Congress All Ears For Online Music Services

Representatives of MusicNet, Duet address House subcommittee.

While songwriters and online music companies argued over how writers should be compensated for downloads of their songs, MusicNet — a subscription service run by RealNetworks and three of the five major record companies — got its first public demonstration in front of a House subcommittee Thursday.

RealNetworks CEO Rob Glaser offered a display of the service in front of the House Subcommittee on the Courts, the Internet and Intellectual Property. For a monthly fee, MusicNet affiliates such as AOL will allow users to search for songs by title, artist name or keyword. Glaser typed in the keyword “love” and received a screenful of titles, including Whitney Houston’s “The Greatest Love of All” and Marvin Gaye’s “How Sweet It Is (To Be Loved by You).”
MusicNet would allow users to download music for a limited period of time. Glaser clicked on a song he had downloaded earlier and received the message “Your license for this song has expired. Please press play to renew the license.” This way, users will have to renew their subscriptions to retain access to the songs they download.

Unlike Napster, a file-sharing program that allows users to download music from any other Napster user’s computer, MusicNet will give its subscribers access only to songs it stores on a central database. The only songs available will be from labels owned by AOL Time Warner, Bertelsmann and EMI.

Vivendi Universal Executive Vice Chairman Edgar Bronfman Jr. briefly discussed Duet, the joint online music venture between Universal and Sony, saying that it would offer both music and artist information.

Bronfman said Duet will offer streaming audio and “tethered downloads,” which would also be temporary. Neither service will allow users to make permanent copies, at least in the immediate future.

One committee member accused the major labels of dragging their feet on granting licenses to other online music services to build a market for MusicNet and Duet.

“Consumers obviously wish they had access online to all the music ever recorded,” California Rep. Elton Gallegly said. “The online music market has not moved quickly enough to meet this demand.”
Notably absent from the hearing was Napster, which was not invited. Earlier in the week, Napster sent an e-mail to members of its “action network,” asking them to e-mail or call committee members in support of the file-sharing service.

The main obstacle facing Duet, MusicNet and other online music services is how to compensate songwriters. The services are lobbying for blanket licensing, where a service would pay a single fee to a royalty collection organization, which then distributes payments to writers and other copyright holders. Radio stations already pay blanket, or compulsory, licensing fees.

Country singer/songwriter Lyle Lovett and songwriter Mike Stoller argued against blanket licensing, and Lovett distinguished between a radio broadcast and a download. “When a song is broadcast on the radio, it’s a promotional tool to encourage people to buy an album,” Lovett said. “If people are downloading it on the Internet, they won’t have to purchase it.”
Stoller, half of the legendary songwriting team of Leiber and Stoller, argued that Internet music services should pay a separate fee to copyright holders each time a song is downloaded, similar to the “mechanical” license fees that are paid on CDs, cassettes and vinyl sales.

Glaser claimed that the copies made by users of its services are no different than “copies” that are made of radio broadcasts that are relayed from one transmission tower to another. Glaser said that mechanical licensing fees for Internet copies would be unwieldy and virtually impossible to enforce.

Stoller complained that labels were trying to deny writers their fair share by asking for blanket licensing, and he countered claims that it’s too difficult to keep track of individual downloads of a song. “I’m no expert on computers,” Stoller said, “but I think we all agree that computers are good at counting.”
MP3.com President Robin Richards agreed with Glaser but said that his service’s “locker” function — which allows users to store copies of music they’ve purchased so they can access songs without playing their compact discs — would be impossible if MP3.com had to make separate licensing deals with the thousands of publishers and copyright holders.

At an April 3 Senate judiciary committee hearing, Napster CEO Hank Barry also lobbied for compulsory licensing, to the opposition of Recording Industry Association of America chief Hilary Rosen.