Pols open up new front in fight over Net tunes

NEW YORK — As the music industry’s efforts to build a business in cyberspace languish in a quagmire of competing interests, two very different visions of how to kickstart the process have found their way to Capitol Hill.

Online music companies favor a bill that aims to streamline rules that have kept legitimate services from getting the licenses they need to operate. But the labels, who say fighting piracy should be job one, support a proposed bill that would clear the way for drastic measures to crush illegal file-swapping.

Each side says the other’s idea spells disaster for the development of legal online music services, and maybe even the music biz itself.

Rep. Rick Boucher (D-Va.) is the cyber camp’s white knight. His Music Online Competition Act (or MOCA) would strip away a broad range of byzantine licensing regulations that have stymied talks in the private sector.

And not a moment too soon, say his supporters.

“There are certain issues that need to be legislated,” says Jonathan Potter, executive director of online music trade org the Digital Media Assn. “You’ve got a lot of warring factions right now — labels vs. radio, radio vs. online radio, labels vs. publishers. It’s a catfight out there.”

One key measure in Boucher’s bill would force labels to license their music to third-party digital distributors on terms comparable to those they give their own inhouse ventures. That means if an independent music-download service like FullAudio wants the right to offer downloads from Universal Music’s catalog, then U has to license to them on terms comparable to those it gives Pressplay, the service it co-owns with Sony.

Such a measure could clear the way for a whole new wave of third-party entrepreneurs to offer music over the Web without fear of getting undercut by label-backed ventures, proponents say. But labels retort that business models for different services merit different kinds of licenses, and they shouldn’t be shoehorned into a one-size-fits-all rate.

Another critical part of the MOCA, according to Boucher, is the confusion over what kinds of licenses are needed for different services.

He argues that the mechanical license, which historically covers the duplication of a master recording, should apply only to downloads, while the performance royalty should be paid only by streaming companies. Music publishing orgs have capitalized on the confusion to sign some services up for both licenses — burdening them with prohibitively high operating expenses, Boucher says.

“Clearing all the licenses needed to offer music on the Internet is an extremely cumbersome process,” he tells Variety. “The legislation I’ve put forward would clear away some of the barriers that currently exist.”

But Recording Industry Assn. of America topper Hilary Rosen derides Boucher’s proposal in the MOCA, arguing that it preempts the industry’s right to extract value for its content.

“The Boucher bill is sort of a kitchen-sink approach,” she says. “It’s focused on what he views as problematic parts of establishing a legitimate online world. But none of that can really develop when you can get all the music you want for free.”

That’s why Rosen and her major-label members prefer a scheme to help quash online pirates once and for all.

Its author, Rep. Howard Berman (D-Calif.), reps a large swath of Los Angeles and therefore counts some of the leading companies in showbiz among his constituents. Many of them see the turmoil in the music space as a staging ground for coming battles over film and TV content online and want to make sure those industries will be able to stand their ground.

In that fight, Berman reps the front line in Washington. He’s devising a bill that would give content owners more leeway to combat peer-to-peer piracy through technological means. They include blocking the offending files and even “spoofing” networks — putting bogus music files into the system to fool users and slow down traffic.

Some peer-to-peer advocates in the tech sector decry such methods as preying on Web surfers, even branding such activity as tantamount to planting viruses in the system.

But Berman argues that file-swappers voluntarily expose themselves to outside inspection of their computers.

“I believe such legislation would have a neutral, if not positive, effect on privacy rights,” he said in a recent speech to a tech trade group. “A P2P user has no expectation of privacy in computer files that she makes publicly accessible through a P2P file-sharing network.”

Rosen agrees.

“The Berman bill comes much closer to addressing the real issue affecting online music, and that’s piracy,” she says. “It’s extremely difficult to invest so much money in legitimate online services when everybody’s competing against the free services.”

Both lawmakers’ efforts face an uphill battle. The Copyright Office has endorsed only some of Boucher’s ideas, and the MOCA faces a divided Judiciary Committee in the House. The Berman proposal, meanwhile, faces a fight from those in the tech camp — including Boucher himself.

Follow @Variety on Twitter for breaking news, reviews and more