IRFA and the Future of Music Policy Summit: Why Would FOMC Miss An Opportunity to Defend Artist Rights?

“People of the same trade seldom meet together, even for merriment or diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

Adam Smith, An Inquiry Into the Nature and Causes of The Wealth of Nations

The Future of Music Policy Summit will convene for the 12th year on November 13.  The Internet Radio Fairness Act will be front and center–both Pandora Founder Tim Westergren and Senator Ron Wyden have been added in the last few days and they are not there to talk about the weather.  Or stock options.

When FOMC first started, it was viewed as a grass roots organization and the policy summit was a new idea–bring current issues in the music industry before the Washington, DC policy environment.  New faces appeared on the panels as well as familiar ones.  A mix of Members of Congress and bureaucrats showed up as well as a bunch of…well, people from the Berkman Center and their pals. (Full disclosure, I was once a member of FOMC’s advisory board and resigned in 2006 after I read a book called Free Culture written by another advisory board member and got the global view of the harm to artists that Lessig caused when I spoke at an OECD conference on digital stuff that year.  Better late than never.)

That Was the FOMC That Was

I would say that the shining moment of FOMC’s ability to effect positive change to help artists was the payola hearings when the FCC went after Clear Channel mostly.  Those hearings resulted in a settlement that was at least designed to help indie artists and labels.  FOMC wasn’t alone in this (A2IM, the Recording Artist Coalition and the Songwriters Guild of America also played key roles), but they were there.

The sponsors for this year’s summit are a sad commentary on what has happened since then–New American Foundation (of which Google’s Eric Schmidt is a director), the Open Technology Institute (which shares a website with the New America Foundation), Google itself, Public Knowledge (which is funded in part by Google) and the Consumer Electronics Association (of which Google is a member).  There are other sponsors, like Pandora, for example, but one is struck by just how many Google connections there are to the event.

It’s Hard to Say No to the Gang of Many

And of course, Google figures large in the coalition of Big Tech and Big Media behind the Internet Radio Fairness Act and the Internet Radio Fairness Coalition.  That trade association is dedicated to jointly benefiting from pricing–its members include Pandora, the Consumer Electronics Association, the Digital Media Association (of which Google is a prominent member), the Computer & Communications Industry Association (of which Google is a prominent member), as well as the National Association of Broadcasters of which Clear Channel is a member.

If you look down into the overlapping membership of these organizations, they include all of the tech oligarchy that Eric Schmidt recently called the “Gang of Four.”  You won’t be surprised to know that the companies that are members of the Internet Radio Fairness Coalition (or are members of their member trade associations) have a market cap of over $1 trillion.  That can be pretty intimidating to a little nonprofit.

It appears that the cross-industry Internet Radio Fairness Coalition (formed over the summer to lobby for IRFA) would like everyone to think that their organization is all about setting prices, also known as royalty rates.  This price and standard setting group alliance would be based on their shared goals in standard setting, lobbying and issue advocacy, all of which would seem to require that the members of the coalition share considerable amounts of business information.  How could they not?

So what these overlapping sponsorships, associations and interests suggest is that some of these guys might see the FOMC policy summit as an opportunity to push their wares–and their Internet Radio Fairness Act.  And it would be understandably hard for a non-profit to say “no” to the desires of the sponsors of their signature programming event for the year.

But–IRFA Is Not Just About Price Setting: Chilling Speech and Court Packing

Characterizing the IRFA as being exclusively about royalty rates would be a big mistake.  Sure, the pricing and standard setting that the Internet Radio Fairness Coalition seeks to engage in is in the proposed Internet Radio Fairness Act, but there are many other significant and, in the view of many, insidious parts of the proposed bill.

These would include the provision that would allow any of the Big Tech or Big Media companies–including monopolists like Google, Clear Channel and Sirius XM–to bring actions under the antitrust laws against any group of sound recording owners, big or small.  (For a good analysis, see “Muzzling Free Speech By Artists” on The Trichordist.)

The proposed Internet Radio Fairness Act would also gut the Copyright Royalty Judges and create a tortured system of appointments that smacks of court-packing.

Has Big Tech and Big Media Captured a Musicians Event?

So let’s have a look at the topics that FOMC is going to cover on IRFA:  First up, a cozy “conversation” with Pandora founder Tim Westergren:

Internet radio service Pandora seems to be constantly in the spotlight — from its initial public offering last summer to the current debate over royalty rates. There is little doubt that Pandora is a leader in the online radio market, and that’s what’s driving so much of the attention. How does the company balance its growth trajectory against its obligations to artists and rightsholders? What does sustainability look like in the broader webcasting sector? Learn more about Pandora’s positions and how the company sees the future of internet radio in this interview with Founder and Chief Strategy Officer Tim Westergren and the Chicago Tribune’s Greg Kot.

