New York - For the past year, Jim Griffin has advised Warner Music Group on digital distribution and licensing models with the goal of bringing an end to the litigation that has put a wedge between the major labels and their customers and replacing it with a regular flow of income for right holders. The project known as Choruss, which is being incubated at Warner and is planned to be rolled out as a non-profit with Griffin at the helm, proposes to build a small music-royalty fee into university tuition payments received from students, and, if successful, could be expanded to make ISPs the collector of the fees. For those of you who were not able to attend DMW's Digital Music Forum East this past week, here is a complete transcript of his interesting keynote presentation:

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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.

Music’s greatest financial power is its ability to draw a crowd, not our
ability to control its quantity and destiny with digital or analog
friction. We should focus on its effect on the heart and soul.

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 or
other 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 authors, 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 experiment, innovate and learn, mindful of history
and excited for the future. We’re bringing open minds and open hands,
not closed fists.