Recording Academy President Neil Portnow's GRAMMYs On The Hill Remarks

January 06, 2006 -- 2:25 pm PST

Good evening.

Exactly one year ago, we gathered here for GRAMMYs on the Hill in this same ballroom, but in a very different environment. While we honored Natalie Cole for her artistry and Sen. Clinton and Congresswoman Bono for their protection of intellectual property, we were also anxiously waiting to see if the Senate would pass the Induce Act. In fact, many of my remarks that evening were about The Recording Academy's support of this act and its simple premise: business models based on active inducement of copyright infringement should not be allowed to flourish.

Well, what a difference a year makes.

While we would have welcomed a 100-0 victory in the Senate, a 9-0 victory in the Supreme Court will do just fine.

But tonight, my intention is not to discuss the Grokster case — pundits, lawyers and all of us have had plenty to say since the June 30 decision — but instead, I would like to address a more subtle yet equally important achievement that took place behind the scenes. For while the victory in Grokster can be traced to many dedicated and exceptional individuals and organizations, I believe the most important factor was a unified music community, working in a coordinated fashion toward a common goal.

And Grokster was not the only example of our unified approach during the past year.

In June, for the first time, the CEOs and presidents of virtually every music association gathered together for two days of discussion, debate, and a determination to address our industry's challenges. I thank my co-hosts Rick Carnes, from the Songwriters Guild, and Mitch Bainwol, from the RIAA, as well as the more than 20 leaders who joined us for those productive days.

And we need only to look at today's activities for another example. The first-ever Recording Arts Day on Capitol Hill brought together a wide range of interests from the industry — groups representing songwriters, artists, labels, publishers, producers, engineers, and digital services all participated in this important grassroots activity, bringing a sharper focus to Congress about our industry's contributions to our culture and economy.

We know what we can achieve together, so now it is time to redouble our combined efforts toward solving perhaps the most important issue before us and before the 109th Congress: modernization of music licensing for the digital age.

I'd like to share with you some thoughts on this subject from one of our advisors. No, I'm not talking about our lawyers and accountants — great though they are. I'm speaking about a young adult from our What's The Download Interactive Advisory Board — a panel of young music consumers that we've assembled to educate us and the industry.

Twenty-year-old Joy Mitchell of Hawthorne, Calif., told us, "There are songs you just can't find on digital music services, and until these services can offer everything Kazaa or old-school Napster had, they're not going to compete. They're losing business by not having every artist and every type of song available. That's huge. It's so frustrating when you are trying to do the right thing."

While previous conventional wisdom held, "you can't compete with free," today it would be more accurate to say, "you can't compete with all," for it is the attribute of all music — more than price — that makes the illegal services most attractive. Digital music companies are providing services today that allow their entire catalogue to be available on a portable music player for as little as $6 a month, without the concerns of spyware, viruses, lawsuits and other risks of P2P. It's a great deal, but the reality is their catalogues are far too small. Licensing reform can level the playing field for the legal services.

The Academy is grateful to Sens. Hatch and Leahy, Rep. Berman, and of course Rep. Smith, who has personally convened numerous meetings designed to solve this issue. Many other legislators have also raised the profile of this debate and offered support. We also thank the numerous organizations, nearly all represented here tonight, that have engaged in negotiations to develop a workable solution. That effort must be expedited, as the Grokster verdict did not completely solve our problem for us, but it did give us some breathing room to solve it ourselves. If we take too long arguing over how to split the pie, we may be surprised to find the pie has already been eaten by the pirates.

To make progress now, we might put ourselves in the shoes of Joy Mitchell and the millions of music consumers just like her. Joy doesn't think about multiple rights and royalties when she buys music. To her, the sound recording and the composition are a perfectly unified whole, and maybe we have something to learn from her. After all, it was an historic accord between the labels and the publishers that allowed for the subscription services to be launched in the first place four years ago. That was a great step, indicative of the kind of inter-community cooperation that now must continue. But more recently, separate negotiations between digital retailers and publishers and between digital retailers and labels have not produced the solution. So perhaps it is time for the guardians of both the recordings and compositions to come together again to find a way to sell the entire music package at a price that satisfies the needs of each link in the chain, from songwriter to consumer. For while the songwriter must approach his task with a blank page, the consumer does not approach the online store with a blank check. Only by continuing to develop a strategy together can we create a model that the music lover will accept, and that will turn pirates into customers.

The Recording Academy stands ready to help. Our membership is comprised of music professionals from every aspect of our community. While it is not for us to establish the solution, we believe we can serve as an honest broker in creating a framework for productive dialogue between those who control the interests of the sound recordings and the compositions. As industry leaders, you all have the intellect, passion and desire to find a workable resolution. Now, applying the cooperative spirit that proved so successful in solving other problems, we can surely solve this one as well.

Decades from now, when an entire new cast of music executives and music fans have taken our place, let them remember the people in this room as visionaries. Let them remember us as leaders who looked at the long view, and ensured a healthy music industry that respects consumers, the companies that deliver music, and most of all, the creators who make those enterprises possible — and who add so much to our lives.

Thank you.