Barry Shrum's interview with DigiMusicTV.com

I was surfing around yesterday and discovered that my interview with DigiMusicTV.com, recorded in 2007, was recently posted on brightcove.  Here it is in all it's glory:

You Say You Want A REVOLUTION?

You say you want a revolution

Well, you know

We all want to change the world . . .

 

You say you've got a real solution

Well, you know

We'd all love to see the plan

You ask me for a contribution

Well, you know

We are doing what we can

 

But if you want money

for people with minds that hate

All I can tell is, brother, you'll have to wait

 

Don't you know it's gonna be alright?

 

-John Lennon

Perhaps John Lennon said it best:  if you push people hard enough and long enough, they will revolt.  The question is, has the RIAA gone too far for too long? A recent motion filed in their case against students at the University of Maine may very well answer that question.

The RIAA named numerous "John Doe" students in their complaint in Arista Records v. Does 1-27, as is their practice in all of their lawsuits.   The RIAA's purpose of naming the John Doe defendants is so that they may obtain an ex parte (i.e., without the other party being notified) order from the Judge requiring the targeted university to provide the various students' name, address, and, particularly, their IP address.

Student lawyers at the University school of law Cumberland Legal Clinic have filed a motion for Rule 11 sanctions against the RIAA claiming that this practice improperly seeks to circumvent the student's rights under the Family Educational Rights and Privacy Act, §1232g(b)(2)(B) ("FERPA"), gain publicity for its cause, and coerce students into settling for "nominal" amounts in the $3-5000 range.

Rule 11 of the Federal Rules of Civil Procedure allows sanctions against an attorney who signs a pleading without properly investigating the facts and the law and does so with an improper purpose.

The motion also questions whether the joinder of plaintiffs and defendants under the RIAA-type lawsuits is proper because the actions do not, in fact, arise out of the same transaction.  Rule 20 of the Federal Rules of Procedure provides that multiple plaintiffs can join in one action if “they assert any right to relief jointly, severally, or in the alternative with respect or arising out of the same transaction, occurrence, or series of transactions or occurrences…and any question of law or fact common to all plaintiffs will arise in the action.” Fed. R. Civ. P. 20(a).  Similarly, multiple defendants can be joined in one action if “any right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transaction or occurrences . . . and any question of law or fact common to all defendants will arise in the action.” Id.  The student motion alleges that the RIAA does not, in fact, believe that all of these copyright infringements arise out of the same facts, but join together against multiple defendants for the sole purpose of trimming litigation and discovery costs.

In this case, the student lawyers are seeking more than just monetary damages under this Rule 11 motion:  they also seek dismissal of the complaint and a permanent injunction preventing the RIAA from filing "fishing expedition" type complaints against "unconnected" defendants in the future.  These types of injunctions may be applied in jurisdictions other than the one in which it was issued, so in theory such an order may be applied to thwart lawsuits in other Federal courts across the country.

This in one ruling that should be very interesting.

 

Technorati Tags: RIAA Litigation,Digital Downloads,MP3,Entertainment Lawyer,Music Lawyer,Music Law,Copyright Infringement

New concurrent resolution, H.Con.Res. 244 introduced to combat performance fees for record labels

For years now, a huge battle has been brewing between proponents of performance royalties for the owners of sound recording copyrights to be paid by terrestrial radio stations (those broadcasting through the air) and it has been gathering steam in the last several months.

The battle is being waged between the giants of industry,  the RIAA, representing the four major record labels, and organizations like the National Association of Broadcasters and the Free Radio Alliance, representing the broadcast radio industry.  The latest round of fire was shot on Oct ober 31, 2007 on behalf of the broadcasters when two Texas lawmakers, Michael Conaway, a Republican, and Gene Green, a Democrat, co-sponsored concurrent resolution H. Con. Res 244, the "Local Radio Free Act."

