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FROM THIS EPISODE

This is Celia Hirschman with On the Beat for KCRW.

Legendary rock band, Journey, released their new three-disc set this week, exclusively at Wal-Mart. No major label was involved in the deal and the band will receive a much greater percentage of the profits than normally distributed.

The deal was organized by their manager, Irving Azoff. It's not the first deal Azoff negotiated directly with Wal-Mart. He also orchestrated Wal-Mart's exclusive release of The Eagles double-disc, which sold over three million copies. Every week, major labels are challenged to innovate or die.

Change occurs when the discomfort of the familiar outweighs the fear of something new.

While most record labels appear to remain in a state of paralytic procrastination, the much larger creative community does not.

Last week, Paul McGuiness, gave the keynote speech at the Music Matters conference in Hong Kong. Mr. McGuiness is U2's manager. He's overseen the success of the band since their inception, and is responsible for financial deals that have earned them untold millions. Mr. McGuiness underscored the real threat behind the record business decline. "You cannot monetize a business in an environment awash with unauthorized free content".

Mr. McGuiness appropriately noted the problem was not unique to the record industry. It is infecting every aspect of our cultural and creative content. He pointed to television production, book publishing, movie investment and sporting events, all now illegally captured on the Internet.

The fact is, as McGuiness pointed out, the only groups earning considerable profit are the Internet Service Providers. The ISP's offer the well financed creative content through their distribution pipeline for a monthly fee to consumers. The ISP's do not share a penny of their income with the creators or producers of the illegally downloaded content.

Many international governments have awakened to this fact. France is working on a plan to disconnect illegal file-sharers; the British government is looking to introduce ISP legislation to deal with online piracy directly. A government supported consortium of creative companies in Japan has now been formed to deal with illegal downloading, and New Zealand just passed laws forcing ISP's to deal with copyright infringers. These governments aren't interfering to save their record industry. They are intervening to protect their cultural assets.

The United States may require a more deft approach when dealing with the problem. We have a long history here of fighting for independence, especially from government interference. "Don't tread on me" was our founding rallying cry. The telecoms, who own the ISP's, are well aware of our heritage, and they'll passionately be lobbying against any government influence over their marketplace.

But in reality, a fight for government legislation is really a fight to protect our most important asset: our creativity. America's strength has been our creative ideas. The concept that an unpaid marketplace will foster consistent creative brilliance is not only unrealistic, it's bankrupting.

This is Celia Hirschman with On the Beat for KCRW.

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