RIAA To Members: Get Ready To Rumble
Recording Industry Association of America chiefs Mitch Bainwol and Cary Sherman sent an e-mail to senior executives of their major label members on Monday night informing them that the Copyright Royalty Board's effort to update a century-old portion of U.S. copyright law had begun.
Tech Daily Dose has obtained a copy of the lengthy letter, which you can read in its entirety after the jump. In the correspondence, Bainwol and Sherman explain the significance of the proceeding and why private negotiations between stakeholders have not worked.
Here's their bottom line: "The last thing we'd want is to damage the songwriters who are so crucial to the music community. But all of us -- songwriters and publishers, artists and record companies -- must recognize that our business has gone through a fundamental change, the effects of which are still reverberating."
From: Mitch Bainwol
To: XXXXXXXXXXX
Sent: Mon Jan 28 22:09:58 2008
Subject: CRB Hearing
----------------------------------------------
Hearings began earlier today before the Copyright Royalty Board, in a
proceeding that will establish mechanical royalty rates for the next
five years.
The Board will hear testimony for four consecutive weeks. Rebuttal
hearings will take place in May. In the absence of a private settlement
between the parties, a new rate will be set by early October.
This proceeding has taken on special significance for several reasons:
* First, the marketplace obviously is in decline, with the sale of
recorded music down for 7 of the last 8 years, amounting to an aggregate
fall from 1999 through 2007 of about 25% (even after factoring in
digital sales).
* Second, this is the first time rates will be set for new digital
offerings like subscription services and mastertones. And,
* Third, despite efforts on both sides, we have been unable to strike a
deal between labels and publishers.
In recent years, record companies have been under enormous pressure from
consumers who have found many ways to obtain music without paying for
it. Record companies have responded by lowering prices, bundling
additional content to enhance consumer value and creating a range of new
business models and content offerings. We look to the publishers to
join us to meet these challenges facing our industry.
This hearing is not a civil war within the music family. Rather it's a
process to resolve a disagreement over what is an appropriate mechanical
royalty rate in the fundamentally different world of today's
marketplace.
During a proceeding that by definition is adversarial, we think it is
especially important to address this issue factually, without
inflammatory language and with respect for our partners in the creation
of music. Rancor and hyperbole serve no purpose.
We understand there will be those who will seek to exploit the moment to
score political points or to rally their troops. Our approach will
seek to lower temperatures.
We are in the same boat. We are all in the music business. Labels,
artists, musicians, publishers and songwriters have a common interest in
recognizing the changes wrought by new technologies and maximizing the
value of the music marketplace. All of us can do that by rapidly
facilitating new models, and by making it possible to reinvest in new
music, new artists, and new products. The more nimble we all are, the
brighter our future.
In the absence of an ability to earn a fair return, however, investment
dries up. No one benefits. Not the artists who are looking for
support. Not the songwriters who are looking to place their songs on
new releases.
So why haven't private negotiations worked?
As you know, the label perspective is that, with sales falling and
prices declining, our core costs have to go down, not up. Moreover,
current mechanical royalty rates in the US are already well above
historical and international norms. We also think that the rate
structure should be changed to a percentage royalty system, a system
that has served publishers and songwriters around the world very well
for many decades. A percentage royalty rate would be self-adjusting and
flexible, making it easier and quicker to explore new business models in
the years ahead.
Publishers, on the other hand, believe the rate should go up despite the
current market realities and despite lower rates elsewhere around the
world. At a time when consumers are paying less for recorded music, an
increase in rates makes no economic sense. Publishers also reject the
idea of transitioning to a percentage rate structure, preferring to
maintain the inflexible cents rate system. That system has inhibited the
ability of our music community to aggressively experiment with new
models.
So our perspectives are different. Unable to resolve them within the
family, both sides must ask the judges of the Copyright Royalty Board to
do it for us.
The last thing we'd want is to damage the songwriters who are so crucial
to the music community. But all of us - songwriters and publishers,
artists and record companies - must recognize that our business has gone
through a fundamental change, the effects of which are still
reverberating. We hope that songwriters and publishers likewise feel
that they wouldn't want to damage the record companies who have been and
continue to be the economic engine that drives the music industry,
because it's the investment in recording, marketing and promotion by
record companies that produce all the revenue streams that make music
publishing the most profitable segment of the music industry today.
Please let us know if you have any questions.
Mitch and Cary
Categories:
Intellectual Property
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