 A concurrent resolution is a legislative measure passed by both the House and the Senate generally used to address the sentiments of both chambers with regard to certain matters.  Since they do not have the force of law, concurrent resolutions are generally used to provide for adjournments, recess, use of the Rotunda, and other such matters.  The "Local Radio Free Act" is essentially a policy statement supporting free local broadcast radio and opposing any new performance fees, taxes or royalties for the public performance of sound recordings over the airways.  Ever wonder what is behind all of this noise?

When a company wants to use a sound recording of a musical composition, there are two copyright owners with whom it must deal:  the owner of the musical composition copyright and the owner of the sound recording copyright.  For example, Dolly Parton (or her publishing company) owns the copyright to I will always love you, but two different record companies own the copyright in the sound recordings performed independently by Dolly Parton and, later, by Whitney Houston.  And, of course, one of the rights granted by the Copyright Act to the owner of a copyright is the right to publicly perform the work.

For years, ASCAP, BMI and SESAC have collected the performance royalties on behalf of the composers and writers of the music compositions.  All radio stations, whether terrestrial or digital (over the Internet or Satellite), pay performance royalties for the musical compositions they play over their broadcasts -- to the tune of around 500 million dollars per year.  It wasn't until 1995 and the passage of The Digital Performance Right in Sound Recordings Acts that the public performance right was created in the sound recording of a musical composition.  At that point in time, the digital broadcasters of music, including Satellite and Internet stations, were required to start paying a performance fee to the owners of the sound recording copyright, i.e., the record labels and artists who perform the song.  The Act specifically exempts, however, the local radio stations that broadcast the music over the airways, ostensibly on the grounds that the recording artists and labels were receiving free publicity from the broadcast radio stations in exchange for the use of their sound recording.

Now, with the demise of the CD and the rise of illicit downloading, the record industry is pressing Congress hard to extend the Digital Performance royalty to the local broadcasters and, of course, those broadcasters, with their extremely old and strong political ties, are fighting hard against it. 

The RIAA, for its part, is sending CEO Mitch Bainwol on the interview circuit.  Bainwol is consistently hailed by many Washington publications as one of the most powerful and influential lobbyist in Washington.  In an L.A. Times article in which he discussed the performance fee, Bainwol is quoted as saying that "the creation of music is suffering because of declining sales."  This group has the formidable support of the U.S. Copyright Office, which has support the removal of the exemption for terrestrial stations for many years, and the chair of the House subcommittee on intellectual property, California representative Howard Berman, who is actively pursuing legislation to remove the exemption.

The National Broadcast Association is fighting the RIAA with a barrage of print ads and radio ads in support of their position.  They use the word "tax" as an emotive term to sway people to their side.  The NBA stress that it is the major label conglomerates that would get the bulk of any new performance fees.  The radio broadcasters are a formidable force themselves with corporate entities such as Cox Radio, Citadel, Cumulus, Clear Channel, just to name a few, in opposition to the expansion of the digital performance fee. This new legislation is a result of this group's hard fought efforts against any new measures, claiming that with profit margins already in the single digits in some instances, a performance tax would obliterate their business.  

In the grand scheme of events, the concurrent resolution is probably a non-event.  It is the efforts of one group's successful lobbying finding a materialization.  Don't expect this to be the last word on the subject, however.

Technorati Tags: Public Performance Royalties , Performance Rights Organizations , Music Lawyer , Music Law , RIAA , RIAA Litigation , Digital Downloads , Major Labels , Music Industry , Legislation , Lobbyists , Mitch Bainwol , Clear Channel , Cox Radio , Citadel , Cumulus , National Broadcasters Association

 

Courts taking a stricter look at evidence in RIAA downloading cases

There appears to be a slight ripple of a trend among courts to take a stricter look at the evidence being presented by the RIAA in its crusade against digital downloads, based primarily on the evidence of user names and IP addresses assembled by their expert consultants, MediaSentry. 

