"That's a more persuasive argument than claiming that radio decreases music sales, which the industry lobbying group in favor of the new royalties contends. Geez, I thought it was piracy that was killing music. Or maybe home taping."

Of course, the reality is that it is not music that is being killed but rather the record labels which are dying a perfectly natural death - a death which the RIAA is trying to delay by means of political pull and legislation.

Music is alive and well. Indeed, it has never been better. Music is everywhere these days. Thanks to digital technology, one can enjoy music in places where doing so was once impossible. And thanks to Internet radio and websites such as myspace.com, artists have unprecedented opportunities to bring their music to the attention of new fans - and they no longer have to get an official stamp of approval from a record label in order to do so. Today, there are more opportunities for artists who are just starting out and who seek to make a name for themselves and acquire a loyal following than there has been since the boom years of the 1920s when America was in the middle of a dance craze that made dancing and attending performances of live music the national past time of young people.

Music existed and was part of people's lives long before the advent of recorded sound. And music will flourish long after the record labels join buggy whips, telegrams and typewriters as examples of industries which were once a crucial part of people's daily lives but are no longer needed or desirable because better things have come along to replace them.

A little history to put things in perspective: in the early decades of the 20th century, sheet music sales, not record sales, were the measure of commercial success in the music industry. Prior to the 1920s phonographs were luxury items that competed with player pianos for a spot in the parlors of upper middle class homes. Phonograph records were very expensive. Very few people had collections larger than a few dozen discs. Each disc only contained one song per side and cost about the same as a CD would cost in today's money. The musical equivalent of 6 CDs would have been considered a very respectable personal collection back then. So when people wanted to buy the latest hit tunes from Tin Pan Alley for enjoyment at home, most went out and purchased sheet music. Musicians made their money doing live performances - which is still the case today for the vast majority of musicians.

Of course, the sheet music industry, while it still exists, is a very marginal part of today's overall music industry. When a flood of low priced independent labels entered the market in the early 1920s record sales boomed. And, at the same time, radio came along as well. Suddenly home grown music sounded dull and amateurish. Undoubtedly those with a financial interest in sheet music regarded such developments with alarm and perhaps even said that it was the beginning of the end for music - which, of course, it wasn't.

When radio came along the record labels were very concerned about it and made arguments that are very similar to those the recording industry is making today. If people could listen to the popular artists and songs of the day on the radio, why would they buy records? And that fear ended up becoming a reality when the Great Depression struck and few people had the money to afford records. Most of the record labels went out of business - only two companies managed to survive, one of them by being fortunate enough to be owned by the country's largest radio company. The record industry was largely perceived to be dead. And then, out of the blue, Decca Records was formed and revived the industry by selling recordings of top name artists for the same price that the other labels sold their no-name bands for in dime stores. And rather than being the death of records, radio eventually became the industry's best friend and major means of promotion.

I rather doubt that there will be a modern day equivalent of Decca to come along and save the recording industry this time. There was still a need for the role they served back then. Today there isn't. The record labels are middlemen between artists and listeners who are no longer necessary in light of today's technological advances. And the demise of their relevance will have about as much of a long-term impact on the popularity and viability of music as did the demise of the once-powerful sheet music and piano roll industries. This is something that Congress really needs to keep in mind when it is asked to artificially prop up the relevance of the major labels by means of the RIAA's demands for unreasonably exorbitant royalties.

Imagine if we today were forced to pay exorbitant royalties on top of what is already paid to music publishers in order to make up for all of the sheet music sales that have been lost as a result of recordings and radio. After all, record labels and radio have built multi billion dollar industries off their music while killing off what was once their primary money maker - far more money than the pittance such industries pay today in fees for mechanical licensing and to PROs such as ACSAP. Imagine if a special fee had to be paid every time a sound recording was sold or performed on grounds that it is necessary to compensate the makers of piano rolls for the loss of their market when the public decided that it preferred recordings.

