Transcript: Jim Griffin of Choruss’ Keynote At Digital Music Forum East

Jim Griffin is an adviser to WMG and founder of Choruss – a plan to license music at the ISP level on college campuses and beyond.  His keynote at last week's Digital Music Forum East is causing buzz across the net. The interest is not just because Griffin finally some Choruss details, but also because of his blunt assessments of the industry and the shifts needed to move forward.

"Music is awash in Tarzan Economics: We cling to the frayed vine that now barely keeps us off the jungle floor. Our survival depends on grabbing the next vine, a shift from product to service.

We all know this, and songwriters feel it: Mechanical royalties fall while performance royalties grow. Music’s ability to draw a crowd, its greatest financial value, gains currency while controlling the quantity
and destiny of music proves futile against technology’s exponential onslaught.

Sound recording’s economy is now a tip jar. It’s a choice listeners make. Not morally, not legally, but effectively it’s become voluntary to pay for music, and every new CES show brings reminders that for at least our lifetimes it will be ever more voluntary with the arrival of faster and bigger networks and tinier and more powerful processors and storage that render the movement of music so trivial that we now carry wireless music copying machines in our pockets.

It’s a fact of life: If your business model depends on controlling or getting paid for copies of zeros and ones, you may need to look at a new business model.

The market for music products has fallen and it can’t get up. Choice is key to music value, and pirates (and compulsory licensees) have everything because they license nothing. So long as the darknet and
compulsories offer superior choice, the brightnet and voluntary markets will suffer.

This is no opera, there is no deus ex machina, no “God from the machine” that descends in the third act to save the heroine from the flames engulfing the stage. Technologists will not code a solution, judges will not rescue us with writs and neither will priests or rabbis chasten the masses to reverse course and  change behavior.

Indeed, the opposite is true: Tech has consumed music, print and graphics on its way to video, and while music’s social repute has never been lower the desire for fans to experience music and express themselves through music has never been greater. Tell someone you’re in the music business and get ready for an earful.

We’ve been here before. Electricity arrived and control began its exodus. Without electricity, musicians controlled their art with their feet. If they weren’t in the room, you couldn’t see them or hear them.
Once acoustic become electric, loudspeakers and broadcast transmitters lit the fuse. Electric becoming digital was merely a gradation of change. The solutions we relied upon then thrive even now: Basically, a
pool of money and a fair way to split it up.

Other media know this well, as do songwriters, music publishers and their collectives. Like on-line access, cable fees, theme parks, on-line gaming and similar services, restaurants, radio, television, satellite, now webcasters, all pay actuarially. Service money grows while product money recedes.

Even children know better, and it degrades and demeans the unique cultural asset that is music and the companion arts its presence enriches. Music is much more than mere chattel.

Where does music draw crowds today? Look no further than internet service providers’ marketing campaigns. When they sell digits, they sell music carriage, and they know it. They lace their ads with images of musicians, musical instruments and oblique references to accessing “your music.”

One pundit recently wrote a Billboard guest editorial critical of my company, Choruss’, network music fee work.  “To understand what’s wrong with this model, use your imagination,” he wrote. That’s just what he did. Only imagination could’ve constructed the straw man he attacks.

Let’s be clear at the outset: Choruss is a learning experiment, a test.The universities with whom we are working have two motivations: They want to do the right thing, and they are interested in research in this
area. Research into incentives, behavior, network analysis, music marketing and more. We are working with professors and chancellors and provosts, university attorneys, IT departments and their public policy
advocates.

We are learning about network music fee approaches, and so we will seek to implement different  approaches at different campus networks. We do not pretend to know the answers, but we are certain that now is the time for experimentation and learning cannot come fast enough. The colleges have been asking to do this for years, and some, like Penn State, have been doing something similar for years, so it’s time we met them halfway.

The light of day is the best disinfectant, so let’s make a few exemplary comparisons between the myths about Choruss and what’s really happening:

Myth: Choruss relies on ISP guesses and no data.

Reality: Choruss will work with, and is discussing the application of, an extensive array of digital music data technologies, and we are open to evaluating all approaches. We will work with universities to advance the state of the art in music data collection, and those technologies include the very efforts Billboard’s guest writer has elsewhere  advocated, such as AudibleMagic (Vance and his team are first-rate and we like each others’ efforts). We are also working with leading firms in network technology towards a process for continual improvement in music and media network data. We encourage the academics with whom we work to publish their work and collaborate with one another.

Myth: Choruss seeks to legalize peer-to-peer sharing.

Reality: Like most everyone, we see the potential and the reality. For a long time we have been in favor of legalized, i.e licensed p2p, but that is not our focus in Choruss.  We are interested in actuarial
monetization ideas and network fee approaches. Someday Limewire will be an answer to a trivia question and we are most interested in where music is going, not where it’s been, so our eye is primarily on the anarchy enabled by technology and networks and only secondarily on specific applications.

Myth: Choruss needs a change in copyright law, a compulsory license that conscripts music rights from creators.

