In the April 2007 issue of EM, this column featured an interview with Michael Petricone of the Consumer Electronics Association (CEA), a trade group that represents technology manufacturers. Some of Petricone's comments raised the hackles of members of the Recording Academy, a group that not only awards the Grammys each year, but also represents the interests of musicians, songwriters, producers, and engineers.
The most controversial statement from Petricone's interview was when he cited the major labels' lawsuit against XM Radio — regarding the recording features in some of its new receivers, which allow satellite radio users to record and organize songs off the air — as an example of how the music establishment is hindering technology that could benefit musicians. Petricone argued that because satellite radio opens up more opportunities for independent musicians to get on the air, a suit that harms it could negatively affect those musicians. The record industry establishment feels that these devices exceed the limits of the Audio Home Recording Act and should incur additional licensing fees.
To give the Recording Academy's side of this issue and others relating to the ongoing battle between technology manufacturers and content producers, I interviewed Daryl Friedman (see Fig. 1), vice president of advocacy and government regulations for the Recording Academy.
Could you elaborate on what your issues are with the CEA's positions about music technology, and in particular Petricone's comments in the earlier column?
One is the implication that the CEA represents the interests of artists. That's disingenuous. It's not uncommon, though; everybody loves to say they're representing the interests of artists. The CEA used to say that they represented the interests of consumers; now they say they represent indie musicians. But in fact, the CEA and Petricone represent the technology manufacturers, whose job is to use music in a way that makes money for CEA members. On the other hand, the Recording Academy speaks for tens of thousands of artists and creators. And it does happen that, on the specific issue of satellite radio and XM's recording device, we're actually on the side of the record labels. So one disagreement I have with Michael's comments is regarding the general concept that the CEA speaks for musicians. The other disagreement I have is on the specifics of the XM technology. We believe that what that device does goes beyond the license of a performance for XM to broadcast, and, instead, that it is actually a distribution requiring an additional license.
In other words, because this device records the stream off of satellite radio, people can then use it in a way that the satellite radio's current license doesn't cover?
It's not just that it records off the air. We're okay with that. We're actually huge fans of satellite radio. We believe it's opened up great opportunities for our members, and we think the fact that satellite radio is broadcasting and paying a performance fee for broadcasting is great. It's even fine with us (and here I'm not speaking for the labels, I'm speaking for the Academy) that there are devices out there that can record blocks of time. But this device goes beyond that and manipulates individual tracks. If you record for one hour, for example, you won't just have a one-hour block of time on the device, you'll have a list of individual songs and artists. You can then do anything you want with those tracks. You can disaggregate them, you can delete the ones you don't like. You can playlist them in a different order, you can playlist them by artists — however you want to do it. That goes beyond the Audio Home Recording Act, and that, we believe, requires an additional license.
Petricone also argued that because satellite radio opens up broadcasting to a wider range of musicians than terrestrial radio, adding additional financial pressure to those broadcasters could harm indie musicians.
Well, satellite radio certainly does open up avenues. It allows independent artists to be heard more, and we love that. We love to partner with satellite radio, and we have. But what Michael is saying is that independent artists would be better served if we let the user take that track and store it on a device without paying anything extra. Would the independent musician be better off in that scenario than if users went to iTunes and paid 99 cents for each track? We don't think so. We strongly believe that musicians deserve to be compensated. If Michael and the CEA are really concerned about artists, they should want to see that those artists, who are basically the backbone of these industries, are being compensated for every use of their music. And the other thing, this notion that content is stifling technology, is really completely out of line with reality. In fact, it's content that's driving all these technologies.
I think there's a perception out there that your group marches in lockstep with the RIAA [which represents the major labels], but in fact, your group is entirely independent, right?
Yes. We have different aims and a different constituency. Representing creators is very different from representing the labels. Very often there are tensions between artists and labels; that's part of the history of the recording industry. But on these particular issues, we happen to be united with the labels. What we're talking about is how much users of our music should pay to use our music to build their technologies and build their companies. We may argue over how we split that money once it comes in, but we'd rather have more money coming in to fight over than to take the CEA's view, which is that uses of our music by certain technologies should not be compensated for at all.
What about the issue of Podcasters playing copyrighted material? Some say the publicity helps the artists.
If the artist owns their copyright and the artist wants to let it be used for free for publicity, the artist should absolutely have the right to do that. But what's happening a lot is, the artists aren't making these choices. The technology companies and the Podcasters are making the choices for them. And that's where we think it's wrong. A lot of Podcasts are licensed — that's wonderful. Any new avenue that connects our music-creator members to their fans is great. We're in favor of it. All we ask is that there be a compensation for each use.
Are there other new technologies that your membership views as potentially problematic?
There's certainly the potential for an issue with high-definition radio like there is with the XM device. As HD comes out, there's potential for the same sort of functionality to be on receivers of high-definition digital radio. The industry and the broadcasters are working on that issue as the technology is developing. But probably the most important upcoming issue is the matter of royalty payment by traditional, terrestrial radio broadcasters for performances. We might want to get into this a little bit here because, you may be surprised to hear, it's an issue where the Recording Academy is actually on the same side as the technology companies. Webcasters have to pay the songwriter and the artist performance royalties for broadcasting their work. So does satellite radio. In other countries besides the United States, traditional, over-the-air radio also has the same rule: they have to pay the artist and the songwriter. But here in America, broadcasters have an exemption on that payment. They pay songwriters, but they don't pay artists. It's a huge anomaly where the United States is out of step with the rest of the world. This is an issue we're going to be fighting for, and this is an issue where we will be on the same side as the Webcasters and satellite radio. Because they want a level playing field. They're paying, properly, royalties to both artists and writers. And yet their competitors, represented by the NAB, Clear Channel stations, etc., only pay songwriters, not artists, and that creates an unfair disadvantage for the new technologies.
Overall, there seems to be a contentious state of affairs where music technology — especially on the consumer side — and commerce intersect. There are a lot of competing interests.
Yes. One thing we're doing at the Recording Academy is to follow up on our president's keynote speech at Recording Arts Day in Washington last September, which called for a truce between the technology and content industries. Recently, there's been this sort of war on Capitol Hill, with PR campaigns and a lot of rhetoric going back and forth. At the Recording Academy, we believe that the technology and content industries actually have more interests in common than we do interests that divide us. Neil Portnow, the Academy's president, is engaged in a couple of activities that are working toward that goal of moving both industries forward. One of them is a retreat this summer that's going to put leading members of music technology, along with labels and artists, in a closed-door retreat in the Bay Area — hopefully, away from the spotlight, away from the media, and away from the policy makers. The hope is that industry leaders sitting down together can begin to come up with solutions that will help us all to move forward.
Mike Levine is an EM senior editor.