What the major record labels are demanding today is really no different and no less absurd. Congress really should consider matters regarding copyrights and royalties in light of the fact that it is almost a given that the marketplace relevance of the major labels will be significantly reduced in the future - assuming that they even exist other than as trademarks owned by the companies who purchased whatever assets they might have which will still be of value.

The question which no one is asking and no one is answering is, "Who will develop and nurture new talent and bring them to the marketplace if music publishers and record labels, both major or otherwise, are not allowed to get just compensation for their copyrights?"

While there is much said about the inevitablity of the major labels becoming extinct and the 'new digital' universe of everything for everyone when they want it and how they want it, the simple truth is without just compensation the art, for lack of a better term, of bringing along the next big thing is a daunting task. It is made less daunting by the existence of copyright which gaurantees, for limited times, the rights of the owner to the exclusive rights to their works. If you would do away with copyright then music does not become like water, it becomes today's newspaper story...tomorrow's fish wrapper. Yes, the depression killed off most of the labels just as the next depression will kill off most of the Internet use. Will there be a hue and cry over that when it comes down? Could Google become some future decade's Chrylser Corp and need government bail out? We'll have to wait and see.

And will the Yahoo's, Starbucks and Googles of the world begin music production divisions with a dedicated effort to discover, nurture, finance and develop new talent? They dance around the edges but are not doing any of the heavy lifting. The scouting of talent can go only so far on Myspace. With new recording technology you can dress up a turd for digital consumption but when you go see it live the smell is palpable. Artist development (A&R) is itself an art form. Not everyone, even with Garage Band, Reason, ProTools, etc. is capable of making great music. Most people think they know a hit when they hear one. The reason for that is the process of A&R and music production has weeded out most, not all, of the bull for you and the consumer doesn't have to sift through it all. Imagine how much work went into everything you preview in iTunes or Rhapsody for free. And I would bet that most people still hear a 'favortie' song first on terrestrial radio, TV or a night club before they find it on the Internet.

Yes, the music publishing and record businesses are filters. And so is radio. And so is TV. And so is the editorial staff of this newspaper. Thanks for all of that. I would hate to filter through all that 'water' to find something good to drink.

It's asking an awful lot of the consumer to do your job for you. And the copyright owners deserve just compensation for their efforts.

My thoughts anywaze...

J Fred in Music City

"The question which no one is asking and no one is answering is, "Who will develop and nurture new talent and bring them to the marketplace if music publishers and record labels, both major or otherwise, are not allowed to get just compensation for their copyrights?"

Answer:

Musicians in this day and age are moving to produce and promote themselves. Sites like Myspace allow them to do self promoting with great success and yet at the same time save themselves a lot of money that they fork over too music labels. They way you worded your article you made it seem as if Labels actually care about the musicians and the music they create. But the reality is music labels have been raping bands for years are actually more of a negative effect of the music industry than a positive.

A record label will sign 10 bands to their label and if 1 happens to stick than all is ok as far as they are concerned. As a online Dj im greatly offended that people are trying to charge me for promoting music FREELY. Ive been a avid music collector for years and take music very seriously. By broadcasting my shows im doing my part to help these bands yet i dont ask for compensation for it. Why? I do it for the love of music and i want to help these bands get noticed.

The idea that somehow playing music over the internet is hurting record sales is not only ridiculous, but naive. And trust me, had i had the ability to preview a album before i bought it 15 years ago i would probably would have not wasted my money on a album that has 1 good hit on it. Music labels are concerned with nothing but the almighty dollar and that is truly a travesty in this day and age.

"And the copyright owners deserve just compensation for their efforts.

I for one agree - I am about as staunch a supporter of intellectual property rights there is. The need for and moral validity of intellectual property and copyrights, however, has absolutely nothing to do with the issue of whether the major record labels have any relevance in the digital world of the present and future.

"Who will develop and nurture new talent and bring them to the marketplace if music publishers and record labels, both major or otherwise, are not allowed to get just compensation for their copyrights?"

The premise here that needs to be questioned and challenged is not whether copyright holders ought to be compensated but why on earth will it any longer make sense for record labels to be the ones who hold the copyrights.

