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RIAA CEO To Tout "Transformed" Music Business To Congressional Panel Reviewing "Future of Audio"

June 05, 2012

WASHINGTON – At a House Commerce Committee hearing Wednesday on “The Future of Audio,” Recording Industry Association of America (RIAA) Chairman and CEO Cary Sherman will tell lawmakers how the music industry has “transformed how it does business,” touting the fact that digital formats now account for more than half of industry revenues and pointing to an array of licensed formats and services for fans.


At the hearing, before the House Commerce Committee Subcommittee on Communications and Technology, Sherman will testify (testimony here) that “CDs are no longer the primary format for the music business or the primary way the industry generates revenues. Digital is not just our future, it is our present. In 2004, the first year we had any meaningful digital revenues, the industry earned a grand total of $190 million from digital services. Last year, we hit nearly $3.5 billion. Quite a change.”

Sherman will tick off a litany of different models licensed by major music companies:

•    You want DRM-free downloads? We’ve got that: iTunes, AmazonMP3, eMusic, 7digital.
•    You want to pay a modest monthly fee for all the music you can ever listen to – on your computer or smart phone? We’ve got that: Rhapsody, Spotify, MOG, Rdio, Music Unlimited, rara.com, Zune Music Pass.
•    You want free, ad-supported video and audio streaming? We’ve got that: Spotify, YouTube, Vevo, Myspace Music, AOLMusic.
•    You want music bundled with your mobile phone? We’ve got that: Muve Music, Metro PCS/Rhapsody
•    You want to store all your music in the cloud, so you can access it from wherever you might be? We’ve got that: iTunes Match, and more deals in the works.
•    You want specialized digital radio services that offer you the niche kind of music you like to hear? We’ve got that: Pandora, SiriusXM, Last.fm, Yahoo!Music, AOLMusic, and over750 more such services.
•    You want online simulcasts of AM/FM radio stations? That is available too: iHeartRadio, WJLK-FM 994.3 (The Point), KPWR-FM (Power 106), WXLC-FM (102.3 XLC), and over 750 more online radio stations fully licensed through our sister organization SoundExchange.

Sherman will testify that the agreement announced last month with the National Music Publishers’ Association (NMPA) and the Digital Media Association (DiMA), setting mechanical royalty rates and standards on a slate of new cutting-edge music business models, was a signal of a new focus of the industry and organization:


We’re also working on new industry-wide databases and royalty distribution systems to make royalty payment functions more efficient; and licensing reform to update the statutory mechanism for the old “mechanical” licensing system. We are intent on working with our Internet and publishing partners to simplify and expedite the licensing process.

The RIAA CEO will point to voluntary marketplace agreements with so-called “intermediaries” in the Internet ecosystem as the strategy to protect the rights of musicians, songwriters and labels: 

So how are we approaching protecting our rights these days? For the most part, by forging voluntary, marketplace agreements with others in the Internet ecosystem under which everyone plays a part in addressing the problem. Just last year, we announced a voluntary program with ISPs that will be implemented later this year to address illegal downloads on P2P networks. We also helped craft an agreement with major credit card companies and payment processors on voluntary best practices to reduce sales of counterfeit and pirated goods. And just last month, major advertisers and ad agencies announced a series of voluntary best practices so that their valuable brands are not associated with rogue Internet sites that offer illegal goods, and advertisers don’t inadvertently enrich rogue website operators. We hope other intermediaries like search engines will follow suit in negotiating voluntary marketplace best practices to prevent directing users to sites that are dedicated to violating property rights.


The Recording Industry Association of America (RIAA) is the trade organization that supports and promotes the creative and financial vitality of the major music companies. Its members comprise the most vibrant record industry in the world. RIAA® members create, manufacture and/or distribute approximately 85% of all legitimate recorded music produced and sold in the United States.

In support of this mission, the RIAA works to protect the intellectual property and First Amendment rights of artists and music labels; conduct consumer, industry and technical research; and monitor and review state and federal laws, regulations and policies. The RIAA® also certifies Gold®, Platinum®, Multi-Platinum™ and Diamond sales awards as well as Los Premios De Oro y Platino™, an award celebrating Latin music sales.

Jonathan Lamy
Cara Duckworth
Liz Kennedy