Industry Upbeat About 2004

The government-relations arm of the record industry sees 2004 as a year of positive change—if the dice roll right.

"The industry—and the broader music community—is at a terribly important juncture in our history," says Mitch Bainwol, chairman/CEO of the Recording Industry Assn. of America.

"Over the course of the next six months, we're going to see lots of factors become clearer," he says. "By late spring or summer, we're going to be in a world that may look quite different."

Bainwol says the RIAA is analyzing four primary factors that will determine the 2004 industry agenda in Washington, D.C.

"There's the [peer-to-peer] litigation [with Internet service providers], which you obviously won't see go to the Supreme Court [yet], but we're going to see court of appeals markers with them," he says.

There will be further lawsuits against infringing downloaders, he predicts. "We'll be watching carefully to see how our deterrent and education campaign continues to move forward."

Bainwol also forecasts "an explosion of competition on the online side." The legitimate online marketplace, he says, "will grow even more dynamic in the next few months with the [Pepsi-iTunes] Super Bowl launch and Microsoft coming into this. It's going to be fascinating to watch and terribly important for us."

He says the RIAA will also "be watching how the P2P [network] players move forward with their statement that they want to get more legitimate."

In a hearing last fall, Bainwol suggested that P2P companies demonstrate more social responsibility to inform their customers of the dangers of file sharing, such as copyright-infringement liability and identity theft.

"We're going to continue to press that," he says. "And if they become legitimate, then clearly there's a road they can follow, a road that the members of Congress are going to be watching."

The presidential and congressional elections add another wrinkle. "What that means for Congress is a shortened calender," Bainwol says. A short session means less time for debate on controversial bills. "So you've got to have a legislative strategy that is capable of broad bipartisan support."

The RIAA hired Bainwol because he is a veteran Republican political operative and has access to top Republican leadership. Even before congressional elections, the decision looks like a good one.

The Dec. 16 announcement by Sen. John B. Breaux, D-La., that he will not run for re-election furthers the chances of Republican gains in the Senate, already controlled by the GOP. Breaux is the fifth Democratic senator to announce his retirement this year.

Of the five, Breaux and Ernest Hollings of North Carolina are members of the Commerce Committee. John R. Edwards of North Carolina sits on the Judiciary Committee. Both panels oversee industry issues.

Artists groups say their agenda for next year will include pressing Congress to continue with still-pending bills probing pay-for-play, payola and the bullying tactics that media giants like Clear Channel Communications allegedly employ with artists.

"If there is one issue that is becoming increasingly important to recording artists, it is media consolidation," says Jay Rosenthal, Washington, D.C., counsel for the Recording Artists' Coalition.

Ann Chaitovitz, director of the American Federation of Television and Radio Artists' recording artists division, says, "We also want to work on negotiations with foreign performing-rights groups to allow payments of [overseas] royalties to U.S. recording artists." BMI senior VP of government relations Fred Cannon says he will continue to press for stronger anti-piracy tools.

"It's most important to make Congress aware that intellectual property piracy could ruin not just our industry but the fabric of our economic society," he says.

"Manufacturing's gone; service industries have moved to Asia. If intellectual property goes, we're cooked," Cannon says. "It's up to BMI and ASCAP, the [National Music Publishers' Assn.] and the Harry Fox Agency as well as the RIAA to fight this. The patent and trademark industries must also be prepared to do the same."