Historically, it made a LOT of sense for the record labels to own the copyrights. Prior to the digital revolution, the production and distribution of sound recordings was a very capital intensive industry. The cost of getting into that business on a large scale basis was well beyond the means of even the most successful artists. It made all the sense in the world, therefore, that the record labels be the ones who hired artists to make recordings for them. And for many decades it was a relationship that was mutually beneficial for both sides. The labels were able to have access to acts that had a public appeal and the artists soon discovered that record sales and airplay of their recordings was a very crucial and important boost to their careers. In those days, aspiring artists needed the recording companies far more than the recording companies needed them. In any of the performing arts there has always been more aspiring and highly talented wannabes out there than there are viable performance opportunities or recording contracts. For that reason, by virtue of the law of supply and demand, it made perfect sense that recording contracts were heavily tilted in favor of the labels and not the artists. It was the labels who had made tremendous investments in studios, manufacturing plants, as well as distribution and promotional infrastructure. They were the ones taking the financial risk so it made sense that they be rewarded accordingly. And it was entirely fair that the artists got less out of the deal as the labels were providing them with a much needed service that they would otherwise be unable to do on their own.

The digital revolution changed all that. Nobody today needs a major label in order to produce or manufacture a sound recording. A lot of people have very high quality recording studios in their garages. And for those who don't, fully equipped studios can be rented by the hour in any major city. And there are countless facilities all across the country that will press CDs for you in whatever quantity, large or small, at extremely low rates. And anybody with a home computer can make a digital file of a recording.

So the only thing that is left of the labels' historic relevance is distribution and promotion. Well, the distribution side of it is pretty much on its last legs as CD stores close down and the big box retailers cut back on the floor space devoted to CDs. Most brick and mortar CD sales these days are through big box retailers - but they pretty much carry only recordings by artists who are already famous and have a mass appeal. Such a distribution channel is not important to artists who are not already at the top and by the time they get there (if they get there) such channels will probably no longer exist. Music distribution - both downloads and sales of physical CDs- is moving to the Internet and one does NOT need a major label recording contract or a lot of money to get Internet distribution.

So the only area of relevance that the major labels have left is their ability to promote recordings. This is very important to artists because, until recently, pretty much the ONLY way to become famous on a big time basis was to get a major label recording contract because doing so was one's best ticket to FM radio airplay.

The question is: in a world where artists can very easily produce and distribute their own recordings, why does it make sense for the legacy recording companies to be the ones who do the promotion and not somebody else who can come along and do so on terms that are much more favorable to the artists?

Let's use an example other than the recording industry. Let's say that you make really great jams and jellies and you have built up a small following for them by selling them at county fairs and a few local specialty stores. Let's say that the response to your jams has been so great that you decide to sell them on a national basis and make them a famous national brand. So you come up with a name for your jam and trademark it. You outsource the manufacturing to a local food processing plant that is capable of quickly expanding production to as high a volume as you will ever need. Now all you need to do is get the word out about your jam so that major wholesale distributors and grocery chains will be interested in carrying it. So what you do is go out and HIRE an ad agency and a marketing company to come up with creative ways to drum up interest in your product - ways far more creative and effective than you could have dreamed up on your own.

Observe what you would NOT do in such a scenario: you would NOT go out and sign a contract with the ad agency or the marketing company which would require you to turn over your trademarks to them. You would NOT go out and sign a contract which would allow the marketing company to give you an "advance" with them keeping the bulk of the profits and you only getting a small royalty payment which would be payable only after the marketing company was paid back for the advance it gave you. Nor would you allow the marketing company to have a defacto veto power over how you choose to make your jam, what it will taste like and such. To sign such a contract would be NUTS.

But the above is EXACTLY what the defenders of the record labels expect the artists of the future to do when it comes to the marketing of their artistic product. WHY ON EARTH would an artist be dumb enough to do so? The ONLY reason they would is if the RIAA manages to get bought and paid for legislation that will artificially preserve their gatekeeper status over which recordings are brought before a mass market audience and which are not.