In the RIAA's case against Jeff Dangler, filed in the U. S. District Court for the Western District of New York in Rochester, Dangler failed to file a response to the Complaint, and the Clerk entered the default against him.  Pursuant to Federal Rule of Civil Procedure 55(b)(2), the Plaintiff can then apply to the judge for a judgment based on the default.  In addition, Fed.R.Civ.P 55(b)(2) gives the judge the option to conduct hearings and hear evidence in order to determine if the damages requested are justified.  This gives the judge the opportunity to evaluate the merits of the underlying claim and, if he finds it to be deficient, deny a judgment on the default.

On October 23, 2007, U.S. District Judge David G. Larimer denied a 55(b)(2) request by the RIAA for a default judgment of $6,420 in Atlantic v. Dangler.   Judge Larimer specifically ruled that there were "significant issues of fact" in the record "as to the identification of the defendant from his alleged 'online media distribution system' username" heavyjeffinc@KaZaA.  The court points out that there is no evidence presented that established a time period of the alleged distribution and/or infringement nor are there details sufficient to determine whether, in fact, the defendant is the user so identified. 

Because of these deficiencies, Judge Larimer determined that he would hold a hearing to allow the Plaintiffs to establish additional evidence that a copyright violation was committed by the defendant.  You can read the full text of the judge's order here.

Previously, in August 2007, a similar 55(b)(2) request was denied by Judge Rudi Brewster in Interscope v. Rodriguez in the U.S. District Court for the Southern District of California.  In that case, Judge Brewster held that "Plaintiffs . . . must present at least some facts to show the plausibility of the allegations of copyright infringement against on th[is specific] defendant," citing the recent U.S. Supreme Court decision in Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955 (2007) that more than a mere recitation of the elements of a claim are necessary to find relief.   Basing his decision on facts similar in nature to Dangler, Brewster concluded that the RIAA's complaint failed to state a claim upon which relief could be granted.

These decisions arise in districts where the judges are, generally speaking, more technically saavy than some other districts where these types of issues do not arise as often.  In a somewhat related case, the Ninth Circuit, the appeals court that has jurisdiction over the California district courts, one bankruptcy court has already established stricter standards of proof for establishing the veracity of computer records.  For more information, see the informative article entitled Admitting Computer Record Evidence after In Re Vinhnee:  A Stricter Standard for the Future?, by Cooper Offenbecher.  In short, this article discusses the interplay between Rules 901 and 803(6) of the Federal Rules of Evidence and their application to digital business records.  Essentially, without getting into the details, there is a hearsay exception for business records allowing their admission as evidence in a trial if they are maintained in the regular course of business and are relied upon by the business.   It is these sorts of dialogues that must inform the judges as they scrutinize the evidence presented by the RIAA in support of infringement claims, whether they be in the course of a default judgment or in the course of a trial.

 

Technorati Tags: Digital Downloads , RIAA , Entertainment Law , Copyright Infringement , Copyright Law , Music Law , Music Lawyer , Twombly

Sony BMG announces McBee promotion

Earlier this week, Tom Baldrica, vice president of marketing at Sony BMG, announced that Heather McBee has been promoted to vice president of digital business.  McBee, who has been with the label for 14 years, was formerly senior director of that department.

Baldrica said in a prepared statement:

"I'm so proud of this promotion.  Heather has demonstrated constant growth and leadership skills in building her new media band-of-one into a full-fledged digital business department.

Originally from Clarksburg, West Virginia, McBee interned with BNA Records while attending the music program at Belmont University and was employed as a sales assistant upon her graduation in 1993.  Through various mergers and acquisitions among the various labels, she ended up with Sony BMG.  In 1997 she was picked to head up a newly formed research department which eventually evolved into the Digital Business and New Media department.  She was appointed director of that department in 2003.

A part of Leadership Music's 2007 Digital Summit, McBee is quoted as saying

I had the fortitude to stick it out when everybody was saying "no."

