Musical heirs

The head of a Canadian recording company believes peer-to-peer file-sharing represents the future of the music industry. But not all lawyers agree.

Just when it seemed as if the long-running debate over illegal peer-to-peer (P2P) file- sharing was over and the record business had begun to make real progress in its battle to protect its copyrights, an unexpected champion of the ‘criminals’ has emerged.

The voice belongs not to a geeky 16-year-old locked away in their bedroom downloading Metallica, but to Terry McBride, the successful head of a recording and management company that has several multimillion-selling artists on its books.

McBride is so confident that the world’s major record companies are on the wrong track by suing P2P file-sharers that he is funding the defence of an American, David Greubel, who is facing prosecution by the Recording Industry Association of America (RIAA) for the file-sharing activities of his daughter. According to McBride, the litigation campaign amounts to the music business “suing its future” and is doomed to fail.

The debate over the legality of internet downloads and P2P sharing of music files has rumbled on for years. It reached a peak in the days of pre-legal Napster and scaled another last year when the first person was prosecuted for sharing songs on the internet. That milestone was also reached in the UK at the beginning of this year, when the British Phonographic Institute (BPI), the British record industry’s trade association, brought a claim against a Norfolk man for sharing songs on the internet. He was fined £5,000 plus costs.

The BPI chairman Peter Jamieson said at the time that “the courts have spoken and their verdict is unequivocal: unauthorised file-sharing is against the law”.

Late last month, Canadian McBride, the co-founder of Nettwerk Music Group, which counts the huge-selling singers Dido, Avril Lavigne and Sarah McLachlan on its books, hit back, outlining his views on the RIAA’s and BPI’s litigation campaign. He was speaking in London at an informal meeting of record company executives hosted by music and entertainment boutique Lee & Thompson.

Quizzed by Ralph Simon, the co-founder of Zomba Records, in an interview staged for the event, McBride spoke of “changing the paradigm” in relation to copyright and the digital distribution of music. He said he believed a “tipping point” has been reached and that bringing legal action against consumers of music was tantamount to the industry wrecking its future. McBride believes that, rather than suing file-sharers and using digital rights management (DRM) to protect the copyright in recordings (he particularly hates DRM, saying it is “just music companies writing copyright law, which is meant to be Parliament’s job”), the industry should “give up control”.

McBride’s new paradigm centres on “mobilising the fans”, as he put it. It means using a band’s fans as the mother of all marketing teams to spread the news about artists through word of mouth. He pointed to another of his acts, Barenaked Ladies, which has sold millions of records off the back of a marketing campaign that effectively “mobilised” 80,000 of the band’s fans.

In addition, downloads could be made freely available, either subsidised by pop-up ads or paid for by a minimal fee paid by subscribers to mobile phone or internet services. By way of an example, he pointed to online service Rhapsody, which recently experimented by cutting its price for downloads in half for a month.

“The number of downloads increased by around 400 per cent,” says McBride. “So they doubled their revenue. Let the market establish what the price is and the revenue will go up. There is a way to create a compelling alternative.”

McBride’s alternative is the method that helped break the Arctic Monkeys in the UK or US bands Arcade Fire and Clap Your Hands Say Yeah. To make that kind of marketing work effectively, he argues, fans need be able to share music for free. A comment from the floor at the event from Jamie Cullum’s manager, Marc Connor, backed up McBride’s approach. Connor said he had “positively, completely changed the way I do business” and had given away a free poster as a download to assist fans’ marketing efforts, shifting 32,000 in just three weeks.

Follow the money
“The market’s already moved on,” McBride argues. “Instant Messaging is now the most popular form of getting music, not P2P. And you can’t track that and you can’t monetise it.”

Others in the music business are not so sure that McBride’s free-for-all model is the way forward. One leading music lawyer in a London boutique described it as “the hippy argument”, akin to those arguing for open-source software.

“You can’t have a flourishing creative industry unless it’s based on rights ownership,” argues the lawyer. “If you legalise P2P file-sharing, you would decimate the legal download sales of the record companies and undermine hard-copy sales.”

The BPI itself commented that the file-sharing practice contravened Sections 16 and 20 of the UK Copyright Act and that its actions had been highly successful in supporting the growth of legal digital distribution methods and discouraging the growth of illegal downloads.

But McBride is not merely spouting. At Lee & Thompson’s networking event, he was jetlagged, having met with Mitch Bainwol, chairman and chief executive officer of the RIAA, the day before in Washington DC to discuss the Greubel case. It centres on Elisa Greubel, a teenager who is accused of making some 600 songs, one of which was by Nettwerk artist Lavigne, available to be downloaded by the public.

McBride said, during his conversation with Bainwol, it became clear the RIAA head realised that “the stick alone” was not going to win this battle. “The use of the sword in litigation has never won,” says McBride. “Competition and better models have always won and we’re in control because we have the artists. We have the competitive advantage – all we have to do is use it.” The pair is due to meet again next month and McBride looks set to fight the Greubel battle all the way.

“People who pirate music and make a profit should be sued out of existence,” says McBride. “But file-sharing is our future.” •