Panel Takes Up Digital Licensing

When indoor plumbing first became widely available in the United States, homeowners must have been thrilled by the prospect of water—however much you needed—suddenly available at the twist of a faucet.

For music lovers, a similar abundance might soon be upon us: any song, anytime, anywhere, for a nominal monthly subscription fee.

That’s the forecast from a growing number of music industry analysts, who believe that the digital phenomenon has sparked a mass movement away from the concept of owning recordings of your favorite music, toward a new model of instant, all-encompassing access. At “Envisioning 21st-Century Music Business Models,” a lively panel discussion sponsored by Berklee’s Music Business/Management Department and Professional Education Division, about a dozen industry experts convened to debate the pros and cons of music’s rapidly changing delivery systems.

For musicians, the situation creates an unresolved dilemma. While many independents have found new ways to reach an audience, it’s not always clear how they will get paid.

After opening remarks by Marybeth Peters, the U.S. register of copyrights, on the changing nature of copyright law, the panel waded into the murky swamp of the issues at hand. Does a creative work have value if you can’t put your finger on it? Do record companies have a future in a world in which physical product is no longer desired? And if every working artist is part of an enormous pool of contributors who draw from a collective income, who will administer those payments, and how?

Dave Kusek, the vice president of Berklee Media and coauthor of The Future of Music, began by outlining the concept of music flowing like water. He acknowledged that this utopian vision for music delivery faces many obstacles before it can become a reality. But just a few years ago, he was thrown out of record company offices for raising the prospect; now, he says, they’re increasingly willing to listen.

Albhy Galuten ’68, a longtime songwriter and producer (with 18 number-one singles) who is now vice president of digital media strategy at Sony Corporation of America, said that the biggest problem the industry faces is sociological. When younger generations view music as “free” and don’t feel guilty about taking it without paying, the culture needs to establish “some new mechanism where the creative arts are funded.”

Several panelists described aspects of the business in which musicians have discovered new revenue streams. Jennifer Link, a Berklee graduate who is now an executive at the ad-supported digital download service SpiralFrog, explained how downloads might work something like radio: seemingly free to the consumer but supported by commercial advertising.

Eric Giler of Groove Mobile reported that his company has found that young people—the same people who believe that music should be free—are perfectly willing to pay for ringtones and video for their cell phones when convenience is a factor. And Gregg Latterman, founder of Aware, a grass-roots scouting affiliate of Columbia Records that discovered John Mayer and Guster, among others, discussed how film, television, and ad placements have superseded record sales as critical income for many of his artists.

Singer Brandi Carlile, Latterman said, has sold 250,000 records without realizing a dime in royalty money. But prominent exposure on Grey’s Anatomy has earned her a steady stream of income in the form of sync licenses, “And that goes directly into her pocket,” Latterman said. “It’s cool to watch these checks come in.”

With such a growing number of revenue options, artists will need some sort of universal licensing agreement to collect on their behalf, said Susan Butler, who covers legal issues for Billboard magazine. She says it’s a potential quagmire. The European Commission hasn’t even gotten past arguing about where to hold its meetings to discuss such a model.

“These concepts,” said Butler, “are not easy for anybody to understand.” That, the panelists agreed, is a major part of the problem. Galuten joked that he doesn’t want to have to become a “network operator” in order to integrate all the sources of music (such as cell phones, portable players, and home entertainment systems) that he owns.

But while this brave new world can be overwhelming to contemplate, some old-schoolers continue to succeed. Newbury Comics cofounder Mike Dreese said that his company posted bigger sales last year than the year before, partly because of an increased focus on online sales of physical product. The Newbury Comics of the world, he said, exist to offer an alternative to big-box behemoths, such as Wal-Mart, which stock only those titles that sell in quantity.

And according to others such as Berklee student Kenny Czadzeck, the talent buyer at Cafe 939, the forces for ownership of physical recordings remain compelling. “It’s hard to say [music] is being devalued across the board,” said. “Autograph seekers at gigs will still buy vinyl, he said, because “you can’t sign a file.”

James Sullivan is a freelance writer.