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Songwriters to blame for digital music's pothole

We'd have got away with it - if it wasn't for those pesky publishers

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DMF Jonathan Potter, head of the trade group DiMA which represents the big digital music download services, says greedy publishers are a roadblock to business, and could hand the illegal P2P networks ultimate victory.

Asked what could help his members, (who include AOL, Napster and Real), Potter, put the blame on the collection agencies for negotiating a higher share of royalties on behalf of the songwriters they represent. Potter was speaking on a panel at the Digital Music Forum in New York, on Tuesday.

"The publishers share has gone from 7.5 per cent, to 8.5 per cent, to 9.1 per cent. Our pie was shrinking but we were paying more and more to the publishers. This made the economics as upside down as the zero price point - it didn't allow people to do reasonable forecasting or price points," he claimed.

The big four labels - which also own the big four publishers - set the wholesale rate for music MP3s which comprise the inventory for online businesses such as Apple, Napster and Real. The recording royalty remains to take up the lion's share of this - around 63 per cent to 65 per cent. But Potter turned his guns on the collection agencies.

"If the price isn't right the price will go back to zero," he said, referring to the illicit P2P networks.

The panel, which included no representatives from the songwriters' collection agencies, or composers, agreed.

"Publishing is a huge obstacle, said Nick Montes, VP of marketing at AG Interactive, formerly American Greetings.

For good measure, Potter added that "ASCAP [were] eating your lunch", and begged the industry to move forward with co-operation.

"There's been a historical antagonism here, and digital services have fallen into the pothole."

However, one country composer from Nashville begged to differ with the picture the DiMA boss had painted. Songwriters had entered the business in the knowledge that they wouldn't receive a cent from the recording royalties they were rightfully owed. But now they were forced to deal with rewritten publishing deals, and a smaller, not larger, share of the pie.

"Our lives are turned completely upside down," he said.

With the panel either largely ignorant of the issues, or unwilling to tackle them publically, and a moderator willing to pander to the ignorance, we had too look elsewhere for the full picture. So we turned to consultant, former Sony lawyer and author of the new book The Future Of The Music Business Steve Gordon. How did he characterize Potter's comments?

"Bullshit," Gordon said.

"I've a lot of time for Jonathan but he's er, obfuscating things. There's a huge barrier to entry - and it's set by the recording rights holders."

The forum begins in earnest today. ®

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