With the industry reeling from one of its worst retail years in memory, the two-day Future of Music Conference (FMC) held at Georgetown University in Washington, D.C., last week didn’t exactly exude a party atmosphere. But it was a chance to see industry bigwigs–Napster CEO Konrad Hilbers, Miles Copeland (CEO of Ark 21 Records) and industry vet Danny Goldberg rub elbows with the likes of former Nirvana bassist Krist Novoselic, Fugazi’s Ian MacKaye and Indigo Girl Amy Ray, not to mention a cadre of industry and technology experts, copyright and entertainment lawyers, union reps and politicians.

Add to this mix a smattering of students, press (rock critic Dave Marsh appeared on one panel) and struggling musicians, who received “scholarships” for the pricey event. There was a bit of the “us vs. them” mentality since the FMC is a pro-musician, activist coalition that aspires to protect artists, especially with regard to retaining the rights to their work.

The conference offered panel discussions on topics ranging from copyright law, new music technology, licensing issues and whether the government should step in to regulate. The big question is whether or not “traditional music models”–i.e. the major label system–actually serve musicians’ interests in the digital age. Keynote speakers included Napster CEO Hilbers and Rep. John Conyers Jr., the senior Democrat on the House Judiciary Committee, who’s a musician and a music-rights advocate. Hilbers, in his keynote speech, urged the government to get involved with setting up some industry standards regarding file sharing, a sentiment echoed by nearly all of the panelists.

With labels complaining that it takes upward of a million dollars to “break” an act ($300,000 to $500,000 to break artists “on the cheap,” according to Tommy Boy Records CEO Tom Silverman), the industry saw only 100 of its 34,000 major releases hit the one million sales mark. What Silverman didn’t discuss were the recent “pay for play” scandals (payola in the form of independent promotion people who act as intermediaries between labels and radio), which no doubt drain the majors’ coffers. Sales are down 2.8 percent–some sources report up to 5 percent–overall, with only one out of 10 major releases actually recouping the label’s recording and promotional costs. Add to these problems an industry climate where consolidation has left American consumers with only five major label conglomerates and one dominant radio network, Clear Channel Communications.

Storm clouds continue to loom on the retail horizon: Tower Records is on the verge of bankruptcy and several major music distributors–the companies that get the album from the label to your local Borders or indie record store shelf–called it quits. Also under attack is the industry’s focus on breaking hits rather than taking the time to develop an artist and prepare them for a long career in the biz.

At the same time many people now own CD burners, meaning that it’s easier than ever to burn multiple copies of pre-recorded CDs and share them with all your friends. This opens up the “fair use” debate: Should consumers be able to copy CDs they’ve purchased, and if so, how many times?

Lastly, musicians, whose recording, promotion, tour support, and video costs all come out of their royalties, are chafing under a system where they can have a hit record and still be in debt.

At stake are issues ranging from whether CDs should be protected by watermarking, to getting Congress to repeal a truly despicable recent anti-artist amendment that refers to an artist’s songs as “work for hire.” In other words, they’re owned by the label forever, never reverting back to the artists or their families. The conference also addressed the problems plaguing music and the Internet: How will artists be recouped if their songs are downloaded or streamed? Do labels need artists’ permission to make their songs available in the first place?

But for teens and college-age music fans used to swapping songs for free–Napster had 60 million users at its peak–the notion of actually paying for music might be hard to swallow, even though consumers don’t think twice about paying for cable TV or renting DVDs. For this reason, another hot topic was how to make these paid subscription services “better than free” by offering extras and perks to get people to sign up. The music public will have access to a greater variety of music from their home computer, including niche markets and global musical resources–all available instantly without leaving home.

With the majors starting their own online subscription music sites with monthly fees, MusicNet and Pressplay, the whole Internet scene becomes more confusing, since these services will have huge gaps in what they’re able to offer consumers due to licensing problems with the labels that own artists’ catalogs. To date, none of these services consult artists about offering their work on the Internet; labels respond that they have no obligation to obtain permission since they own the copyrights.

The phrases that came up over and over during the conference were “consolidation” and “restructuring.” Everyone seemed to agree that putting emphasis on the first week’s numbers–a practice associated with the movie biz–is hurting the industry. Another development is that the industry has “expanded” itself into a corner. In turn, the public is responding to this lack of diversity by choosing to not plunk down cash for pre-recorded CDs and concert tickets.

Radio is now dominated by the 1,400-station Clear Channel Communications, which offers a stunted menu of “hits” more-or-less bought by the majors and is known for its strong-arm tactics. For instance, if a competitor in one of the company’s markets plays your record, the Clear Channel station won’t. And forget the old days of regional hits. No music is going to get played on a commercial station just because someone likes it.

