Shaky future, fierce debate at Canadian Music Week

The recent 2007 Canadian Music Week conference organized by Rogers Wireless featured several sessions on the digital future of the music industry and the Byzantine intricacies of digital rights management (DRM). As can be expected with such contentious issues, a diverse array of viewpoints and voices was also very much in effect.Monetizing consumer behaviour - instead of trying to control or punish it - is the way forward for the global music industry, said Terry McBride, CEO of Vancouver-based Nettwerk Music Group, in his keynote address. A powerful player in the Canadian music scene, McBride's indie label includes Avril Lavigne, Sarah McLachlan and the Barenaked Ladies. DRM is a great idea, but the locks are bad as they stop people from moving music around, said McBride. The threat of litigation is also forcing people into new underground behaviour that can't be traced, skewing peer-to-peer (P2P) file-sharing metrics that could be used to create a monetized system based on a tune's popularity. "The value of data is immense, and we are losing a powerful tool," he warned.To illustrate, McBride said analysis of online traffic after Lavigne's latest release revealed that Beijing and two other Chinese cities comprise the largest chunk of her fans globally, so future promotions will focus on Asia."But how will we monetize China?" McBride asked, noting whatever is released in that country is immediately pirated and spread. Managers can only control intellectual property when a release is first introduced. "After that, you can either try forcing consumer behaviour or look for ways to monetize it. I prefer to monetize it," he said, staking his position. Creative thinking and new models are needed to play well in this new global sandbox: "Like a beach, it's washed clean every morning."DRM also figured prominently in several conference panel sessions, and was portrayed as necessary to enable a range of offerings by Graham Henderson, president of the Toronto-based Canadian Recording Industry Association (CRIA). "Our job is to provide the framework for a dynamic model so rights-holders can choose to protect copyrights, release promos or do whatever they want," he said.Meanwhile, Peter Jamieson, chairman of London-based British Phonographic Industry (BPI), said the broader music industry is in crisis. Sales of CDs have been falling 20% annually since 1999, while consumption of digital music has increased 60%. "These two trends will eventually meet in two to three years," he said, pointing out the industry doesn't have much time to resolve its issues.But Henderson pointed out other trends are coming to the fore. "Access will trump ownership in the next generation," he said, arguing the subscription model will become more appealing as consumers accumulate increasing numbers of large music files, thus creating data management headaches. Sound quality will also become a selling point, he added: the current generation is accustomed to low-quality sound, but broadband penetration will stimulate demand for better recordings. "If the pipes are big enough, high quality will work," Henderson concluded.Maybe so, but litigation is the only thing that deters illegal downloading today, said Mitch Bainwol, CEO of the Washington-based Recording Industry Association of America (RIAA), claiming its lawsuits have decreased P2P trafficking by about 14%. He noted RIAA is next targeting the parents of college students who traffic in pirated songs. In another panel, Christopher Amenita, senior VP at the New York-based American Society of Composers, Authors and Publishers (ASCAP), said the lack of DRM mechanisms on CDs is a major issue, and creates inconsistencies in the way music is treated online versus offline. Moreover, digital pricing doesn't reflect the realities of the marketplace, he said: "Not all songs are created equal, but everything's 99 cents." Michael Geist, law professor at the University of Ottawa, said DRM raises concerns about taking away consumers' rights to fair use of purchased music. Every time Nokia makes an upgrade, consumers won't be able to play their music. But Christian Castle, an LA-based attorney with law firm Sherman Oaks, countered by asking the rhetorical question: are rights-holders obliged to provide music forever?Consumers do indeed appear to want a forever experience, said Ray Farrell, VP at New York-based eMusic.com, who added that music is deemed a public good in economics - something that's not used up when it's consumed.But while these debates go round and round, the music industry is imploding, said David Basskin, president of the Canadian Musical Reproduction Rights Association (CMRRA). "We're dying out here. There are more important issues than if an Apple file works on a Windows machine. DRM is an over-hyped issue - people can buy the CD if they're bothered."

Shaky future, fierce debate at Canadian Music Week

Broadcast | April 3, 2007

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