Audio Video News

Absolutely. We are very sensitive to this.

We understand this is a tough course that won't always be popular. Based on a lot of research we continually do, we know there's a lot more support for the notion of the record industry enforcing its rights against egregrious music file sharers than some online commentators probably realize. Also keep in mind--no one likes getting caught and those that do will understandably protest, and do so loudly.

We would rather not be in this position, but this is an industry that has experienced substantial losses--thousands of regular, working class folks laid off and new bands not getting signed--and we won't and can't hesitate to enforce our rights. The record companies feel an obligation to their artists, their employees, and their shareholders to protect the valuable property rights they own from the music they've worked hard to create. And now that there are so many great legal ways to get music online, who can justify stealing it? Just because the technology is there to make it easier to acquire music illegally does not sanitize the act--it's still theft. Unfortunately, there are some who just won't stop unless the threat of getting caught is introduced.

One last point--our education and deterrence efforts have actually been effective. Is the problem still acute and are far too many people still engaging in illegal downloading? Absolutely. We're not Pollyanna-ish. But we believe we have basically stemmed what was an epidemic of illegal file trafficking and brought some stability to the marketplace. Think about what the world would look like had we done nothing--just thrown up our hands and said, "Oh, the problem is insoluble, so we'll just give up and do nothing." Illegal downloading levels would be astronomical and the legal marketplace would have difficulty gaining traction.

You bet. We work closely with respected educational firms like the Close Up Foundation and Young Minds Inspired Inc. to develop programs and curriculums that engage kids to think critically about the issues and appreciate that music does have value.

Sure. We participate in lots of standard-setting organizations. We spent a lot of time working on the DVD-Audio format, for example, to ensure not only high-quality sound but also a uniform understanding of how quality should be defined.

While the industry's long term future may be in various electronic distribution platforms, there is still a real demand for the experience of the physical product and the often-superior audio capabilities that it offers. Our member companies are experimenting with new premium products that take advantage of DVD-video capabilities and the growing installed base of multi-channel home theaters. The new Linkin Park MVI (Music Video Interactive) release, for example, is an exciting development.

What's been curious to us is that fans have been less sensitive to audio quality. The popularity of compressed MP3s suggests that the quality of the audio just isn't as important to fans as it is to the people who make the music. Of course, one of the positive elements of digital distribution models is that audio quality can easily be improved simply by increasing the bit rate. We can keep going all the way to lossless encoding. There's a lot of potential there, and ultimately the marketplace will sort it out and our companies will gravitate toward what consumers demand.

There are a lot of things going on in Washington as usual. In the post-Don Imus world, lawmakers are especially interested in looking at content and musicians' lyrics. We will continue to defend the First Amendment rights of artists.

We are part of a larger coalition, MusicFIRST (Fairness in Radio Starting Today), which has recently launched a campaign to secure the right to be compensated when music is played on over-the-air radio. In virtually every industrialized country in the world, artists and record labels are paid when music is played over the air. To clarify, artist and labels are paid when music is played on satellite and Internet radio, but not over the air. It's an exemption that has unfairly existed for years because of the clout of the broadcasters. A coalition of organizations--AFTRA, AFM, RAC, A2IM (indie labels group), SoundExchange, NARAS, and us--have all begun a campaign to change that. It will be a long, tough haul but we think it's the right thing to do. There should be parity in the marketplace.

Let me start with a quick (perhaps) counter-intuitive observation: The record companies are the most flexible and permissive copyright industry. Think about it--can you make a copy of a videogame, DVD or any other software? No. But you can burn copies of CDs for personal use, move music from CDs to iPods, and make multiple copies of songs downloaded from iTunes. We want consumers to have an enjoyable experience with their music, and that's why we have never objected to a music buyer making copies for personal use.

See above. You might also check out www.musicunited.org, where the music community has tried to spell out "When It Comes to Copying Music, What's Okay--And What's Not."

This is a decision for each individual record company to make. But we haven't sensed a lot of interest in trying to retrofit DRM technology onto the CD.

We will see. There's a lot of experimentation going on in the marketplace right now. EMI is one such example. Obviously, everyone is paying attention closely and we will have to see how it plays out.

It's probably worth noting that most of the experimentation involving DRM-free music is with pure downloads. DRM remains an indispensable tool for other business models, like subscription services, or pre-loading content, because without DRM, those models could not be offered to consumers.

The industry is changing, no doubt about that. In 2005, digital formats (ringtones, subscription services, and downloads) were 8.8 percent of overall industry revenues; in 2006, they were 16.1 percent. Clearly, that is our future. But I don't think it will be a future with just downloads. If you think about it, digital downloads are a pretty traditional model--you are buying a song or album, just in a different form.

Mobile will be huge. We are at just the tip of the iceberg with mobile--videos, streaming music and subscription services, Internet radio, you name it--will be available on mobile. The licensing of music will be increasingly important (for TV shows, movies, etc). Performance royalties from digital radio services like satellite and Internet radio will grow and be a bigger piece of the pie. Music companies will branch out and no longer just be record companies, but all-purpose entertainment firms. Lastly, legal subscription services--those now on the scene like Rhapsody and Napster--but other models as well (perhaps by an ISP?) in the future will play a bigger part. It's a different model than what people are used to, so it will take some time, but the subscription service model--all you can eat a month for basically the price of a CD--makes real economic sense and will likely grow as consumers become more comfortable with this new way of acquiring music.

The future is bright. We are in a tough transition now, but the good news is that the appetite for music is greater than ever. All those iPods have made music even more a part of everyone's daily life than before. But while the consumption of music is increasing, people are paying for less and less of it. We just need to steer more attention toward legal models and continue to innovate and offer exciting additional ways to consume music.