BOSTON (08/10/2000) - More than two years after the Digital Media Association (DiMA) began with seven charter members, the growing trade industry group that represents technology developers, retailers and Webcasters is still in the development stage.
Two full-time staffers recently were hired to work out of its Arlington, Virginia, headquarters. Its public relations firm has only been on board for 90 days. And DiMA is currently working with an annual budget of about US$800,000.
But the trade association in recent months has grown to more than 60 members, with big names like Amazon.com Inc., Yahoo Inc. and America Online Inc. (AOL) and smaller partners, such as Radioactive Media Partners Inc., Vitaminic USA Inc. and TuneTo.com. Most members pay between $15,000 and $30,000 annually for DiMA membership.
Membership to the trade association offers a united industry lobbying voice in Washington, advocacy and education efforts and an early warning system on emerging policy and legislative issues, said Jonathan Potter, the association's executive director. Potter is a vice president of ColumbusNewPort LLC, a venture consulting firm in Arlington, and a former Washington D.C. attorney focused on technology matters. He recently sat down with the IDG News Service in Boston to talk about DiMA's agenda and its take on the recent Napster Inc. situation. The transcript of the interview was edited for clarity and space.
Q: How did the Digital Media Association come about?
A: Through myself and our outside counsel (Seth Greenstein with McDermott, Will and Emery in Washington D.C), we were representing some of the early (association) members in a variety of contexts. We had both come from representing consumer electronics companies and doing years of work in the Audio Home Recording Act and the Performance Rights Act; things like managing public policy issues on behalf of technology-oriented clients who were bumping up against copyright issues and how they are going to develop public policy that would enable consumers and tech companies to sort of continue to drive forward in ways that copyright-oriented companies could handle.
It is a lot easier if the industry has a position (and has) worked out the consensus amongst themselves and maybe there are tweaks here and there for specific companies, which they can go fight about. But the broad-based positions need to be industry centric and industry wide. And if you don't have an industry association, you don't have nearly as much traction.
So, we got seven companies around a table and said, 'You guys need to have an industry association and we're the guys to do it for you.' And they agreed to that. And that was June 2, 1998, and three days later we were testifying before Congress on behalf of this new association, along with AOL and (other trade associations) and getting into the midst of a firefight over the Digital Millennium Copyright Act (DMCA).
Q: What are the general goals of your association?
A: Our goal is to create a level playing field for the consumer because the consumer doesn't care whether they access their media digitally (or by) analog, broadcast, webcast, fiber, coax, satellite dish. But if the legal public policy and business practices skew the playing field, the consumer doesn't have all the opportunities they might otherwise have to access all content they want at reasonable prices. So, yes, we represent the industry that is creating new business models and new technologies to deliver exciting opportunities to consumers.
A lot of what we focus on is how do we get value to the consumer and get payment to the creator and let's not worry about the entrenched industries who have grown up in between merely because of their existence at the time.
Q: What are some of the main focuses of your organization this year?
A: We are involved in the Webcasting royalty rates issue and the issue of interactivity and when is a service interactive such that it doesn't get in the compulsory license box. That is critical to our members. There is the issue of whether Webcasts that are simulcasts of broadcasts are subject to the DMCA webcasting license regime. It is critical to our members because of the competitive implications.
On the direct legislative front, it is our sense that Napster, SDMI (Secure Digital Music Initiative) ... (and the) MP3Board case suggests that the Congress is going to become very active in this area, at least ... and even if they are not able to legislate in the next two years, we expect to spend a lot of time educating members of Congress and senior staff and (presidential) administration folks about the balance between technology and content control and the values of consumers and creators as perhaps preeminent.
Q: What is on the front burner that you hope DiMA can accomplish during the next three months?
A: I am hoping we can get senior level commitment to do more as an industry, in the face of very pitched discussions about incredibly significant issues to our industry; that we will be able to persuade our members to go from somehow getting us from a $1 million a year organization with a few staff people to $2 million or $3 million a year with higher-powered support internally and externally. We are committed to doing a research program. Our members are concerned about the quality of the research that is being used to characterize the industry and the benchmarks that are being created. On the quantitative side, we will identify and commit to some specific research partnerships to have our members in the room working with the quantitative research folks.
Q: Has your association taken a position on the Napster situation?
A: Napster is not a member of DiMA and DiMA doesn't pick between technologies or between business models -- secure, insecure, download versus lockers. Our goal is to enable consumers and the creators to get into a win-win situation and there are a lot of folks out there that suggest they are on the side of the artist, but my hunch is that the artist wants to disseminate the content.
With regard to Napster, as a general sense, we don't have a position, but clearly there is a business model to be had here, in fact there are a variety of business models. Whether Napster hooks up with an EverAd, so that ads pop out every time you go through the Napster server or ads get wrapped every time you go the Napster server; whether they use Liquid Audio with timed-out downloads and, of course, Napster has a tech-licensing deal with Liquid Audio now. There are ways that Napster will be extraordinarily beneficial for the artists and for the consumer and perhaps to try and find ways to monetize those ways. I think what we have now is a variety of tiers of distribution opportunities and we need to find ways to leverage them and the solutions are not going to be in accord with the technologies out there.
Q: Do you view what Napster is doing as copyright infringement?
A: My reading of the Sony-Universal case [See "How VCRs May Help Napster's Legal Fight," July 25.] in the Supreme Court case says that the standard for contributory copyright infringement is that a technology or a device has to be capable of substantial non-infringing uses. If that is the standard, I don't see how Napster loses in a court of law, based merely on that standard.
I think that Judge (Marilyn H.) Patel was focused on intent and particularly on early intent. I think the difference between Napster and Scour was that Napster was developed by a 19-year-old kid that put it out and thought this was a lot of fun and then realized this was potentially a lot of money and still didn't get around to a business model for a long time. Scour was developed by a bunch of bright engineers who also were teamed with bright lawyers and bright business executives who had relationships and they said sort of, 'You know what let's let this genie out of the bottle slowly and let's do some deals and to create an aura of propriety, while Napster said, 'Screw the aura, let's let it out. This is too good.'
The RIAA (Recording Industry Association of America), intelligently, sued the 19-year-old kid first, who was underfinanced and didn't have the best legal team money could buy. I think Hank Barry (Napster's interim chief executive officer) and Milt Olin (Napster's chief operating officer) are top-notch thinkers and strategists and lawyers and their intention is to create a product or service that in fact works for everyone, putting aside whether or not it is the service of today in its current form (and whether it) is legal.
If you get off the table if it is legal or not, and the question is 'Can you make it work,' I think the record industry has to make it work. They have no choice. And Hank Barry knows that, ultimately, file sharing is going to be an acceptable form of distribution. So the question is, 'Are the labels going to do a deal with Napster,' which we know is scalable and we know runs through central servers, so it is manageable. Or are they going to squelch Napster and enable the renegade market to continue and to thrive and to perhaps perfect itself through open-source technologies, which obviously have far greater risk.
Q: The Association's position is that there needs to be compensation in all of this?
A: Artists need to compensated fairly and reasonably. That means that they don't need to be compensated twice for a single act. So if it is a performance or a download, it gets paid as a performance or a download and doesn't get paid for both. ...The artist needs to be paid, the creator needs to be paid and the incentive needs to be there for them to continue to create and disseminate.
(Sam Costello of the IDG News Service also participated in the interview.)DiMA, in Arlington, Virginia, can be reached at +1-703-276-1706 or at http://www.digmedia.org/.