McBee credits label group chairman, Joe Galante for allowing her flexibility to prove the viability of her ideas about the future of the industry:

He asks that things be quantified. He gave me freedom to experiment…as long as I tempered my excitement and made it fit our goals and what we were doing.

Among other things, McBee was influential in moving Sony BMG into the cellular ringtone business.

Technorati Tags: Digital Downloads , Nashville Business , Music Row , Major Labels , Record Labels

 

Amazon profits in the stratosphere

Propelled primarily by the sales of 2.5 million copies of the new Harry Potter book, Amazon's profits reach ed the stratosphere in the 3rd fiscal quarter of 2007.  The company announced its third-quarter earnings in an online conference call on Tuesday, announcing a profit of $80 million, three times the $19 million it earned in the third quarter of 2006.  Amazon reported sales of $3.26 billion, up 41% from $2.31 billion in the quarter last year.  The company expects its overall 2007 net profits to be up by 33-36%, or somewhere north of 14 billion dollars.  A replay of the webcast announcement can be heard on Amazon.

As you recall, my earlier interest in the announcement stemmed from the company's September release of the public beta of its DRM-Free music download store.  While generally overshadowed by the Harry Potter sales, Amazon's Chief Executive Office, Jeff Bezos, did comment on the digital downloads, saying in the conference call that the company was happy with early results from the store.

"We are getting terrific feedback from customers," he said,  Everybody loves the DRM-free format. Now the onus is on us to continue to convince music labels that this is a good way to sell their music."

Little more can be gained from the announcement with regard to the actual sales of MP3s.  Hopefully more data will be released in the 4th Quarter announcement.  The company intends to expand its digital offerings later this fall by introducing an electronic book reading device and offering downloadable e-books.

According to one research firm, Hitwise, Amazon is the leading benefactor of the web's double-digit increase in web commerce retail sales, garnering 11.5% of the increase in traffic, followed by Wal-Mart, which received 5.4%.

Amazon, a Fortune 500 company based in Seattle, Washington began operations in July 1995.

Technorati Tags: Digital Downloads , MP3 , Internet , Entertainment Industry , Amazon

Amazon to post third quarter earnings, including profits from MP3 Sales

Amazon.com, Inc. (Tickler Symbol: AMZN) will hold a conference call on October 23, 2007 at 5:00 p.m. ET to discuss its 2007 third quarter financial results. This announcement has tremendous relevance for those of us interested in the commercial viability of digital sales and downloads of DRM-free music -- since Amazon launched its online music store, Amazon MP3, which sells songs without copy protection in this fiscal quarter, the sales of said music will be a component of the report. Many financial analysts are expecting Amazon to announce earnings of around 18 cents per share on just over $3 billion in revenue for the quarter.

Most online reviewers agree that the Amazon experience of buying digital music is very favorable when compared to iTunes. My feeling about iTunes generally is that is an overbloated, unwieldy piece of software that doesn’t do the job it was designed to do very well at all, so this favorable comparison comes as no surprise to me. Although Amazon’s MP3 store is web-based, once you download a small companion program (on either Windows or the Mac) you get a better one-click experience than Apple's iTunes store, and the software automatically adds purchased files to iTunes, if you choose to use that software, or any of the myriad of better music players available on the Internet.

In addition to the favorable software experience, many users are impressed that Amazon offers over 2 million at an average of 10 cents less than the cost on iTunes. The offering, while only about 20% of Apple’s offerings on iTunes, is the largest collection of DRM-Free music anywhere.
Both UMG and EMI have signed up with Amazon, while Sony BMG and Warner Music Group still lurk in the Dark Ages when it comes to the digital spectrum. The only negative vibe about Amazon’s service is that UMG is slipping watermarks into the downloads to enable tracking.
According to some stock analysts, Amazon’s global site traffic rose 13 percent year-over-year in July and August.

