Subcommittee Statement on Digital Music Interoperability and Availability
Washington,
Apr 6, 2005 -
Today, this Subcommittee continues its work to update music licensing for the digital era.
New technologies are providing numerous and competing methods of delivering music content to consumers.
Consumers can buy music online for immediate download, subscribe to unlimited amounts of music that can be downloaded to a portable device, listen to webcasts of their favorite radio stations on the Internet, and subscribe to music broadcast from satellites in space.
Each of these different types of music services is a new and unique business model that brings different values and opportunities for consumers. Consumers have multiple choices for how they can purchase and listen to legal music. Unfortunately, just as the number of legal options has increased, so has the number of illegal ones.
Legitimate questions have been raised regarding the impact of digital interoperability on consumers. In the physical world, consumers didn’t expect that music audio cassettes were interoperable with CD players. Consumers switching from music cassettes to CDs bought the same music for $10 to $20 per CD that they already owned. Consumers accepted this since they felt they were getting something new with more value – a digital format that made every reproduction sound as good as the first playback.
Music is quickly becoming an online business with no connection to the physical world except for the Internet connection. Even that connection is increasingly becoming wireless. Some of the same interoperability issues that occur in the physical world are now appearing here. Consumers who want to switch from one digital music service to another must often purchase new music files and, sometimes, new music players.
For example, music purchased from the iTunes Music Store will only work on Apple’s iPod music player. Music purchased from Real cannot be accessed on the iPod. Last year, both companies became involved in a dispute over Real’s attempt to offer software called Harmony that would have allowed legal copies of music purchased from Real’s online music store to be playable on Apple’s iPod music player. Apple objected to this effort, calling it “hacker like” and invoking the DMCA. Apple blocked Real’s software from working a short time afterwards.
This interoperability issue is of concern to me since consumers who bought legal copies of music from Real could not play them on an iPod. I suppose this is a good thing for Apple, but perhaps not for consumers. Apple was invited to testify today, but that they chose not to appear. Generally speaking, companies with 75% market share of any business, in this case the digital download market, need to step up to the plate when it comes to testifying on policy issues that impact their industry. Failure to do so is a mistake.
As a result of disputes like the one between Apple and Real, some have suggested that efforts to boost digital music interoperability should be encouraged by regulation or legislation. Others have urged Congress to leave the issue to the marketplace and let consumers decide what it best for them.
Just last week, the Supreme Court heard a copyright case dealing with a 1984 decision in the Sony Betamax case. Consumers ultimately chose the VHS format over Betamax as their preferred technology in their homes without any intervention by Congress. At the same time, broadcasters chose the Betamax standard for their internal broadcast operations. If anything, this example demonstrates not only how consumers will decide for themselves what standard best meets their needs, but also that multiple standards can survive in the marketplace.
The digital music interoperability issue is of interest to more than consumers. Performers and songwriters are affected by the decisions made about how their music is made available. Music that is made available on only one digital music service will limit the options for artists to earn royalties.
Many of the licenses and rights in the music industry stem from compulsory licenses and exclusive contracts. Since one of these licenses, the compulsory Section 115 mechanical license, is now being updated for the digital era, the time is appropriate for the Subcommittee to learn more about the impact of digital interoperability on consumers and artists.
I look forward to hearing from today’s witnesses.
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