EMERYVILLE -- The record industry's goal of creating a cohesive business model for online music is quickly turning into a free-for-all.
At the Music Biz 2005 conference last weekend, record industry executives met with artists and tech companies to map out some direction for selling music on the Internet. While the label representatives continued to promote their view of a secure digital distribution system, artists were more focused on the new creative and promotional opportunities the Net presents.
Chuck D, a co-founder of hip hop's Public Enemy -- and one of the first high-profile musicians to adopt MP3 and online distribution -- said the Internet is causing a top-to-bottom shift in the music industry.
"What you've got is not an eradication of the middleman, but a balancing out ... everybody will have to share a little bit more," he said.
Kevin Conroy, senior vice president of marketing at BMG Entertainment, said the Internet offers three applications for digital music: media, an efficient way of ordering 'product,' and digital distribution, which are at very different stages of development.
While the Internet as a medium has exploded and e-commerce has begun to take off, digital distribution is still very complicated and in its early stages. And until the Secure Digital Music Initiative (SDMI) is completed, most record companies are not ready to send out music as bits on the wire.
"The end goal for SDMI is to create a marketplace in which companies can all operate with a degree of security that people can be comfortable enough with so that we can actually create a commercial marketplace," Conroy said.
Left Bank Management CEO Allen Kovac said that he's advising his clients not to worry about which file format to use right now, because "the great thing about these companies is their avarice. One of them will win, and we'll pay them a toll."
"The record companies need to hear something really clearly: Distribution is no longer your gig, banking is no longer your gig. Your gig is to market. And you're going to have to market outside of radio, outside of MTV, and outside of conventional retail. And that challenge is right now," Kovac said.
But Universal E Cat executive Lisa Farris quickly disagreed.
"I think it's about digital rights management, and if you believe that you are going to take your artists' intellectual properties and say, 'Oh, I dunno, Microsoft, a2b, any of those people, somebody will win.' If that is the attitude you're going to take, without saying we have a responsibility to create a digital rights management system ... that is an ignorant position to take."
Another persistent issue throughout the conference was the bugaboo of MP3 and pirated music, which many in the industry still view as synonymous.
"We have artists that are very upset about the fact that people who call themselves fans of the artists are in fact taking their music and making it available for free to large numbers of people," said Conroy.
But many of the artists on hand were optimistic that the Internet will open up enough new business opportunities for musicians to offset the inevitable increase in pirating. Some artists even suggested that pirating is a form of feedback that some musicians enjoy.
"Most artists that you talk to ... the chances of them saying, 'I want to protect my intellectual property, I absolutely believe that this has to be protected, I expect my record company and the RIAA to take any means possible to prevent piracy...' You're never going to hear that from an artist," said Beatnik.com founder Thomas Dolby Robertson. "What you're going to hear is 'Man, I made some impact, I got 20 million downloads out there....'"
Dolby also said that long-term deals and constraining technology --CDs -- have kept the record industry in control of artists for years. But he expects the Internet to change this situation, giving artists an opportunity to present their work in different ways, and at different costs to the fans.
Jeff Patterson, who brought his band to the Net in 1993 and later founded the Internet Underground Music Archive, agreed with Dolby's projection that music may become a service-oriented business, fed to consumers via different types of Internet appliances.
"I get upset hearing the [record] industry trying to make technology conform to its rules. As new blood is coming in I think we'll see a big change to that, but I think we have to go through this SDMI stuff to get there, to move to this service model that may work."
Summing up the feelings of many musicians who have used the Internet to distribute music, Chuck D said the medium allows almost immediate gratification, which is a notion all but lost on the industry these days.
"When I first started in '86, you turned your master tapes in and had a 65-day turnaround, or as short as 30. Now, it's as long as 10 months! I mean, you could have a baby in that time, and start yourself on another one," he said.
"The beautiful thing [now] is I'll have a producer, I'll have an artist, and he'll go and cut [a song] and the next day it's up, like Stax records or something. It's like -- boww! -- it's out."