The thing that attracts me to the Amazon model is the flexibility. The ala carte digital music can be used on any player, with any software and reproduced on as many devices as you want. It does not expire and you are not required to subscribe to any service or use any specialized players or software. This, in my opinion, is the business model of the future. As Amazon’s catalog expands, I expect that it will become increasingly more competitive than Apple. The Motley Fool described Amazon's chances for success in the digital music download business as follows:

Amazon sold $10.7 billion worth of merchandise last year -- $7.1 billion in
the form of media -- but at issue here is more than just respect for Amazon's
girth. Amazon is a trusted source in music. Now it also happens to offer the
better deal. If you have a choice of paying $0.89 on Amazon for a higher-quality
track with no DRM, or $0.99 for a lower-quality track with portability
restrictions, where will you turn?

I can only add that Amazon has an incredible database of customer preferences and cross-references. Amazon does an amazing job at suggesting impulse purchases.Most consumer already have an established account with Amazon that has established preferences. Amazon is the Wal-Mart of online merchandisers, the king of the Internet in sales. I believe it will succeed where others have failed.

Jammie Thomas to appeal verdict in RIAA Litigation.

Imagine that you have a wireless network router in your home which you set up yourself. Also imagine that, because you are not computer saavy, you failed to establish a password for that router, or established a “weak” password consisting of only numbers, or your birthdate, or something of that nature. Consider now the proximity of homes, roads or pathways within around 100 feet of your home. How many people would have access to your unsecured wireless network? Your wireless router has an IP Address. Regardless of the the number of nodes using that IP Address, it appears the same to others in cyberspace. It does not matter if it your own computer or someone else with a laptop that has jumped onto your wireless network. Now, using the precedent established in the decision against Jammie Thomas, you could be liable for any copyright infringement committed by a scavenger utilizing your wireless network. Does that seem fair?

Something like this scenario is what Jammie Thomas still maintains happened to her. The latest news in this case is that she is appealing the $222,000 verdict against her. She still claims that her computer was spoofed, which generally refers to various techniques of using falsified data to obtain entree, services and/or goods using a “middle man” to obscure identification.

In order to appeal to the 8th U.S. Circuit Court of Appeals, the court with jurisdiction in this matter, Thomas must establish some clear error in the district court’s finding of facts. See Glover v. McDonnell Douglas Corp., 150 F.3d 908, 910 (8th Cir. 1998). On the other hand, the RIAA can defeat the argument by showing that any trial errors committed were harmless and had very little effect on the jury’s verdict See United States v. McCrady , 774 F.2d 868, 874 (8th Cir. 1985)

In this instance, Thomas’ primary argument will undoubtedly be that Jury Instruction No. 15 was not a correct statement of the law with regard to the Copyright Act, that the judge erred in submitting it to the jury, that the instruction significantly impacted the jury’s decision, and therefore there is reversible error in the instruction as provided. Jury Instruction 15 read as follows:

The act of making copyrighted sound recordings available for electronic
distribution on a peer-to-peer network, without license from the copyright
owners, violates the copyright owners' exclusive right of distribution,
regardless of whether actual distribution has been shown.

Thomas argues that this instruction made it too easy for the jurors to find liability if they found she made her Kazaa shared file folder available to others, regardless of whether anyone downloadied any of the music from the public folder.

For it’s part, the RIAA has argued this theory successfully in several cases prior to this one, including, for example, Electra v. Barker. The essence of the argument is that Section 106(3) of the Copyright Act gives the copyright owner the exclusive right to distribute copies of its work to the public and, while “distribute” is not defined, it is the equivalent of “publish” which is defined in the Copyright Act as follows: “the offerring to distribute copies or phonorecords to a group of persons for the purpose of further distribution . . . constitutes publication.” It is not an unsolid argument.

The question quickly becomes whether it is necessary that a tangible copy actually be distributed, or whether simply creating the possibility of that distribution is sufficient. One of the grandfathers of copyright law, Nimmer on Copyright, states that the “sine qua non of publication should be the acquisition by members of the public of a possessory interest in tangible copies of the work in question.” This seems to suggest a conclusion to the contrary.