There is another reason why the labels are doomed when it comes to promotion. The sort of promotion that the labels specialize in and are good at is marketing music to widest (and lowest) common denominator mass markets. Thanks to the digital revolution, those mass markets are going to go away very quickly and be replaced by countless niches.

Marketing music in the future is going to be ENTIRELY about finding ways to appeal to different niches. And the people who are most effective at appealing to niches are those who, themselves, come from those niches. There is no way, for example that the major grocery chains can be as effective at marketing ethnic food to immigrant populations as are the small mom and pop ethnic food markets run by entrepreneurs from those particular immigrant communities.

The only way that the national grocery chains are able to have an appeal across a number of diverse immigrant populations is by selling products that have an appeal to all of them. Toilet paper, for example is such a product. When you go into small food markets catering to Indian, Korean, Vietnamese and other ethnic communities, you almost never see toilet paper for sale. That's because their customers can buy it at Wal-mart or Safeway for the same price that the grocer would have to pay for it himself. For that reason, it is not uncommon for a national supermarket chain and a small Indian grocery to be located near each other and for both to prosper. Safeway and Wal-mart cannot make money by selling Rajmah masala and brown basmati rice - and the Indian market cannot make money selling toilet paper and Diet Coke.

The problem for the major labels in a niche dominated world is that, unlike groceries and household items, it is VERY difficult to come up with music that has much of an appeal across a wide variety of niches. My favorite musical genre is the popular music and jazz from the 1920s and 1930s decades. There is no way that any of today's mainstream artists or genres are going to have an appeal to me. Before the Internet came along, my only reliable source for my favorite music was my own private collection. Before mp3s made it convenient for me to take my music with me anywhere I would go, there were times such as when I was driving alone in my car and wanted something to occupy my attention that I would "settle" for whatever I found on the radio. If no classical station was available, I would either suffer through the dreadful easy listening stuff on the stations oriented to senior citizens or, as a last resort, listen to the music on the Spanish language stations despite the fact that I don't speak a word of Spanish because such music has at least some melody to it. My point here is this: since the advent of today's digital technologies, I no longer have to "settle" for listening to stuff I would rather not on grounds that the music I am passionate about is simply not available to me. Today, the music I am passionate about is always available to me so I never have to "settle." If I am near my Internet connection, there are a half dozen stations I can find on Live 365 alone that appeal to me. And when I am not near my Internet connection, I can bring with me mp3s that I have made of my 78 rpm records and from CD reissues of such recordings.

The only way the labels can remain relevant is if there continues to be a mass market for music which appeals to the widest cultural common denominator and if the labels are able to maintain their gatekeeper status to that market. The problem for the labels is they are not only losing that gatekeeper status, that mass market is in the process of being splintered into countless niches.

"Not everyone, even with Garage Band, Reason, ProTools, etc. is capable of making great music. Most people think they know a hit when they hear one. The reason for that is the process of A&R and music production has weeded out most, not all, of the bull for you and the consumer doesn't have to sift through it all."

That is certainly a valid point. As you point out, filters are absolutely essential, especially in light of the enormous amount of content that has new found viability because of technological advances. But the question remains: why on earth does it make sense for the legacy record labels to be the ones who act as such filters in the future?

The A&R process of the major labels that you mention basically filter music with one objective in mind: to find acts that will appeal to the widest possible common denominator. And when FM radio music directors filter through the recordings that get past the A&R people, they filter them with another objective in mind: to find recordings that will attract the largest listening audience possible. And the major labels and the FM radio music directors are very good at filtering music for such purposes.

But, as I already mentioned, in a world where there will be tens of thousands of radio channels to choose from and where mp3 players will have hard drives that hold more music than a person could ever have enough free time to listen to, that mass widest common denominator market will go away. There will never again be a need for a person to "settle" for whatever music happens to be put in front of them by the music marketers. Every person will have the luxury of indulging in nothing but what they consider to be the absolute very best sort of music - and, trust me, once one goes down that path, there is no way one ever wants to go back.

