Hi Bill

Thanks for taking my call this afternoon about the media levy and the music industry.

As I noted, I was one of the individuals (as opposed to the consortiums (retail association, manufacturers' association, etc.) who paid my own money to travel to Ottawa to testify in front of the judge presiding over the formal blank media levy hearings at the Copyright Board in February. The ruling on this round (they happen every 2 years) is still not out, and the current levy is in fact an extension of the levy determined at the end of 2000 for 2001-2002 - when there were 3 objectors as opposed to the 100+ this round.

In my presentation, the one item which made the judge comment "I hadn't thought of that before..." (and which elicited what appears to have been the only such comment in the several weeks of testimony from everyone according to one of the lawyers from the retail association) is that the blank media levy at its present ($0.21/CD) rate raises more per Canadian than would be paid for equivalent access to music paid for such things as a "community radio license" (i.e. rights to broadcast music to a closed community such as a townhouse complex or school ($100/year)) or streaming audio on the 'Net (see below).

You can see more in my pages of information and my notes and presentation at:
http://richard.pacdat.net/MediaLevy/index.htm



As you may recall, you've had me on your show regarding the Internet back when it was an infant, and I've spoken to radio, TV and live audiences about all manner of the changes happening to both the 'Net and to society because of it.

I've tried to remain objective in all my discussions and writings about this particular item (the levy), since I've also been around the technical side of the entertainment business, the retail side of the music business, and the design and implementation side of music (and video) hardware and software for the future of the Internet music and video business.

The problem is not an easy one to get one's head around, since there are so many conflicting "facts" and figures bandied about.

I think the point to remember is that any time there is a "disruptive" technology discovery (as the Internet very much is) there will be businesses that win and businesses that lose. During this time, there should not be any interference by anybody in the process - especially government - since this only delays the inevitable at the cost of making the end-user pay more, either through higher taxes or through higher prices.

The carriage trade had to deal with the invention of the car

The ocean liners had to deal with the application of the large aircraft to travel.

The mainframe computer business had to deal with the invention of the microcomputer (I used to sell time-sharing services here in Vancouver for a company with a bunch of DEC-10 mainframe computers in their offices in Toronto back in 1976).

Microsoft is going to have to deal with the rise of "Open Software" (i.e. Linux).

And the music publishing industry is going to have to deal with the fact that anyone with a computer (the artists for example) can get an artist's songs to the person who wants to listen to them for less than the cost of an album in a retail store; i.e. become a publisher. They no longer need to have a factory for pressing the vinyl or CDs. They no longer need to pay millions in promotional fees to advertising agencies or in "payolla" (legal or not, I can't think of any other word for it) to radio stations to put the music on their playlists. The public will decide if the music is worth talking about, and push that which is good and ignore that which is bad. The musicians and recording artists will learn directly from their fans what is needed/wanted, and either provide it or languish (i.e. not make any money).

So, the publishing industry as it is today in the music business is going to die or evolve. The only question is: when?

In the mean time, the big question that the general public should be asking of their legislators is "why should we support a dieing industry?"

Note that this is not to say that the musicians, writers, recording engineers, etc. will die. They won't. They'll just get their income more directly from their fans, or via the totally new industry of "web music publisher" that is currently typified by Apple (a company that makes computers, not one that has before this been in the music publishing business).

As a parting thought, consider that the US Copyright Board has set a fee of the equivalent of about $0.001 (US$0.0007) per song per Internet stream (i.e. the music sent to one PC "out there") for an average 3 minute song. An individual can log onto a streaming site, set up a playlist of the same music they might otherwise listen to from CDs or vinyl, and listen to their selected songs. At this rate, a listener 24 hours/day, 7 days/week could listen for about $175/year.

BUT!!! the industry agrees that in fact, people only listen to an average of 20 hours/week of their own music (i.e. not radio but music stored on their own playing equipment) which at the same rate would be $20.80 for the year.

BUT!!! the industry says their sales are down 20% so in fact they are only compensating for 20% of the music individuals play which would mean $4.16 for the year - or about the current levy on 2 10 packs of CD-Rs.

And of course, I and others argue that the publishers in fact have caused some of the lower sales by not publishing what the public is willing to purchase, at any cost; and that other amounts have simply been diverted to purchase other things the public wants such as cell phone text messaging time.

Fun with figures eh?

I'd love to come on your program to talk more about this if you are interested. The best time would be shortly after the levy for 2003-2004 is set - some time this summer, don't know when - should have been done by Jan 1, 2003 but is 'way late.

Talk to you again soon.

richard