Kazaa, Verizon Propose to Pay Artists Directly

"An unlikely alliance of swap-service Kazaa and telephone and Internet giant Verizon is floating a proposal to break the logjam of lawsuits: Computer manufacturers, blank CD makers, ISPs and software firms such as Kazaa will pool funds and pay artists directly.

'Historically, there's been a clash between the content community and new technology, back to the player piano,' says Verizon vice president Sarah Deutsch. 'We're proposing the idea of a copyright compulsory license for the Internet, so peer-to-peer distribution would be legitimate and the copyright community would get compensation. It's hard to get the genie back in the bottle.'

Kazaa lobbyist Phil Corwin says a $1-a-month fee per user on Internet providers alone (it's unclear whether costs would be passed along to subscribers) would generate $2 billion yearly: "We're talking about a modest fee on all the parties who benefit from the availability of this content."

Recording Industry Association of America president Hilary Rosen calls the proposal 'the most disingenuous thing I've ever heard. It's ridiculous.' " [USA Today]

Rosen only thinks it's ridiculous because it bites into the status quo money machine of the companies she represents. I guess the labels aren't as concerned about artists getting paid as they told the judge they are.

"[Jim] Guerinot is upset that the labels have tried to combat technology with alternatives that have been widely rejected by the public. MusicNet and Pressplay offer limited downloads, but not in the preferred MP3 format, and they usually can't be transferred to portables or burned to CDs.

'It would be like me opening a video store, charging 10 times what others were charging and only offering videos in the Beta format,' Guerinot says. 'In any business, when you have billions of downloads occurring, you don't say we're going to ignore that market and try to create something else. You serve your customers.' "

Unless you're the music industry, as evidenced by the following:

File Sharing is a Hit, Despite Legal Setbacks

"The numbers are staggering. From January to March of this year, the most popular file-sharing programs, which include Kazaa and Morpheus, were downloaded 79 million times. During the same period in 2001, a similar group of programs including Napster were downloaded just 8.2 million times.

Morpheus has 90 million registered users; Kazaa, 75 million....

Meanwhile, what's a poor musician to do? The digital musical revolution grows and grows, and the only ones getting rich appear to be pop-up advertisers and lawyers. 'Same thing they always did — go out and tour,' says Gonzalez. 'Peer to peer is a great way for them to get their music out there, develop a following and attract more fans to the venue. Artists have been poor since music began; this isn't changing anything, just revolutionizing how the music is being distributed.'

The next wave is file-swapping via instant messages, says Gonzalez: 'I see file sharing and instant messaging turning into one.'

The latest versions of MSN Messenger, Yahoo Messenger and AOL Instant Messenger all have buttons to press to chat or send files, a process which is much faster than with such programs as Kazaa and Morpheus.

'I don't think you'll find anyone outlawing instant messaging,' says Raymond James analyst Phil Leigh. 'Even if AOL was to say they wouldn't permit file sharing, then they would lose the battle to Yahoo and Microsoft, and that would never happen.'

'The essence of the Internet is file-sharing,' says Phil Corwin, a Washington, D.C., lobbyist for Kazaa. 'I do it every day with clients. I attach files to e-mail. Unless you're going to shut down the Internet or cripple computers and require them to examine each and every file, there's no way people are going to step backwards.' " [USA Today]

Of course, this is exactly what Fritz Hollings and his sponsors in the entertainment industry want to do, but even if we went back to the way things were ten years ago, I'd still be making music tapes for my friends, videotaping TV shows for my family, and borrowing books from the public library.

The proof is out there. Give folks what they want at a reasonable price and you'll break the bank with profits. Just ask Spider-Man.

"Star Wars and other larger-than-life movies have given Hollywood the ultimate weapon against digital piracy: They make people want to go to the movie theater.

The music industry continues its mighty struggle against online file-sharing networks, but the movie industry has seemingly overcome that battle.

Ticket sales are at an all-time high. Spider-Man took in more money in its opening weekend than any film in history. Advance ticket sales for Star Wars have caused traffic to online ticket sellers to jump 150 percent.

It's a movie bonanza, offering positive lessons to the entertainment industry. Hollywood's recent success comes because movies with special effects, surround sound and epic storytelling just don't translate as well onto the television and computer screens as they do to the big screen.

'The visual experience is totally different in your home or on a computer than it is at a theater because the screen at your home doesn't dominate you,' said Peter Guber, chairman of Mandalay Pictures. 'The movie theater has 54-foot screen with surround sound. People expect a larger-than-life experience....'

While file trading has thrived, so too has Hollywood. Studios grossed $8.4 billion last year, an increase of almost 10 percent over 2000....

Half of the top 100 grossing films of all time have been released since 1996 -- about the same time frame as when people began discovering the Web. Even as file-sharing reached its highest point between 1999 and 2002, 33 films cracked the list.

No other three-year period comes close to topping that number. Twenty-two films cracked the list in the early nineties, while the entire 1980s had only 21 films make the list." [Wired News]

The same is true for music and television, too. As long as you're producing something good that appeals to people, they'll pay money for it. This also proves that they'll pay money for a quality, original version, as noted by Lawmeme. Spider-Man will be all over the internet later this year, but I'll bet the DVD still breaks records and outsells all others to become number on when it's released.

It's only when you create a void that consumers will attempt to fill it themselves.