Tim Westergren Founder & Chief Strategy Officer, Pandora Greg Kot Chicago Tribune music critic

So–do you think that Tim Westergren is going to talk about the Internet Radio Fairness Coalition’s price and standard setting, or do you think he’s going to talk about packing the Copyright Royalty Judges and the chilling effect of threatening to sue artists for antitrust violations?

Greg Kot is one of our great and distinguished music journalists, but does he have the expertise to address the full scope of the proposed legislation and the impact of the Internet Radio Fairness Coalition on setting prices and standards?  Does he come ready to ask probing questions of Tim Westergren about artist rights?

Next up is this panel:

Radio-active: Internet Broadcasting and Artist Compensation –

Today, fans have more ways than ever to discover music, and radio — whether webcast, satellite or good old fashioned over-the-air — is a major driver. But radio isn’t just about finding new sounds; it’s also a source of revenue for composers, songwriters and performing artists. But not all broadcasters pay all creators, and some don’t pay at all. Additionally, the uneven royalty obligations [no spin there, oh, no] among digital broadcasters have some complaining that the current rate-setting process is unsustainable. The recently-introduced Internet Radio Fairness Act (IRFA), seeks to abolish the current rate-setting standard for webcasters — including the popular “predictive radio” service Pandora [and what about Clear Channel?]. There is tremendous controversy around how this move might impact artist compensation, as the bill’s approach to lowering webcasting rates is to move the royalty to the standard used for satellite radio. The bill’s supporters say this will help grow the market and provide more earning opportunity for musicians. Critics say that there is no way such a move does not result in a substantial reduction of revenue for artists. Meanwhile, terrestrial radio still doesn’t pay performers or labels. Many would agree that parity among radio services is a worthy goal. [What is “parity” supposed to mean?]   The question is what is ultimately “fair,” and do artists get to have a say?

Kurt Hanson CEO, AccuRadio.com; Publisher, RAIN: Radio And Internet Newsletter David Lowery University of Georgia/Cracker/Camper Van Beethoven Michael Petricone Senior Vice President, Government Affairs, Consumer Electronics Association Patricia Polach Of Counsel, Bredhoff & Kaiser, PLLC, and Associate General Counsel of American Federation of Musicians Colin Rushing General Counsel, SoundExchange Chris Richards Washington Post Pop Music Critic (moderator)

While I’m sure that all the panelists will come loaded for bear, the topic suggests that the panel will focus solely on the price and standard setting that the Internet Radio Fairness Coalition would like to see given effect.  Again, the moderator is a great music journalist, but is it really fair to expect him to discuss the nuances of the bill’s chilling effects and court packing provisions?  And is anyone going to say anything about Rep. Nadler’s bill?

Next up we have the recently added Senator Ron Wyden with a keynote.  I wonder what he might be speaking about?  Maybe he’s going to announce his concerns about the court packing and chilling effects of his legislation and that he’s amending his bill to take out that language.  Maybe?

Taking The King’s Shilling or Artist Advocates?

Here’s what I think:  FOMC has come to an organizational crossroads.  Lots of people think they have incrementally become shills for Google and its pals.  The sponsor lineup for this year’s policy summit does little to dispel that idea.

But I have hopes for FOMC–I remember this statement about Clear Channel from the payola hearings:

[Following Clear Channel’s recent settlement of a payola investigation with the FCC, Clear Channel (and other broadcasters) agreed to air 4,200 hours of indie music.  The Future of Music Coalition commented at the time:]

Clear Channel is giving indie artists a raw deal by forcing them to give up performance royalties as a condition of getting airplay on its hundreds of stations. Remember, as a condition of its settlement with the FCC over payola allegations, Clear Channel and other broadcasters were required to play 4,200 hours of local and indie music. It’s replacing one form of a payola with another.

Sneaky. Greedy. Egregious. Any number of pejoratives could be used to describe the move, but it is especially troubling because digital performance royalties are becoming an ever more important source of revenue for artists as technological changes drive the way music is delivered….This is a company that is not — and has never been — on the side of artists.

[According to FOMC’s former executive director,] “’The fact that Clear Channel would require artists to waive royalties to get consideration for airplay clearly shows they’ve learned little from the payola scandal of the last couple years,’ said Jenny Toomey, executive director of the Future of Music Coalition. ‘Clear Channel is playing the same old tune.’”

I’d like to see that FOMC again.  I would like to see that FOMC use its policy summit to hold Tim Westergren’s feet to the fire about his cozy collaboration with Big Media and Big Tech, demand that Senator Wyden explain himself, and condemn IRFA’s obscene encroachment on artist rights.

Or maybe ask the Internet Radio Fairness Coalition to really level the playing field and all agree to conduct themselves in compliance with the FCC’s payola rules regardless of whether the rules technically apply to them.

In other words–do something.

But then I’m funny that way.

If you want to voice your opinion on IRFA, Senator Ron Wyden has a comment page on his Senate website click here.