Life after Grokster: Music CEO asks for tech help

Technology and entertainment companies need to put aside past differences on how to address file-sharing using peer-to-peer (P-to-P) software and work together on ways to protect digital content such as music and movies, the head of a major music label said Monday.

Edgar Bronfman Jr., chairman and chief executive officer of Warner Music Group, announced a new "e-label" his company is planning to launch that would sign new and niche artists and release their music only online. Artists who don't have mass market appeal could release small groups of songs every few months and Warner Music Group will avoid the large cost of producing an album-length CD, he said.

Artists signing with the e-label will retain ownership of recording masters and the copyright to their music. "An artist is not required to have enough material for an album, only just enough to excite our ears," Bronfman said, during a speech at the Progress and Freedom Foundation's Aspen Summit. The conservative think-tank focuses on promoting free-market solutions for technology and other industries.

Warner's e-label is one of the ways the technology and entertainment industries can work together on new business models following several years of disagreements, Bronfman added. He offered this olive branch to the technology industry following the U.S. Supreme Court's ruling in June that P-to-P vendors Grokster Ltd. and StreamCast Networks Inc. can be sued by the entertainment industry for encouraging their users to violate copyright law.

Several technology groups had worried that the entertainment industry's push to allow lawsuits against P-to-P vendors could overturn a 21-year-old ruling protecting most technology companies from being held liable for their customers' copyright infringement.

But the Supreme Court did not overturn its 1984 Sony Betamax ruling, in which technologies with significant noninfringing uses -- in that case, a video recorder -- were not liable for their users' copyright violations. After years of bickering over issues such as government-mandated copyright protection technologies, it's time for the technology and entertainment industries to come up with new ways for content creators to be paid for their work if they want payment, Bronfman said during his speech in Aspen.

"Let's not hurt our credibility by blindly following party lines," he said. "Clearly, content and technology both need each other and can benefit from each other."

Free P-to-P services destroyed a long-standing "symbiotic" relationship between technology and the entertainment industries, Bronfman said. Both sides made mistakes, with the music industry initially refusing to acknowledge that its customers wanted access to music online, he said. "The war between the music companies and the consumers has been fought," he said. "We lost."

On the technology side, PC and chip makers "happily watched profits soar" as unauthorized music-trading using computers exploded and no content-protection standards existed, he added.

But Bronfman urged technology companies and the entertainment industry to resurrect a relationship that goes back to the earliest days of recorded music. Recorded music has long shaped itself to the distribution technologies available; for many years, pop songs clocked in around 3 minutes because that's as much music as a 45 rpm record could hold, he said.

"Technology shapes music," he added. "Music drives technology adoption."

He called on the technology industry to work on digital rights management (DRM) standards, instead of letting the government mandate standards such as compulsory licensing. Compulsory licensing, backed by some P-to-P vendors, would set a price for downloaded music while requiring music companies to make their products available to P-to-P users.

"As a content company, we quite naturally want devices out there that permit consumers to seamlessly access our music without having to worry about the compatibility of operating systems or DRMs," he said. "The consumers' digital music experience should be as seamless and rewarding as possible, but we would be hypocrites to suggest that the government should force interoperability standards on devices while at the same time insisting there is no need for compulsory licensing."

Bronfman's call for the two industries to work together was cheered by Ed Black, president of the Computer and Communications Industry Association trade group, but he and another tech industry representative disagreed with Bronfman's assertion that the tech industry stood by and cheered authorized music downloads. James Burger, a lawyer who represented computer vendors in early content-protection discussions with the music industry, said technology companies proposed copy-protection schemes in the late '90s.

"We offered to go online," said Burger, with the Dow, Lohnes and Albertson PLLC law firm. "We were told, 'Yes, we'll talk about that, but only after you help us protect CDs.' I think there's always been a desire in our industry to work with your industry."