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The head of the American Association of Independent Music, Rich Bengloff discusses a variety of weighty topics with Dailytech

The following is the unabridged interview between DailyTech and Rich Bengloff, President of the American Association of Independent Music, in which he discusses piracy, taxation of online downloads, internet radio royalties and more.

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DailyTech: Tell our readers a little bit about your organization and what you do.

Rich Bengloff, President of A2IM: A2IM (American Association of Independent Music; www.a2im.org) is a non-profit trade organization representing a diverse community of independent music labels seeking fairness, equitable treatment, and improved business conditions in the marketplace where Independently owned music labels account for 30% of recorded music sales. Our members support and receive the benefits of our services: lobbying, commerce opportunities, and member services which include networking events, general business advice, education about issues facing indie labels, and special offers and discounts to many important music industry conferences.

DailyTech: What are some of the independent labels you represent?

Mr. Bengloff: We currently include as members over 200 Independent labels from very large companies such as Curb Records, Razor & Tie, Roadrunner Records and Wind-up to cutting edge smaller companies such as Bloodshot, Saddle Creek and Stones Throw, to name just a few. To see a full list of our members please click http://a2im.org/members.aspx" rel="nofollow. Collectively our members represent nearly an 11% market share of U.S. sales making them larger than EMI. Independent labels are the growth sector within the music industry and represent over 80% of annual new releases in the U.S. making them a vital partner/customer for any service provider, licensor of music or anyone using music in their own business.


DailyTech: How detrimental do you see piracy as being to the smaller labels in the music industry?

Mr. Bengloff: Piracy is a problem for all music creators, large or small. Music resonates with people as much as it ever has as the accessibility to music has expanded. The business ten years ago consisted of buying CD's and listening to traditional AM/FM radio with a 168 hours in a week limitation and a limit in the number of radio channels. Now there are many more options to access music. As a result music has moved from a model where consumers wanted to own their music to a new model where consumers are content to just listen to the music without necessarily having ownership. The non-terrestrial forms of listening via webcasters, satellite radio, cable & direct TV, MySpace, etc. give consumers unlimited options. The goal for creators of music has to be to drive people to these legal sources of music and to make sure that these sources of music for consumers properly compensate artists and labels for the use of their music. Unless these entities and the social networking sites, as well as the sellers of music, physical and digital as well as mobile carriers and subscription oriented models properly compensate creators the creation process will decline. In addition, the traditional AM/FM broadcasters need to start to pay for using performers’ music.

DailyTech: Does piracy affect smaller labels less or more than major labels, would you say?

Mr. Bengloff: As per the above we are all, big and small, experiencing the effects of piracy.

DailyTech: Do you support highly punitive punishments, i.e. the RIAA's recent $220,000 victory against single mom Jamie Thomas? Or do you prefer smaller fines?

Mr. Bengloff: A2IM has no official position on the RIAA's piracy lawsuits; our members have a wide range of views. That said, most of our members believe that there needs to be some deterrents to piracy in place and publicized.


DailyTech: Your official stance on DRM is that you are neutral on the issue. Nonetheless, which way do you see the industry leaning?

Mr. Bengloff: Each of our members has their own policy as it relates to DRM. The key issue is interoperability so that consumers can enjoy their music where and when they want to and any form of DRM in the marketplace needs to allow this usage or DRM will drive consumers toward greater piracy.

DailyTech: The latest rate increases (from 8/100 of a cent per song per listener to 19/100 of a cent under the same conditions in 2010) by SoundExchange have basically sealed the demise of the online radio industry, according to most online radio stations, including Pandora. If the increases go into effect, they say they will be forced to close in order to avoid bankruptcy. Do you see a solution to this?

Mr. Bengloff: Like many we were troubled to hear Pandora recently refer to the current situation as a possible 'Last Stand For Webcasting.' As the primary advocacy group for the independent music label community we support a fair and equitable resolution to the webcasting rate negotiations -- a solution that fairly compensates artists and labels for their creativity and investment but still allows the pure play webcasting community to continue to grow. These webcasters need to be supported, as they give independently produced music the opportunity to be heard and discovered, which is all too often not the case at traditional AM/FM radio. The current CRB set rates for thru 2010 are problematic for the pure play webcasters, that said we are hopeful that all parties can get on track towards a constructive solution.

