PFF and IPcentral hosted a compelling Congressional Seminar Friday on digital music licensing and the PERFORM Act. We had as speakers the RIAA's Mitch Glazier, CEA's Michael Petricone, DiMA's Lee Knife and LA-based IP attorney Chris Castle.

There were spirited disputes over how best to harmonize digital music licensing across platforms and services. There was debate over to what extent DRM should be required in various services. But much of the debate -- particularly between Mitch and Michael, who were seated next to each other -- was over the Pioneer Inno and XM Satellite Radio. CEA boasts XM as a member, and RIAA is suing XM because the Inno has functionality RIAA contends requires a download license, not merely the compulsory performance license XM uses for its music service.

I had originally lined up an XM Satellite Radio speaker for the panel, but they withdrew when RIAA filed suit. Michael performed ably, however, as a representative of XM. He argued the recording talents of XM devices like the Inno merely permit time-shifting a la TiVo. He said you couldn't program a device to record every Led Zeppelin song. He also said the kind of recording the RIAA says is permissable would mean if you wanted to record the Miami Heat game (using a TV metaphor), you'd have to set it to record from 7 pm to 11 pm and hope the game was somewhere in that time block.

Mitch took issue with that. He said TiVo-like recording was fine, and said you should be able to record programs. You wouldn't need to set a time parameter for the Heat game; you could just set it to record that program. What he said was not permissable under a performance license, or the Audio Home Recording Act, was setting it to record only the musical acts on Saturday Night Live and not the whole show.

There was much back-and-forth between Mitch and Michael, who have gone up against each other innumerable times over the years. Sometimes I felt a sense of deja vu -- for example, in Michael's opening remarks he mentioned Jack Valenti's famous quote about the Boston Strangler, which must be a macro key on any CEA speechwriter's computer. But this XM debate is fairly new; it's been the subject of a couple of Hill hearings but they had shed more heat than light. It was helpful to hear Mitch and Michael's interpretations of these licenses, of XM's recording devices, and of the AHRA. Lee had helpful input on licensing as well, and Chris was a wealth of information not just on AHRA and licensing, but on how the current law suit parallels the MyMP3.com case.

As for Michael's claim that the AHRA can handle this new downoad technology, Mitch and Chris made pretty clear that the AHRA is fundamentally flawed. It is too easy for media manufacturers to avoid having the AHRA fee levied on their products (label blank CDs multipurpose rather than "music," for example). In addition, as Copyright Office Registrar Mary Beth Peters pointed out from the audience, royalties are capped at a very low rate. Chris also called for an audit of the program (which is permissable in the statute), arguing that artists aren't getting their fair share from the program. Chris, a musician himself, has a number of artists and songwriters as clients, so he's in a position to know.

As moderator I made an effort to discuss licensing generally, as well as DRM requirements and the role of terrestrial broadcasters in the debate. However, as the numerous media stories written on the event reflected, the focus of the discussion was on the XM case. Michael did a good job of pointing out how the Inno does not have the full recording capabilities of some MP3 players; it has limited storage capacity, the songs can't be transferred to another device, and they go away if the customer stops subscribing to XM.

But these limitations don't avoid the fact that this is, in fact, a device that downloads specific songs in their entirety with complete metadata and permits playback on demand. My Napster to Go songs go away if I stop subscribing, but Napster still has to negotiate a download license with the owners of the tracks on my Creative Zen Micro. Many services limit the extent to which songs can be moved from device to device, but those services also have to negotiate download licenses.

This seems something best left for the market. It seems to me these limitations could play in XM's favor at the negotiating table; they should be able to get far cheaper licenses than, say, a service that allows a download of a song with unlimited rights to the downloader. Sirius negotiated a license for its Inno-like device, and the labels agreed to a narrow label for just that device; Sirius didn't have to accept a blanket license for all of its customers.

I don't know how the law suit will turn out. I do know that Sirius CEO Mel Karmazin was crowing in an investor's conference the other day that his service is getting a leg up on XM now because it struck a deal and is rolling out new hardware while XM is tied up in court.

My sense that a download license is appropriate for the Inno doesn't change my general antipathy for licenses, particularly compulsory licenses. It seems Mitch shares my antipathy. He made a facetious, but insightful, proposal at the event regarding licensing. David Carney of Tech Law Journal recorded the event, so I'll lift his quote of Mitch's to make sure I am accurate:

"I have a terrific idea. We know that technology buyers usually go out and buy even more technology. So, we ought to have a mandated government licensing system, that says that the government will set the price for every consumer electronics device that comes out. And, we will only allow people to pay what is fair and equitable according to what the government thinks for that particular device. And don't worry, because consumers love them so much that they are going to go out and buy even more. Because it is really great for your business, and you just don't know it. I mean, it is so ridiculous to sit there and say to creators of products in business that they just don't know what is good for them, and to protect their rights, they are just idiots."

posted by Patrick Ross @ 11:40 AM | DRM & Watermarks, etc., Legislation and Legislators, Radio

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