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May 25, 2000
Online Music Industry Tells Congress to Leave It Alone
By JERI CLAUSING
ASHINGTON -- Executives from independent and online music companies asked Congress to keep its hands off their industry while traditional businesses and copyright interests adapt to new technologies and controversial song-swapping services like Napster.
"Let the lawsuits play out," said Tom Silverman, the chief executive of Tommy Boy Records and a member of the Recording Industry Association of America (RIAA). "The dust has to settle."
The RIAA is one of several groups that have filed copyright infringement lawsuits against Napster, which allows computer users to share music files in the MP3 format over the Internet.
The House Small Business Committee called the hearing to examine how new technologies are enabling musicians and independent music companies to compete against the industry giants. But much of the testimony turned to Napster and the controversy over music piracy by users of the service.
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Last week the Progressive Policy Institute, a research group associated with the Democratic Leadership Council, called on Congress to strengthen copyright laws to make services like Napster illegal. Neither that group nor representatives from the major record labels testified at the hearing.
But Silverman and other witnesses said the digital music industry is so young, and technology is changing so fast, that new regulations would be premature.
"We don't know if people are even going to want" services like Napster as technology changes, Silverman said, noting that new systems will soon let people get music through their cell phones.
Peter Harter, vice president of public policy for EMusic.com Inc., reminded the committee that with technologies like Napster, the songs available depend on who is online. Music files can only be shared among Napster users who are logged on at the same time.
With services like EMusic, Harter said, computer users have catalogs that give them "one-stop shopping." EMusic sells tracks from independent artists that can be downloaded to computers and MP3 players for 99 cents each. The company has a record of purchases for backups if users accidentally erase their files.
Napster, which pays no royalties to music companies or artists, could ultimately be an "end note," as old and new companies figure out how to make money online while also paying artists and their record companies fairly for their music, he said.
Ric Dube, a digital entertainment analyst for Webnoize, told Congress it is "rash to assume that every time someone downloads an illegal music file, the recording industry has lost a sale."
"When music is free, people will try a lot they wouldn't have otherwise," he said. "And while Napster may have enabled the worst climate for casual piracy ever, the music industry is growing. Total revenue is up, CD shipments are up. It's worth wondering whether free music and MP3 swapping have stimulated sales."
At the same time, however, Dube pointed out that Napster is most popular with young people, who have not been buying as many CDs as other age groups in recent years.
Chuck D, a rap artist and an outspoken critic of big music companies, applauded the new technologies as a way to finally level the playing field for artists and small companies.
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"You'll see a change in the rules this century," he said. "I don't think you'll see anyone go away -- you'll just see an adaptation."
The rapper, who is also the founder of Rapstation.com, said that despite technologies that enable people to get music for free, they will still pay to get it more easily through commercial channels.
"These big companies will still be around," he said. "I think the laziness of the American people will keep the entertainment business at an all-time high."
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Jeri Clausing at jeri@nytimes.com welcomes your comments and suggestions.
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