DailyTech: States are recently passing laws to tax digital downloads. How might this affect your labels?

Mr. Bengloff: As noted earlier in this interview recorded music industry sales continue to decline. At the same time all the participants in the industry, the retailers, music labels, publishers, performing artists, etc. are all aggressively trying to get a larger percentage of the shrinking revenue streams. It's unlikely that the digital retailers will be able to pass these sales taxes along to consumers or absorb them within their costs. Do you think consumers will start paying $1.08 instead of $.99 for a track download? The music industry needs to unite to make sure that third parties, whether governmental or for-profit entities, don't go into the music industry space during this period, when we need more economic support for creators, and instead work to extract value we cannot afford to share with third parties for whom music is not their primary business.

DailyTech: Is your organization considering lobbying against such measures?

Mr. Bengloff: It would depend on the form of the lobbying related to our limited resources but we are concerned about these additional costs.

DailyTech: What's one other legal issue or technical issue you see as a major problem facing the music business today, aside from those mentioned?

Mr. Bengloff: The proposed Orphan Works legislation (S.2913 in the Senate and H.R.5889 in the House of Representatives) is aimed at changing a portion of U.S. copyright law that deals with musical tracks, writings, images, videos or other content whose owners cannot be easily located. If passed, Orphan Works will allow for anyone to use music that they have not acquired the rights to use. All they'll need to do is show that they made "best efforts" to locate the copyright owner (the bill does not define what would define "best efforts" and it also specifically eliminates the ability for a copyright owner who feels infringed upon from recovering legal fees from the infringer).

A number of A2IM members are concerned that this bill, if enacted, would make it very difficult to stop parties from using our music in ways we don't want or haven't consented to and, further, it puts the burden of finding uses on the copyright owner rather than putting the burden on the user who wants to use our music. This certainly would hurt smaller independent labels who are more likely to be harder to find than the majors. Independent labels also have less resources to do searches to find infringements and then, after finding infringements, getting compensation.

DailyTech: What are your hopes for the future of the music business?

Mr. Bengloff: All industries go through periods of transformation. We remain optimistic that as the transformation of music consumption occurs new forms of monetization will arise that will be shared with the artists that have created the music and the music labels that have invested in that creation. We just need to navigate as an industry, with all participants supporting each other, thru this process of change

DailyTech: Thank you on behalf of DailyTech for your time and insight. It was great talking with you.



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Piracy fines
By kipper2k on 9/4/2008 9:21:12 AM , Rating: 2
If I was to walk into a music store and steal a music CD that would be considered shoplifting. I would have to go to court and then i would pay a small fine for the crime of shoplifting (or stealing). If i was to download copyrighted music from the internet that would also be considered stealing. How can the fines for shoplifting be so small when i steal the same music that i could steal by downloading. The end result is that i steal the music and if i shoplift it i would have to pay a small fine instead of the Thousands i would have to pay the music industry.. There has to be some parity in the fines. Going by the RIAA rules it would mean that any shoplifter should sign over their pay cheques for the rest of their lives if they are caught stealing a music CD, in which case all the fines for shoplifting for any item should be brought up to the level of fines imposed for pirating (stealing) music!!! (sorry, couldn't resist the sarcasm).




RE: Piracy fines
By ebakke on 9/4/2008 9:36:10 AM , Rating: 3
I think it'd be worth the time of evaluating all crimes and their associated penalties, in the light of all others, and make adjustments as necessary. There seem to be inconsistencies all over the place. For example, a few hundred bucks for driving 90 down the interstate weaving in and out of traffic vs several thousand for downloading music/movies.


RE: Piracy fines
By stonemetal on 9/4/2008 9:59:23 AM , Rating: 2
Perhaps because the two are entirely different. Steal a cd from a store and you have taken one copy. Share a track on P2P, and you have(possibly) distributed to thousands of people. to make the theft situation even remotely close it would have to go something like you stole the CD printed thousands of copies then left those copies on park benches with a little sign that says take one free all across the entire world.


RE: Piracy fines
By spuddyt on 9/4/2008 11:29:56 AM , Rating: 2
so if one could proove that one had just downloaded, and then removed the torrent, would that make it legal?