In the niche dominated world of the future, not only will there be a need for "filters" such filters will be more important than ever before. Why? Because niches are, by definition, the end product of a great deal of filtering. For example, the Internet radio station I operate only plays recordings made from 1920 - 1935. You have to admit, that is pretty filtered. And I filter it even further as I do not play recordings of classical, country, blues and countless other specialty formats from that period. I only play jazz and popular dance band recordings from that period. I have many thousands of 78 rpm records in my collection of the sort of music I feature. Only a small percentage of those records ever make their way into my station's playlist because, as with any era and genre, a great many of the recordings were merely mediocre and some were horrible. Most stations with vintage formats filter their playlists based on nostalgia - i.e. they play the big hits that people from the era are most likely to remember fondly. Well, most of the people who were alive when the music I play was popular are dead. The vast majority of my audience is of younger people who were born decades after the music disappeared. Thus I filter the music based on the recordings that I think will appeal to younger modern audiences - which means that some very popular artists from the era I play only get token representation in my playlists. And I also spend a great deal of time, effort and money on as high a quality of digital audio restoration as I can afford as I know most modern listeners do not have much tolerance for the crackle and surface noise that most people associate with 78 rpm era recordings. So the music I present on my station is very filtered. And I couldn't care less if other stations have more listeners than I do. My only purpose is to present the sort of music I love in the best possible light so that it can have the appreciative modern audience I passionately feel it deserves. And I filter my music accordingly.

What I do with my niche market station is really no different than what any other niche webcaster does. And most producers and suppliers of niche content have motives similar to my own. There is no way it would be profitable for the major labels to try and compete for the audience that listens to my station - it is not even profitable for me to serve them. My audience is way too small for the labels to care about or to try and win over. The problem for the major labels is we are very close to the day when countless musical niches as narrow as the one I serve will be commonplace. Individually, none of them will count for jack squat in the scheme of the overall marketplace. Collectively, however, they will account for a VERY significant number of music fans - fans the labels cannot economically serve or win back. It will be a classic example of the "long tail" at its very finest.

As for artists in a niche dominated world - well, they will need to adopt niche marketing strategies in order to become successful. That is not an area that the major labels will be able to be of much use to them. Furthermore, artists will have more opportunities open to them than they have had in many decades which will give them much more leverage in their business dealings than they had in the past. If artists need help with promotion, they will hire someone to do that for them. They won't go to work for the promoters. If they need capital in order to fund their marketing efforts, they will do what any other business endeavor does: they will take on investors and/or partners. They will not become employees of someone else in order to get that investment because, if they are truly talented and have potential, there will be no need for them to do so.

As for compensating copyright holders - I agree completely that it is important. Indeed, I am opposed to statutory royalties on principle because I believe that individual copyright holders have the right to demand whatever they think they can get for airplay of their recordings. I also think they have the right to forbid airplay if they wish to do so.

But whatever the rates are that copyright holders receive for their works, that is something that should be determined by the marketplace - NOT by a government panel of judges, or by Congress and especially not by the RIAA which seeks to set rates so high as to price their emerging competitors out of the market for airplay.

If, in the world of the future, it will be the commonplace norm for artists to hold the copyrights to their own music, my guess is the free market rate for Internet airplay will be a negative number for the vast majority of recordings. For unknown artists and niche genres, the most important objective is to expand their audiences - which means that they need the promotional benefits of airplay. It is not like such artists and genres would ever get more than a token amount of royalties anyway so they risk little by giving them up. But it should be the artists themselves to decide that - not SoundExchange or the CRB on behalf of ALL artists. I believe that it is the copyright holders and only the copyright owners who have the right to set the price for which they are willing to sell their intellectual property. They should be free to ask for the highest price they think they can get - and if they price themselves out of the market by doing so, that is their problem and they will face the consequences. My problem with the mess we have today is that, in practice, it is the RIAA that is setting the price for EVERYONE, including those emerging competitors whose marketplace interests are very contrary to those of the major labels.