Addressing audience questions about label practices, Copeland, Sting’s personal manager for 15 years and the guy who “discovered” R.E.M., seemed to echo the mood of the industry in general. Quibbling about industry specifics, he quipped, is like “arguing about the size of your room or the price of the ticket when you’re aboard the Titanic.” (It goes without saying that artists would be quartered in steerage.)

One of the high points of the conference was the major-label panel, a rogues’ gallery of sorts featuring heavy-hitters such as Copeland, Silverman, Danny Goldberg and Hilary Rosen, CEO of the Recording Industry Association of America (RIAA). The panel became less a discussion of “label strategies” than a platform for these industry vets to rail against “label bashing” and artist-activist groups, in particular the Recording Artists Coalition (RAC). The RAC, headed by former Eagle Don Henley and supported by big sellers like The Dixie Chicks (as well as media-savvy soundbite expert Courtney Love) made news last fall by pushing for the industry to have to honor California’s seven-year statute, a provision that guarantees artists a way out of their contracts. The majors see the RAC’s actions as a full-scale mutiny by their former “work-for-hire” acts.

Artemis Records CEO Goldberg, who headed Geffen and Mercury before starting his own label, stated that the industry has to get back to actually listening to music, rather than putting the emphasis on economics. By listening and connecting the band with its audience, he contends that it’s possible to break a band, pointing to one of Artemis’ 2001 success stories, hard-rock band Kitty.

EMI’s Vice President of New Media Ted Cohen recalled his early days in the industry working with bands like The Ramones and The Pretenders, a time when bands had “partnerships with labels that weren’t adversarial.”

But Cohen went on to admit that, for the majors, “There’s a real hesitancy to do what we used to call ‘artist development.’” For fans, this means crops of forgettable new bands and getting burned shelling out bucks for a CD with one good song, which they could probably download for free. For artists, it means you often get only one shot at making it–at having your music played on commercial radio.

At the other end of the spectrum was Tuesday’s artist-friendly, DIY panel featuring Ian MacKaye (Dischord Records), Amy Ray (Indigo Girls, Daemon Records) and David Fagin, a musician/activist with pop group The Rosenbergs. MacKaye, a crowd favorite, was the antithesis of the old-school, satin-jacket wearing record exec (he referred to major labels as “the mob” at one point).

“You set a goal for yourself and then reach it; radio doesn’t legitimize you,” he told the audience. MacKaye’s goals were to document the D.C. punk scene and be able to quit his day job. He explained that his company, Dischord, doesn’t rely on contracts; if a band is unhappy they’re free to move on. So far, it’s a situation the label has never encountered. Dischord doesn’t copyright their product and splits profits 50/50 with their artists. He emphasized that Fugazi and Dischord are successful because they put in the hours. They book the shows, drive the van, do the work.

Fagin agreed with the hard-work ethic, also echoed by Indigo Girl and Daemon Records head Amy Ray; he slept on floors and “got in the van” rather than waiting for a major-label deal. These indie rockers and entrepreneurs rejected the overnight-rock-star dream that the big labels dangle in front of young bands, enticing them to sign away their publishing rights and sign one-sided contracts with the promise of a fat advance. At the same time, they’re making a living in the business they love.

Peter Sivers of CD Baby, an online record store that offers CDs by 1,500 artists and groups, told the audience that he split $1 million between his clients last year. This might be chicken feed to the majors, but it’s a sizable chunk to both DIY musicians and former major-label signees who often–for the first time in their careers–are seeing a royalty check. The future of music seems to be artists taking control of their music and marketing, with the Internet providing them access to millions of consumers.

This month, you can expect the “new” Napster–now boasting 5,000 indie labels, including TVT and trendsetter Matador–to offer music files in their new pay-subscription service. Hilbers is still, however, in negotiations with the majors for licensing rights to their artists’ catalogs. Unlike the days when Metallica was in the news for fighting Napster’s use of their work, Hilbers says that the service will compensate “rights holders” (often the labels, if artists have sold their publishing rights) to use their music. At the moment, 20,000 computer users have been selected to “test drive” the service, which will cost between $5 and $10 monthly.

The only thing conference attendees seemed to agree about is that the industry is in trouble. Big trouble. Regulation needs to be put in place to control Internet distribution of artists’ work, as well as guidelines to make sure they’re compensated. Meanwhile, the list of formerly invincible artists such as Rod Stewart, Tori Amos and others that are getting pink slips from their labels for not being profitable enough keeps growing (prompting Fagin to ask the audience, “Will Michael Jackson be next?”). The industry seems adrift, uncertain of where, exactly, it’s trying to go. For music lovers, the tragic thing is that more than ever, the industry seems to only be concerned with the bottom line, not if the “art” is any good. EndBlock