RE: Piracy fines
By Rookierookie on 9/4/2008 11:54:48 AM , Rating: 3
I don't see why I couldn't steal a CD then distribute it over the internet.


RE: Piracy fines
By Staples on 9/4/2008 12:02:43 PM , Rating: 1
Not to mention that it takes 100x the man power to catch an online P2P thief than it does someone in a store. I think the RIAAs damages fees are just.


RE: Piracy fines
By mindless1 on 9/4/2008 1:32:19 PM , Rating: 2
No it definitely does not take 100X the manpower, online cases are automated while in stores you have thousands of stores and employees having to actively look out for theft.


RE: Piracy fines
By TOAOCyrus on 9/4/2008 1:42:16 PM , Rating: 2
Well if you stole a CD you stole it from the store which had already paid for the license. I agree though downloading a song shouldn't count as copyright infringement, it should count as theft. Distributing music should be copyright infringement.


RE: Piracy fines
By Xerstead on 9/5/2008 1:33:44 PM , Rating: 2
Downloading (copying) a file is not stealing, it is copyright infringement. You have made an unauthorised copy of the file and infringed on the copyright. The 'host' of the original still has their copy and you have not taken anything from them.
'Steal' as defined in the dictionary: To take (the property of another) without right or permission.
To take a CD from a shop without paying means the shop no longer has it to sell because you have taken it. Which would be stealing.
I do agree that the penalties imposed are far too excessive compared to stealing a CD from a shop and other offences.


Punishment is meant to be a deterrent
By Beenthere on 9/4/2008 11:18:44 AM , Rating: 3
If the punishment isn't severe enough it is not a deterrent. It doesn't matter if you're stealing a CD in a store or stealing the music online, you should be severely punished to deter future violations of law. Jail or prison time and a stiff fine are appropriate deterrents.

In the case of piracy where people falsely believe they can hide behind their PC monitor and freely distribute stolen goods, the punishment should be even higher than a damn fool who tries to steal from a store. The arrogant pirate needs more of a deterrent as their thought process is defective and their attitude all wrong.

A $10,000 per copy fine and jail or prison time is a pretty effective deterrent for any pirate that is worth saving. Those who still don't get it should rot in prison with the other scum of the earth. If you can't live within society's rules then you aren't entitled to be out on the streets. We have prisons for those who think they are above the law.




By spuddyt on 9/4/2008 11:35:52 AM , Rating: 2
it depends on your viewpoint - if you believe that the law should not be followed, or you take a psychopathic, I will do whatever I can get away with viewpoint, it does not matter how big the fine is, when so few people are caught, that people will not fear it, in the same way you don't fear a natural disaster, hey, lighting may strike me, but its so unlikely i'm quite happy to hold a metal pole in the air on a sunny day, however, if you change the climate, IE you increase the numbers of people CAUGHT, then that would do far more than financially raping a few unlucky single mothers


By mindless1 on 9/4/2008 1:39:26 PM , Rating: 2
Ok then YOU FIRST.

Whether you meant to or not, you have certainly broken some laws and, umm, goodbye they'll take everything you have and toss you in prison. It's only fair if you feel this way that it happen to you first.

Oh, but you didn't really mean fair did you? You meant it's ok to do what you want but it's not ok for someone else to.

Severe punishment is already happening any time someone tries to defend against an RIAA case. Is this deterrent working? No. Jail or prison is the wrong answer, our prisons are already overpopulated and the largest % of our population of any civilized (and possible some not so civilized) nations. We already pay enough taxes so are you personally going to donate the few billions to build these prisons, and of course you won't mind when they're built in your back yard. Think about the consequences of your foolish hate trip. It's kids sharing some songs, they should not have their life ruined because they didn't have a chance to participate in the lawmaking, laws that they are obviously against.

Did you understand the last sentence above? These kids ARE SOCIETY, they are a majority versus those who feel the way you do. There's no "we" like you wrote, "we" think you want an excuse to hate. BTW, I don't pirate music so if you wanted an excuse to ignore the reality of my comments then you won't find it there.