That definition, in fact, seems to suggest that a tangible copy of the work must be acquired before publication can occur. A new line of cases, however, are interpreting this section differently when it is applied to making digital copies available for download on the Internet, including two U.S> Circuit Court cases, one in the 4th Circuit and one in the 9th Circuit.

The most apropros of these two is A & M v. Napster, 239 F.3d 1004 (9th Cir. 2001), which found that “Napster userse who upload file names to the search index for others to copy violate plaintiffs’ distribution rights.” Id. at 104.

Perhaps even more supportive of the “making available” theory is the international WIPO treaties to which the United States is a siganatory. Article 6 of the WIPO Copyright Treaty states that the “authors of literary and artistic works shall enjoy the exclusive right of authorizing the making available to the public of the original and copies of their works through sale or other transfer of ownership. Article 8 is even more specific, stating that “authors of literary and artistic works shall enjoy the exclusive rights of authorizing any communication to the public of their works, by wire or wireless means, including the making available to the public of their works.”

Finally, the Register of Copyrights, Marybeth Peters, weighed in on the discussion in a letter to Rep. Howard L. Berman dated September 25, 2002. Citing the Napster case, she opined that “making [a work] available for other users of a peer to peer network to download . . . constitutes an infringement of the exclusive distribution right, as well as the reproduction right.”

So, as these citations illustrate, the theorectical concept of “making available” as copyright infringement is not merely the construct of the RIAA lawyers’ imagination, as is concluded by The Recording Industry v. The People in Argument Over "Making Available" in Virgin v. Thomas. While the 9th Circuit case was, indeed, a brainchild of the RIAA, the concept of “making available” has its origns in the international community as reflected in the WIPO treaties.

It seems, therefore, that Thomas’ appeal will not be an easy battle to win. At the very least, the Judge’s decision to include the jury instruction was based on some pretty solid and well argued prior case law and supporting opinions. In order to prevail, Thomas’ attorney will have to convince the Eighth Circuit that merely making the files available does not constitute publication.

One case which might offer some support this theory is the 8th Circuit’s opinion in Nucor Corp. v. Tennessee Forging Steel Service, Inc., 476 F.2d 386. That opinion cites the Nimmer quote above in ruling that distributing brochures and photographs of architecture did not constitute general publication of the detailed plans. This case, however, involves common law copyright and is factually distinquishable from the Thomas fact pattern.

Thomas will also, no doubt, have tremendous support from various third parties, as evidenced by the Electronic Frontier Foundation’s announcement on Monday that they will be filing a friend of the court brief in support of Thomas’ appeal. A friend of the court brief is a procedure whereby an interested third party who are not a party to the litigation can file a document in support of a party’s position.

Wired’s THREAT LEVEL blog reports that one of EFF’s attorneys, Fred von Lohmann, will hinge their arguments, at least in part, on the “tangible” requirement as set forth in Nimmer. "Look into the Copyright Act — it narrowly defines distribution as distribution of a phonorecord or a copy. The definition says it has to be a physical object," von Lohmann is quoted as saying.
Whether there will be enough to overturn the trial court on appeal is, of course, yet to be seen.

I will attempt to keep you posted on the appeal as it develops.

The new paradigm of music has arrived!

Law on the Row used to be a periodic newsletter in the physical world that I would send to my clients and mailing list. In the first edition of Law on the Row, published September 9, 1999, I published an article on digital downloading entitled “To MP3 or not to MP3? The catalyst for a paradigm shift in the recording industry.” That article was a harbinger of the paradigm which is still melding in the music industry even now. The focus of this blog is where are we now?

