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The Future of Music Manifesto

The History of the Music Industry vs The Future of Music

June 1, 2000

The history of the American Music Industry is a disheartening one, which largely details the exploitation of artists and musicians by opportunists and those without the musicians' best interests at heart.

For too long musicians have had too little voice in the manufacture, distribution and promotion of their music on a national and international level and too little means to extract fair support and compensation for their work.

Manufacturing and distribution monopolies concentrate the power of over 90% of music sold into the hands of five labels. With huge media mergers continuing to consolidate the decisions of what to play and promote, it becomes more and more difficult for artists to gain exposure through the few remaining coveted radio spots.

Historically, musicians have had one of two unattractive choices:

  1. Align themselves with major label exploiters and agree to unfair compensation in the hopes of one day reaching a national audience; or

  2. Resign themselves to working with indies and a life in the shadows.

The Good News

Recent advances in digital music technology are loosening the stranglehold of major label, major media, and chain-store monopolies. Digital download and online streaming technology offers musicians a chance to distribute their music with minimal manufacturing and distribution costs, with immediate access to an international audience. Songs that would never be programmed through currently-existing narrow commercial channels are slipping through the radio industry programming stranglehold and gaining exposure, thanks to the new breed of file-sharing programs.

The Bad News

As these technologies advance, their very accessibility threatens many of the traditional revenue streams (like mechanical royalties) which compensate musicians, often without substituting new payment structures.

The Media and Policymakers

Most media attention to this issue polarizes discussion, focusing either on the exploitation of artists by the major labels or on the exploitation of the artists by Internet applications that encourage unauthorized copying. Artists are presented with a false and unnecessary choice, support traditional notions of artists' rights and be called a money-grubbing luddite; or support new technology solutions and be accused of ignoring the plight of those artists left behind. This rhetoric pretends to speak for the artists, but in effect just continues to promote the viewpoints of moneyed interests like The Record Labels or The Technology Companies while it obscures some of the more promising new possibilities.

The Future of Music

We build this organization as an attempt both to address pressing music-technology issues and to serve as a voice for musicians in Washington, DC, where critical decisions are being made regarding musicians' intellectual property rights without a word from the artists themselves.

  • No longer will corporate media and big money be able to frame the discussion of music solely in terms of their industries, as we draw together the strongest voices in the technology and independent music communities to address questions of music in the marketplace with a clear-eyed focus on the interests of the artists.

  • No longer will business interests or lobby groups for business interests drown out the voices of the musicians on whose art they have built an industry.

  • No longer will idealistic techies and idealistic musicians find themselves locked into opposing sides of an issue that profoundly affects both of our communities.

We begin this organization with the intention of addressing three pressing areas of concern.

  1. Piracy / Technological Innovation

    The Future of Music Organization is founded on the belief that creation is valuable and should be compensated. Here we are speaking of both musical creation and technological creation. By drawing together advocates for musicians' rights and innovators in Internet technology, we will work to move the discussion away from the narrow privacy vs. piracy discussions that dominate the general media, toward practical solutions leveraging the strengths of digital download technology on behalf of the artists. Our work will encourage the development of innovative Internet music business models to guard the value of musicians' labor and ensure that artists will continue to be paid for their compositions and performances despite drastic changes in methods of distribution.

  2. The RIAA's Conflict of Interest

    The Recording Industry Association of America is a special interest group that claims from time to time to lobby on behalf of musicians, but it is funded by, and represents the interests of, the major record companies - the same corporations traditionally known to be the primary exploiters of the musicians that the RIAA claims to represent. The RIAA simply cannot be trusted to serve two distinct masters - the record companies and the artists. An important example is the "work for hire" issue: the RIAA pushed legislation that gives major labels the right to own musicians' master tapes in perpetuity, changing an existing law that allowed some artists to regain the rights to their masters after 35 years. By advocating for this language, even while claiming to have the artists' interests at heart, the RIAA made it clear that it is compromised, and cannot be left to its own devices in the policy-making arena.

    In a more frightening development, the RIAA is attempting to step beyond its traditional lobbying role in order to enter the music-licensing business by collecting and distributing royalties from webcasts. While there is clearly a need for an organization to manage these royalties (webcasting royalties could result in more money than currently collected by BMI and ASCAP combined), the Future of Music has no confidence in the RIAA's ability to represent the voice of musicians or to collect and distribute artists' royalties from the major labels who fund the RIAA.

    The Future of Music therefore advocates for an impartial and accountable organization to guard the value of artists' webcasting royalties. By standing in opposition to the RIAA we hope to give voice to the concerns of musicians who are simply not represented by an organization whose core mission is promotion and protection of the record industry agenda.

  3. SDMI

    The Secure Digital Music Initiative (SDMI), spearheaded by the RIAA, was an attempt to pull together a limited group of powerful consumer electronics manufacturers; PC manufacturers, and record labels to develop a copyright-enabled alternative to the MP3 format. It is viewed by many as a misguided and desperate scramble by those in the existing music business monopoly to maintain their stranglehold on the channels of distribution through the application of a standardized encryption or watermarking program.

