalfreedom.org and take a look. And, certainly, if they agree, get active.
Mike Levine is an EM senior editor.