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NEW YORK -- More than 300 music industry executives are gathered in New York City this week to attend the 7th annual Jupiter Plug.In conference on online music, which yesterday featured keynote addresses from both Congressman Rick Boucher (D-VA) and RIAA CEO Hilary Rosen.

The event also featured a panel of execs from subscription services including Rhapsody and MusicMatch, a panel of retailers, and an on-stage "focus group" of teenage music consumers.

Boucher: "Go on and take off the brakes"

Keynoter Boucher, one of the two co-chairs of the Congressional Internet Caucus, explained to the attendees that while he is to some extent a music fan, his primary motives in the space are based on his desire to promote and stimulate broadband deployment, and that he feels that music is the best near-term approach to do so.

Furthermore, by resolving Internet-related copyright issues now for music, he noted, useful precedents will be established for other forms of content (films, e-books, etc.) in the future.

Boucher described the elements in the Music Online Competition Act (MOCA) that he and Utah Congressman Chris Cannon (R) are sponsoring, which include clearing up numerous "burdens" in copyright laws that inhibit the growth of the medium. (Those elements include a request for a comprehensive study of the value of the "performance complement" rules that restrict, among other things, the number of times that an online or satellite radio station can play a given artist in a three-hour period.)

Inslee and Boucher to propose new legislation
this week for smaller webcasters
Boucher announced that he and Congressman Jay Inslee (D-WA) will be proposing legislation this week to provide a short-term remedy for smaller webcasters who would otherwise be bankrupted by the recent Librarian of Congress ruling on royalty rates. Their bill will propose deferring smaller webcasters' royalty obligations until the next CARP cycle.

"Hopefully we'll have a whole new standard in place," Boucher said, adding that he hoped it would include a consideration of "fairness" and the more traditional percentage-of-revenues structure "to give the young and small the same ability to compete as the older and prosperous."

One hour later, RIAA CEO Rosen began her keynote by proclaiming, "It's time to come together." She called this "a critical juncture in our relationship with music fans" and noted that her member labels face a situation "unique in US commercial history" in that they have suddenly had to compete with their product being offered for free by the peer-to-peer file sharing services.

She spoke briefly on the subject of Internet radio, noting that she was "adamant" about getting "market rates" for webcasting. "If the government wants to subsidize webcasters, let it. We can't afford to," she said.

Regarding public policy issues, she said, "Our data shows very clearly that downloading and burning are hurting sales." She added, "Don't listen to the naysayers and carpers that say everything has to change."

Rosen: "The Beethoven.com guy doesn't want to pay anything"

In a question-and-answer period following her address, one audience member (me) asked Rosen if the RIAA truly felt it was in the best interests of labels to let most of the pioneer webcasters be bankrupted by the CARP decision -- and whether webcasters' only hope was for Boucher's proposed legislation or whether she could offer any hope for a compromise solution.

Rosen responded by saying she didn't believe Boucher's bill would pass. She told an anecdote about an executive from the classical label Naxos Records who complained to her about how it would be impossible for his firm to compete with smaller independent webcaster Beethoven.com, because the guy from Beethoven.com has said didn't want to pay for his music.

"This is not a mom and pop issue, this is a business model issue," she concluded.


NOTE: It's hard to imagine that Beethoven.com's Kevin Shively — the only "Beethoven.com guy" she could possibly be talking about — has ever said anything of the sort. He's a careful, articulate spokesperson who has consistently lead the cry for fair royalty payments to labels and artists.

Teens on downloading music:
"You're not making me feel bad"

In the last session of the day, following a "keynote conversation" by RealNetworks Chairman and CEO Rob Glaser, Jupiter analyst Stacy Herron conducted an "on-stage focus group" with fourteen NYC-area teenagers on their music consumption habits.

The vast majority of the panelists were extremely infrequent CD buyers. Most said they listen to music on their computers rather than stereos, and many had collections of thousands of MP3 files (several had 5 to 10 gigabytes of files) that they had obtained primarily from peer-to-peer services like Kazaa, Morpheus, and LimeWire. (One teen noted, "On behalf of all of us, I apologize to the music community.")

One panelist explained their behavior by saying, "We're teenagers — we're cheap and we're lazy" and added, "and we don't have a lot of money."

One interesting observation was that CDs are inconvenient because they want their music in the MP3 format, and buying a CD requires an additional step (ripping) to convert the music into that format.

Virtually none of the panelists seemed to have any moral qualms about downloading files from the P2P services. One teen said, "My father's a musician and my mom is a lawyer who works for CBS fighting music piracy, and they don't mind at all." An audience member asked, "You know it's illegal, right?" to which one panelists replied, "You're not making me feel bad," and another noted, "Jaywalking is illegal but still everybody does it." ("None of this equipment is illegal. They give it to you!" one panelist observed.)

None admitted to being regular users of broadcast radio either. Their musical tastes spanned from hiphop (the most-popular genre on the panel) to reggae, jazz, and Broadway. "All the music on commercial radio and MTV is crap right now," was the generally-agreed-to consensus.

When asked for their opinions of MusicNet and Pressplay, none of the panelists said they had ever tried either one. Pressed further, it came out that none of the teens had even HEARD of either service!

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