    As with most technologies that are conceived and developed in a no-feedback vacuum, without the desires of potential consumers in mind (not to mention an understanding of the limits of encryption technology), it was destined to fail. As much has been said by Executive Director Leonard Chiariglione, whose comments at the May 2000 SDMI meetings revealed a combination of infighting between competing business interests and fatal flaws in the group's structure, which requires all decisions to be made by consensus. While SDMI members bicker and veto proposals based on the personal financial interests of their multi-national corporations, consumers are presented with narrow, confusing options that alienate them and thus do more to promote piracy, which becomes the only viable mode of digital transfer for the great majority of the world's existing music.

    The Future of Music believes SDMI is a perfect example of what happens when industry attempts to legislate technological advances without the crucial input of musicians and programmers.

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SoundExchange Background

SoundExchange®, Inc. is a dynamic, 501(c)(6) nonprofit performance rights organization embodying hundreds of recording companies and thousands of artists united in receiving fair compensation for the licensing of their music in the new and ever-expanding digital world. Modern technology makes all of our lives a little bit simpler and SoundExchange takes full advantage of its accuracy and efficiency to license, collect and distribute public performance revenues for sound recording copyright owners (SRCOs) and artists for noninteractive digital transmissions on cable, satellite and webcast services.

Prior to 1995, SRCOs in the United States did not have a performance right. This meant that, unlike their counterparts in most of Europe and other nations around the world, recording companies and artists were not entitled to receive payment for the public performance of their works. Users of music, the digital music service providers, freely performed these works at will, without a dime being paid to the rightful owners of those recordings or the featured artists who performed the songs - the recordings which created the backbone of their business.

The Digital Performance in Sound Recordings Act of 1995 and the Digital Millennium Copyright Act of 1998 changed that by granting a performance right in sound recordings. As a result, copyright law now requires that users of music pay the copyright owner of the sound recording for the public performance of that music via certain digital transmissions. The U.S. Copyright Office recognized the benefits of SoundExchange's administration of these royalties, and so has designated SoundExchange as the administrative entity for subscription services' statutory license fees. You may find SoundExchange's Notice of Designation as Collective Under Statutory License here.

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At SoundExchange we are dedicated to making the process of licensing music and collecting royalties as accurate, efficient and fair as possible for everyone. Part of being accurate and fair is distributing on a per performance or pay-per-play basis instead of sampling. At SoundExchange, there is parity in royalty distribution and in governance where everything is split evenly between artists and SRCOs.

Members of SoundExchange include major and independent record companies from Sony BMG Music Entertainment and Warner Music Group to over 1,000 independents like Alligator Records, Beggars Group, Benson Music Group, Koch International Sonido, Inc., The Mountain Apple Company and Tommy Boy Entertainment. These companies understand the economic efficiencies and benefits of sharing the costs associated with the administration of statutory licenses.

We have assembled a unique and talented staff ranging from seasoned music industry veterans to Internet strategists, technologists and royalty professionals. Our distribution operations staff processes millions of performances a year, our membership and royalty departments ensure all artists and SRCOs receive the most accurate payment possible. SoundExchange's licensing professionals strive to make the process of receiving a performance license an uncomplicated task. Together our team has developed one of the most modern and groundbreaking music organizations ever.

SoundExchange is the principal administrator of the statutory licenses under Sections 112 and 114 of the Copyright Act. SoundExchange participates in each periodic rate making proceeding under the Section 112 and 114 licenses to establish rates that appropriately compensate copyright owners and performers for the exploitation of copyrighted sound recordings. Such rate setting proceedings may be resolved through arbitration proceedings or through voluntary multi-party settlements. SoundExchange also participates in Copyright Office rulemakings to establish the terms governing how services operate under the two statutory licenses.

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Over the past few years, SoundExchange has successfully negotiated agreements for foreign royalties with the following performance rights organizations:

  • Mexico's SOMEXFON (reciprocal agreements for featured artists and labels)
  • Netherlands' SENA (reciprocal agreement for featured artists)
  • U.K.'s PPL (reciprocal agreements for featured artists)

In summary, SoundExchange handles the following:

  • collects performance royalties from the statutory licensees;
  • collects and processes all data associated with the performance of the sound recordings;
  • allocates royalties for the performance of the sound recording based on all of the data collected and processed;
  • makes distribution of the featured artist's share directly to the artist;
  • makes distribution of the SRCO's share directly to the copyright owner;
  • makes distribution of the nonfeatured artist's share to AFTRA and AFM's Intellectual Property Rights Distribution Fund; and
  • provides detailed reports summarizing the titles, featured artists and royalty amounts for each of the sound recordings performed by the statutory licensees.

If you want more detailed answers, please see the FAQ page. Please feel free to continue browsing our site or contact us directly.

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“There are wonderful things in real jazz, the talent for improvisation, the liveliness, the being at one with the audience.”

Henri Matisse