There is a lot of discussion on the web and in the print press these days about the overall health of the music industry, including an article entitled “What’s the future of the music industry” published just last week in the New York Times. The article points out the Nielson statistics for albums sales which indicate that sales have fallen 18% from 2000 to 2006. Certainly, everyone in the music industry appreciates the downturn in sales, however, as the article also points outs, sales in other industries are also proportionately down , such as new cars which have declined 22% over the same time period. Also, downturns in the music industry are certainly not atypical, and the digital download phenomenon is not the culprit of our current downturn.

I have always believed, as I still do, that people are essentially honest and want to pay for things they enjoy. I believe that people do not mind paying for something of value, including music! The success of iTunes, emusic.com, and all of the Russian download sites are indicators of the validity of my belief. Yes, there is illegal activity. Inevitably there will be people who abuse the system and will seek to get something for nothing. But the average person just wants value.
I support the artists and songwriter’s rights to be paid for their time. I even believe that a record label should recieve financial remuneration, even profit, for the marketing, promotion and distribution efforts involved. The simple fact is that people will not work if they do not get paid. If people stop getting paid for music, music as an industry will cease to exist.

Returning to the idea of value for effort, the author the NYT article reminisces about the historical “single,” an idea which deserves some consideration. I remember going to a record store and looking at all of the singles displayed on the wall and picking one or two of my favorites. The beauty of that system was that you got value for your money — you selected the music you for which you were paying. In contract, with the industry’s current “record album” paradigm, you have to pay for 8–9 songs for which you don’t care. Credit digital downloading for bringing back the “single” paradigm.

But again, people want value even for this paradigm. Most people I talk to insist that 99 cents for a single may be too much money. Most people feel that somthing along the lines of 25–40 cents is an appropriate price point. So, in essence, in considering everyone’s interest, including the songwriter, publisher, distributor (and/or record label) and artist, the question become how much are people willing to pay for a digital single to compensate the varying parties for their considerable effort.

The second component, in my opinion, of value for my money is DRM-free music. People want their music to be free of any restrictions. Any form of digital rights management has to be incorporated into this new paradigm. Finally, selection is imperative. People want variety. Apple has only around 500,000 or so songs in their current catalog. This may seem sufficient until you realize that peer-to-peer networks generate catalogs in the millions!

So, how will the new paradigm work? The Electronic Frontier Foundation proposes voluntary collective licensing, which is to say that “the music industry forms a collecting society, which then offers file-sharing music fans the opportunity to "get legit" in exchange for a reasonable regular payment, say $5 per month.” This is, of course, similar to the current method of collecting performance royalties by such giants as BMI, ASCAP and SESAC, as well as a multitude of foreign performance rights organizations.

The collective licensing system is certainly a valid model, however, there are some disadvantages to consider: first, with the risk of overgeneralizing, I note that these models typically favor, again, the players with the most power, i.e., the mega-conglomerates – not the independent artists and songwriters. Secondly, the subscription method favors the supplier, not the demand. Like most consumers, I personally do not like the “subscription-based” model. I don’t like being obligated to a monthly fee, even if I can cancel it. I want an ad hoc pay-as-you-go system — more like iTunes and less like eMusic.

My personal prediction of how the new music paradigm might shake out is dependent upon the efficiency of search engines and indices on the Internet. As the online community of music lovers grows, so does the online community of music providers. Independent producers can sieze the day in many ways. Myspace.com is evidence of this phenomenon. but as anyone will tell you, the old addage of “build a better mousetrap” does not apply in the online world. It less like looking for needle in a haystack and more like trying to find a dime on the ocean floor.
There are certainly headways being made in this arena: take the free Internet radio service, Pandora, as an example. At this innovative site, people find new music similar to the music being played by Pandora’s web-based radio that is based on their selection of favorite music. Another innovative search site is LivePlasma, which displays a graphical sytem of color-coded bubbles that are more or less related to your favorite artists. As more of these types of search engines become available and intergrated into the Web, it will be easier for independent artists and producers to get their music heard. For a much more detailed analysis of this idea, read Chris Anderson’s important book, The Long Tail. Once that happens, the paradigm shift from major labels to independents will be complete.