RE: Punishment is meant to be a deterrent
By wvh on 9/4/2008 9:49:51 PM , Rating: 2
But you live in a democracy. Most people don't consider a $10,000 per copy fine a very good idea, to put it mildly. In fact, most people are starting to rebel against the RIAA and similar organisations. The punishment should fit the crime, but (especially in the U.S. in these sorts of cases) it rarely does.

You paint a picture of seasoned thieves and criminals hiding behind their monitors in the night. Pretty much anyone with any clue has recorded, copied or shared music or movies "illegally" or at least stretching Fair Use restrictions, ever since the technology was there (Watching a video tape in group? Trading tapes? Sharing a record with a friend or letting them copy it?). The technology has just made it too easy for data to be infinitely copied and sent all over the globe; this does not make it any less absurd that I can steal a CD with little or no consequence while I would have to pay off a fine for the rest of my life for P2P'ing this same CD. Your precious law is wrong, outdated, irrelevant.

Most people have more sympathy for the teens and single mothers that get caught downloaded (and hence sharing) some songs on the internet. Even my father, always a very moral and law-abiding citizen, starts to "up yours" the music industry and download some rare things here and there; partly because he doesn't care anymore, and partly because there's no viable alternative.

You can't uphold draconian laws the majority doesn't agree with. The music industry is trying to uphold an outdated distribution system by force, and the RIAA has taken things so far, people want to sabotage the system so it fails. You can be as authoritarian as you like, it doesn't make you "right" in a free society.

I feel bad for the artists that don't offer ways to obtain their recordings directly -- they really should, but the major record companies and the RIAA can go to hell.

Patents and copyright law should go up for some serious review, because oftentimes they are either abused or completely irrelevant to modern society and technology.


By wvh on 9/4/2008 9:59:00 PM , Rating: 2
Oh hey, by the way -- I'm a musician myself (though not full-time sadly enough, real metal doesn't pay).

Note to younger people: don't expect to be making a lot of money, especially if you're doing any sort of alternative music. Those times are over (if they were ever upon us).


Errr........no
By theapparition on 9/4/2008 11:26:52 AM , Rating: 3
quote:
As a result music has moved from a model where consumers wanted to own their music to a new model where consumers are content to just listen to the music without necessarily having ownership.

Not this consumer. I want to own the music, take it from car to living room to portable player to computer.

Nice of them to tell me that I'll be content with what they give me.




RE: Errr........no
By mindless1 on 9/4/2008 1:42:39 PM , Rating: 2
Exactly, I'll be content to only listen when it costs 5 cents a pop not $1, so long as access is universal and totally unrestricted such that it has 100% availability like I can have with burning a CDR or ripping an MP3/other off the original CD.


Just let it die
By japlha on 9/4/2008 11:31:19 AM , Rating: 2
Maybe we are witnessing the death of the music industry. Maybe becoming a musician isn't a good idea especially if it's no longer profitable. Industries change as our world changes.
Musicians may just have to make music for the purity of being creative and not to make millions of dollars.
They'll have to support themselves by getting a part time job to support their "hobby". It's what most of do anyways.
Welcome to the rat race musicians.




RE: Just let it die
By spuddyt on 9/4/2008 11:40:40 AM , Rating: 2
agreed, I never was that in to it in the first place


Exposure
By AntiM on 9/4/2008 11:01:42 AM , Rating: 2
How does an indie artist get exposure? It's seems that the labels, especially the major labels, are trying everything they can do to prevent people from owning or listening to music. Streaming internet is all but dead, buried in excessive fees. I don't know of a terrestrial station in my area that plays any indie music at all. iTunes and Amazon are the only saving grace for indies, especially when a person is searching for a particular genre. Plus, I will only buy music from Amazon from those artists that have sample tracks. The days of the mega star that makes millions are numbered. Music must be cheap, and easy to obtain, (and free of DRM) that's the only way the music business will stay in business, indie or major.
Another problem for the music labels is that plenty of people are making music for the simple pleasure of making music without profit motive and having people listen to it and appreciate it. They have plenty of outlets for doing so. Alot of it is crap, but there's a lot of very good stuff as well.




By BladeVenom on 9/4/2008 1:22:58 PM , Rating: 2
How do they call Roadrunner Records an independent label? They are a subsidiary of Warner Music Group.




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