WASHINGTON -- Embattled music-trading service Napster Inc., with hundreds of its users and pop singers Alanis Morissette and Don Henley in attendance, Tuesday asked Congress to force publishers to offer their catalogs online.
There is a "failure in the marketplace," Hank Barry, Napster's interim chief executive, told the Senate Judiciary Committee. He said compulsory licenses would provide consumers more than the smattering of songs now available online and simultaneously assure that publishers and artists are compensated for their work.
"Congress has repeatedly used such licenses to advance public policy goals in the context of new and frequently inefficient marketplaces," Mr. Barry testified. "Compulsory licenses with clear payment structures have encouraged beneficial new technologies and responded effectively to particular market failures. Music on the radio works because of what is functionally a compulsory license."
Representatives for major music labels and Jack Valenti of the Motion Picture Association of America panned the idea. Hilary Rosen, who represents the music publishers' trade group, called the possibility of compulsory federal licenses a disaster for the music industry.
"Government price-fixing never works," Ms. Valenti told the committee.
Sen. Patrick Leahy of Vermont, the committee's senior Democrat, said there is some support in the House and Senate for compulsory online licensing. But Chairman Orrin Hatch (R., Utah) seemed cool to the idea, saying compulsory licenses might violate international treaties.
Sen. Hatch floated his own idea, however: Offer record labels tax incentives to encourage them to put their catalogs online.
"We know we're going into a new age," Sen. Hatch said. But, he said, "It seems to me very slow in the making."
Mr. Henley and Ms. Morissette said artists' concerns have been ignored during the past year's legal battles between recording labels and Internet companies.
"As we sit here, there's a ping-pong game going over our heads about business models when we don't know how our rights are going to be protected," said Mr. Henley, co-founder of the Recording Artists Coalition.
Mr. Henley said artists want a "seat at the table" and worry specifically about getting compensation for online performances and making sure that the copyright "fair use" doctrine isn't expanded to let consumers trade music for free.
"There are a lot of excruciating details that need to be worked out in this new world," he said.
Ms. Morissette explained why more artists have not spoken up, even as they were overlooked in the music piracy debate.
"History has not been kind to artists who have candidly expressed points of view that differ with those of their record company," she said.
Executives from AOL Time Warner (AOL) and EMI Group, two of the five largest music companies, were on hand just days after announcing a deal to sell their music online. The service, called MusicNet, also involves Internet media company RealNetworks (RNWK) and German music publisher Bertelsmann AG, which has an investment in Napster.
"MusicNet will be offering this service to a range of distribution platforms, and all the music companies are not exclusive to MusicNet," AOL co-chief operating officer Richard Parsons said. "The agreement ushers in the era of secure, convenient, interactive mass music distribution that consumers demand and that we want to provide."
Napster's Mr. Barry told lawmakers his company is trying to comply with a court order to keep its users from trading copyrighted recordings, and EMI's president Ken Berry said that Napster may be able to use MusicNet once it stamps out piracy on its network.
Napster mobilized about 500 of its users to converge on the hearing and show support by wearing pro-Napster T-shirts. About 70 of the users, mostly teen-agers, were allowed inside.
Copyright (c) 2001 Dow Jones & Company, Inc.