Issue #52

Last Update June 22, 2007

Arts Digital Music Forum - East by David Katz March 3, 2007  The Digital Music Forum - East, held in the Museum of Jewish Heritage in lower Manhattan, brought together executives from major music labels, music publishing, aggregators and subscription services and new distribution channels such as cell phone companies and internet feeds. Although there were a variety of discussion panels, conversation on and off the dais focuessed on the rapidly changing digital scene, and its implications for intellectual property rights, how to make money from music in the new environment, and what new roles will the vfarious industry segments play. 

There was concensus on a number of issues:
-The traditional functions of a music label, finding talent, producing the record/CD/music video, distributing the product, and publicising the product, have been greatly altered. Talent can find itself, and with the advent of the computer and the internet, can produce its own product and distribute it worldwide. Labels are now struggling to find a reason for existance and a way to profit from the music industry.
-While fewer CDs are being sold year by year, more people are listening to more music in more formats than ever before.
-Digital rights management (protection from copyright infringement) is a more complex issue than appears on the surface. Controlling theft, however, is only part of the problem. Interoperability, the ability to have a single rights management scheme so that the purchaser does not need to search for a purveyor that supports the purchaser's music playback medium, and portability, so that, having purchased music, the purchaser can move it to any playback system he possesses (buy once, use anywhere), are far more important to having the music consumer go along with DRM protection. 

The issue of delivering music in MP3 format, raised recently by Steve Jobs of Apple, was felt to be a non-issue, since the implication behind this position was that removing embedded Digital Rights Management would harm both the distributor and creators of the music; increasing interoperability and portability would remove much of the music buyer's objection to DRM. 

New ways of monetizing music, that is, making money from the creation or distribution of music, were discussed. Various segments of the industry have conflicting requirements. For example, while singer/songwriters might be willing to distribute their music for free or in an unprotected format in order to build audiences for live performance, the non-performing songwriter gets no such benefit and must depend on sales and royalties for survival. A distinction was drawn at the Forum between musicians and entertainers, where musicians create for the love of it, and are often ignored by major labels, while entertainers are celebreties using music as a vehicle to propagate their fame. Independants and major labels differ in their access to modes of distribution. Finally, the interests of the music publisher and the record label are not identical. 

Music subscription plans, in which the listener pays a monthly fee for limited downloading and play rights to music haven't been overly successful, and are therefore not a promising method of monetization. Rights cost keep the subscription prices too high to be attractive to most listeners, and only a small segment of the market is willing to pay for subscriptions. Ads-based subscription services may succeed better, especially if the ads are not intrusive on the music experience. 

Mobile music, the direct downloading of music into cell phones and mp3 players, has become an important segment of the music business. In addition to downloading songs, packages are available that let the listener download a song, a music video of the song, a telephone ring tone made from the song, and text materials related to the song, all for a single price. Cell phone companies like Sprint and Verizon, both participants in the Digital Music Forum, have become key players in the industry. 

Where is the industry heading? All particpants in the Forum agreed that they really didn't know, and that technology is altering the music business so fast that business practices can't keep up.

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