The history of record labels is a sea of litigation. The Beatles spent just over a decade wrestling song rights and back royalties away from Capitol-EMI, George Michael sued Sony to get out of a contract he likened to "professional slavery" and, after being sued for breach of contract by Geffen, Don Henley counter-sued to unburden himself of a business relationship that made him feel like "a commodity, like soy beans or pork bellies."

These cases, and thousands just like them, have painted the recording industry as a monolith that thrives on keeping its artists down. But although artists have spent decades suing (and complaining about) their labels, until the advent of online music distribution, few of them ever denied the apparent fundamental need for a record industry. Today the Recording Industry Association of America, the trade organization that represents the major U.S. record labels, finds itself entangled in a legal battle with Napster, the software company that facilitates the free trading of copyrighted music files via the Internet (last week Napster won an appeal of an injunction that would force the company to remove copyrighted material from its site). But with music distribution now just a click away, the record industry's biggest battle is proving to artists that they still need labels.

Artists ranging from Chuck D to Roger McGuinn to Courtney Love are hardly convinced. In her keynote address at the Digital Hollywood Conference in New York in May, Love challenged the record companies to "do for me what I can do for myself with my nineteen-year-old web mistress, which is drive millions and millions of people in less than a month by just doing that Web site . . . We don't have to work with major labels anymore, because the digital economy has created new ways to distribute and market music."
Testifying before a congressional subcommittee on courts and intellectual property, Sheryl Crow argued that artists should hold the copyrights to their recorded works, not record labels, thereby implying that the rights of the record labels that Napster has allegedly infringed upon are rights they shouldn't have anyway. "The artist featured on a sound recording functions as the author of the work," she told the committee. "To legislate that the record label should be recognized as the 'author' of the sound recording undermines the framers' intent of the Constitution and goes against my good Midwestern common sense."

On the frontlines of the artist vs. label wars is RIAA CEO and President Hilary Rosen, whose job it is to keep the industry together. We asked her to address the record industry's current and future battles.

Why do you think Napster won the appeal?

Well, I'm not a lawyer, so I really can't speculate on what attracted a judge to the case. This is obviously going to be precedent-setting. It's gotten a lot of attention and it seems to me, it's human nature for an appeals court to want to rule first. I don't think any legal experts who have looked at the order issued by the appeals court could or should assume that they disagree with the judge's decision. We certainly don't think that.

Is legal action the solution here, or will technology find its own solution?

I don't think that legal action is a solution. I think it's a tool and an important tool, but it's certainly not the only tool and I've never kidded myself that that's the answer. We tried to talk to Napster last fall. When nobody heard of Napster, we were talking to them. We encouraged them to come up with ways to develop a legitimate business and to have ways to compensate artists, the same with Scour.com. [Litigation] has always been my least favorite route.

Will the recording industry ever be able to make a business out of digital downloads as long as there are sites that give music away for free, and artists who do the same via their Web sites?

I think that that's exactly the question. If services are permitted to exist that aren't legitimate -- that have to compete with the services that are -- how does a new business develop? And it's not just about record companies or artists. It's how do the innovators like a Listen.com or an Mtvi or an Emusic or an MP3.com -- how do those guys survive?

So are those the issues that Napster supporters are missing?

I think that the people who use Napster are real genuine music fans. I don't know that they are missing it. They've been invited to a fun party for free and they'd just as soon show up.

[Napster CEO] Hank Barry's statements on Napster suggest that he would like to find a way to resolve this through technology.

Napster has got a real problem. These guys are in it to make money and yet they've hyped a free music movement. It's an irony, isn't it? And until they can monetize their users they're not going to make money, and so they've created quite a quandary for themselves.

Some artists have argued that while they are not profiting from their music being swapped on Napster, they're also not profiting from major-label contracts.

I think, if artists don't want to be with record companies, they shouldn't sign with them. It's silly to say that because they have a contract with a record company that they're now not happy with, that that's the issue. That's not the issue. Not diminishing its importance to an individual artist, but that's not the issue here. A record company has invested money in an artist with an eighty-five percent expectation of failure. If an artist is successful enough to have had some hits, then they understand the value of their work being protected. This is the modern day record industry. This is not the record industry of old. Everybody is well-represented at the table in the current environment.

But somebody like Sheryl Crow has been successful and still expresses concerns about contracts?

Sheryl's a great person and a good friend of mine, but if she doesn't like her contract, she shouldn't have signed it.

Will the lawsuit and the potential for the digital download business to grow force record labels to rethink their function?

Record companies are going to be in a position of having to prove themselves on a daily basis that they bring something to the table for artists. But that's what they do now. Record companies are competing for artists every day and what they're doing in that competition, in those contract negotiations, in those efforts, are to demonstrate that they believe in an artist's dream, that they believe in their vision and they're confident in their ability to help them execute it. That goes on today and that will go on in the future.

So will a record company's value lie primarily in having the money to market artists?

I don't think record companies are concerned about that. Again, if there are artists who want to go that way, as my grandmother would say, "Go and be well." But there are central functions of record companies: helping develop the music, the vision and, most importantly, creating the demand for the music, doing the marketing and promotion. If it's not a record company doing that, somebody else has got to do it.

What about the argument that Napster is promoting sales of music because people sample songs and then go out and purchase CDs?

I think it's not an excuse for stealing. There are lots of sites to learn about new music -- I could sit there and name twenty of them -- but to suggest that that's somehow an excuse for stealing is silly. This is a good economy, and if record sales weren't going up somewhat, we would be stupid. Our sales have barely kept pace with the increase in the GNP. I think it's irrelevant.

Do you think Napster opponents -- the RIAA, the labels, Metallica and Dr. Dre -- have been portrayed as the "bad guys" in this case?

I do think that people who have really thought about these issues -- not just in the context of today's hit record or today's hit artist or today's teenage downloader -- understand that this is about a larger principle that will live longer than today's hit single. Just because your work can be reduced to digital bits doesn't make it any less valuable to you or to anybody else. And should you have the right to control it or should somebody have the ability to create a business and profit for themselves based on exploiting that work without your permission or compensation? Those are some pretty fundamental questions that say a lot about where we go as a society, where culture goes and where intellectual creativity goes. This story has sort of become the Elian of the tech world this summer, but it does have deeper meaning.

CHRISTINA SARACENO
(August 4, 2000)