Reality: An ASCAP license has real value, as do BMI and SESAC in proportion. None represent all the rights holders, nor do they in aggregate cover every songwriter nor all the rights to the music they
represent.

None was created by law, nor are theirs compulsory licenses, and yet they absorb much rights uncertainty and offer real value to their licensees, not to mention billions to incent creativity.  Choruss seeks to preclude government compulsion and hopes to achieve a similar effect with a voluntary market approach to compensation.

Myth: Choruss is a network tax unfair to people who never use unauthorized digital music.

Reality: While there are many mandatory approaches to media fees – and none so mandatory as advertising – Choruss will experiment and will not apply any one size fits all approach. We will include purely voluntary payment (opt in), opt out and all-in systems with lower fees spread evenly across campus, like library or gym fees. Many campuses already require residents pay for cable TV, and choose to assess student fees in many and diverse ways. There are already numerous campuses that require the payment of network technology fees, music fees, and needless to say some portion of every student’s university bill already pays music performance fees for the entire campus. We are especially curious to study voluntary network penetration rates, replacing guesses with real information.

Myth: Choruss will favor major label music at the expense of independent and smaller artists, and its data collection techniques will inevitably skew payment towards big music.

Reality: According to their industry associations – and indie music has proven especially supportive of Choruss – independent artists fare better on digital networks, and Choruss is committed to fairness,
including data collection techniques that accurately reflect the use of music across the network. Today, this is more art than science, and we will continually advance the state of the art. Besides, buffet
approaches to monetization inherently favor discovery; product-based approaches tax adventure.

It is absolutely untrue that Choruss equates peer-to-peer with payouts; We know peer-to-peer data alone would skew results and will act accordingly, and we leave to their representatives the decision about
how to use the data in allocating payments. We will never learn to split music pools fairly without the very testing and experimentation with new approaches enabled by Choruss’ work with universities.

Myth: If you can count music on networks you can stop it with filters orother interdiction techniques.

Reality: Accounting after the fact with efficacious sampling and database matching is far different from census with specificity in time to intercept the light-speed flow of digits, and the trend towards encryption renders census or complete filtering unachievable and getting worse. In our conversations with technology providers, they all agree that it is far easier to sample and to count music traversing networks to arrive at a fair set of payments than it is to identify and to block for complete control.

Myth: Choruss advocates espouse an interesting idea, and make some compelling arguments, but there are just too many challenges in the way of any real world implementations of this theoretical construct.

Reality: We are driven by what we believe are an important set of concepts and principles, but we are totally focused on making this vision a reality.  We have been engaged in extensive in-depth discussions with key players throughout the connected digital music ecosystem who will shape the implementation of this new model.  We are working very hard to address all the details that will go into the proper execution of trial implementations, including the research methodologies that will ensure we maximize the learning from such real world experiments. 

Victor Hugo, who was a seminal figure in the formation of collection societies in the 19th century, said "There is nothing more powerful than an idea whose time has come."  We believe that the time has come for this idea, and we will be devoting all our efforts to harness its power and bring this idea into the real world.

Asserting property rights and attempts at control have cost the sound recording industry over a decade of licensing revenue that trades control for compensation, a deal made far more willing by publishers
accustomed to trading control for pooled compensation.

Monetizing friction-free access to music will require swinging to the next vine, and when we make that transition we’ll uncover a bigger music service business that’s been too-long trapped in the too-small body of an old product-based business of control.

And we’ll likely find new money, much as has the Copyright Clearance Center, a non-profit license collective formed in the 1970’s to monetize the effects of photocopying. Like PRO’s or other music collectives, no doubt they fail some critics’ tests: Imperfect data, not every rights holder participates, unauthorized copies a moral hazard to property rights, and so on through the litany of complaints, but CCC has thrived and distributed over a billion dollars to autho
rs, primarily in the scientific, technical and medical fields. Last year they collected well over a hundred million dollars for writers, and they tell us their licensees show interest in licensing music, too, and that’s no surprise. Music collectives world-wide payout many billions annually.

Breakthroughs against the delta of loss music is suffering will come from business deals, not laws or technology or police. They will be focused less on preventing piracy and more on promoting music and
ensuring its widespread access over digital networks.

That’s because music’s greatest challenge isn’t only pirates, though they’ve been a distraction. Music primarily competes in the marketplace for attention, for discretionary time and cash, for money in the wallet and time in the day, competitions increasingly won by flat-fee approaches offering wireless phones, online services, video channels, multiplayer games and the new new network thing just around the corner.

At Choruss, our goal is to test out a variety of approaches and one day make it faster, easier and simpler to pay for music, believing that when we do, more money will flow for music. We are dedicated to a transparent and fair conduit between those who want music and those who have music. Our non-profit efforts cannot survive without providing this on a voluntary and equal basis to all rights holders, large and small, nor can we survive without attracting the crowd’s money for these rights.

Music’s challenges are opportunities. Choruss was formed to meet them. At Choruss, we will  xperiment, innovate and learn, mindful of history and excited for the future. We’re bringing open minds and open hands, not closed fists."