A US Senate panel was told yesterday that new laws are needed to
make on-line music services viable. Napster is working to
restructure itself to comply with a court injunction ordering it to
stop downloads of thousands of songs owned by record companies.
On Monday, AOL Time Warner, Bertelsmann AG and EMI Group
announced their plans to launch MusicNet this Summer, a
subscription-based MP3 download site to be operated with the
assistance of software company RealNetworks. The MusicNet service
would combine the back-catalogues of the three music industry
giants. While some commentators are suggesting that the intention
of MusicNet is to sink Napster, Bertelsmann is the only one of the
five major record labels that sued Napster to later agree
settlement terms with it, with the German company taking an option
to hold a controlling interest in Napster.
Microsoft is also joining the on-line music market with its MSN
Music service, announced today. It offers thousands of internet
radio stations to users, similar to the music preference service of
Spinner.com. It is not an MP3 download service – there is only
music streaming; nor is it offering songs on demand. Users can only
select channels that play their favourite type of music or
regularly play their favourite artists.
Napster CEO Hank Barry told the Senate Judiciary Committee that
Congress should pass an Act to establish a flat royalty rate for
copyright holders that includes a direct payment to artists. He
said: “Licensed music should now be available over the internet as
it is over the radio.”
Barry then gave an example of the various rights contained on a
typical CD, explaining how there are typically 13 sound recordings
and 8 separate music publishers for every album. There are 3,000
record companies in the US, 25,000 music publishers and 27,000 new
CDs every year. “Separate individual negotiations for all these
rights are simply not a viable option. This has led to endless
private negotiations and litigation.”
This view, he said, was consistent with that held by Napster’s
long-time nemesis, the Recording Industry Association of America
(RIAA).
Senators criticised the music industry for its slow reaction to
the internet as a music delivery medium.
