Remarks of Senator Coleman at Winter 2004 Meeting

Senator Norm Coleman
Chairman, Permanent Subcommittee on Investigations
United States Senate
Remarks at DCIA 2004 Winter Meeting

Thank you, Marty. I come from the state where Hubert Humphrey was the Senator for many years, so I don’t know if I’m capable of making brief comments. But let me make a couple of observations.

Marty talked about shared vision and I think that’s the great challenge and the great opportunity.

What’s going on in this industry reminds me at times of what’s going on in Washington: there seems to be a war.

The challenge ultimately in dealing with platform technology companies and in dealing with P2P software firms and in dealing with content providers, and the analogy to what I face in Washington is that, in the end, if you don’t have a shared vision of what you want to accomplish, all you do is fight. You’re not going to accomplish anything.

And so the real challenge is in fact to develop that shared vision.

I have my favorite shared vision story, by the way: Andrew and Mrs. Carnegie were philanthropists. They gave away a lot of money – they were very, very generous hosts.

And every year, one of the things they would do is to take care of the deficit of the New York Philharmonic. So one day the Secretary of the Philharmonic comes up to Andrew Carnegie and says, “Mr. Carnegie, the deficit this year is $60,000.”

“That’s a lot of money.”

“Yes, it is.”

“Would you want to write a check?”

Carnegie has this new notion – a vision – of not doing a loan, but a partnership to get members to step up to the plate. And he says, “Mr. Secretary, I’ll tell you what I’ll do – something different this year.”

He says, “I’ll put up half the money – $30,000 – and you raise the other $30,000.”

The secretary says, “Absolutely.”

He accepts the challenge; very excited. He comes back the very next day.

He says, “Mr. Carnegie, we’ve raised the other $30,000.”

Andrew Carnegie thinks that’s fabulous. He writes out the check. He’s about to hand it over when he says, “By the way Mr. Secretary, where did you get the other $30,000?”

The Secretary says to him, “Mrs. Carnegie.” [laughter] I use that story just to cement in your mind this concept of shared vision.

Nikki talked about a paradigm shift driven by users. I think that’s important.

And by the way, I have a great appreciation for the recording industry. My wife works for the entertainment industry. She’s an actress. I used to be a roadie for a rock-and-roll band in the late sixties. I love music. The guy who’s now the head of the RIAA is a guy who helped me get elected to the United States Senate, Mitch Bainwol, who was head of the Republican Senatorial Committee.

The recording industry faces a challenge – I said this to Mitch. And it’s partly their own doing in that for too long they ignored the customer. They ignored the wants of the customer. And ultimately, at least in this country, the market prevails.

And in this case, customers found a way to get what they wanted. But not in a way that provided returns for the content providers. All of a sudden, it’s like Humpty Dumpty has fallen off the wall and they need to put it back together again.

You don’t put it back together simply by suing some folks. It doesn’t work. You’ve got a generation of kids who are exchanging stuff like spit. They do it through the Internet – and that’s their world. And they’ve found a way to get something for free that the music industry didn’t provide them.

I think it’s important. In the end we’ve got to get back to the users. How do we satisfy their needs?

I firmly believe that if the distributed computing industry can provide to end-users products and services that have quality, that are affordable, that are safe, that are easily-accessible, they’re going to get users to listen.

Not everybody. There are always going to be those who kind of move to the dark side. You’re not going to get everybody. But in a market that’s so huge, if you can grab a big piece of it, then you’ll be successful.

The key to that, and this is what I think the DCIA is all about, and why I applaud what you’re doing, is to figure out new and different business models. That’s what has to happen.

You’ve got technologies, by the way, that change all the time. And one of the challenges with legislation is that too often – and this is what we face now with the Digital Millennium Copyright Act – legislation lags behind the curve of technology.

And so whatever we do, given the question of how are we going to respond in the United States Senate, what’s ultimately going to happen in the marketplace? There are a lot of conflicting views on that.

We’ve had the litigation involving the Digital Millennium Copyright Act. The act was passed, by the way, when P2P wasn’t even a light bulb in a legislator’s head. So technology has clearly gotten ahead of law.

The problem really is that ethics is also somewhere out there and not in sync. And the challenge that we have there is how to get them all in sync.

I will keep my remarks short. I have held hearings on this. I have had concerns.

The concerns I had were about the use of the subpoenaing of records, about a massive use of subpoena power without any judicial review. And these were concerns that were reflected, ultimately, in the appellate court decision. And it was really a concern about whether the punishment fits the crime.

We had our hearing; and we had a tremendous witness: a young woman who was a college student who got sued. And it was interesting because she was actually first notified by one of her telecom providers, who said her name was on a list. She didn’t know what to do. She actually called the RIAA. “What do I do?” And nobody got back to her. They weren’t at that point identifying and talking to folks who were the subject of investigation. She eventually got sued – and found out from the media! Then she called the RIAA again, and this time got in touch with someone. I have to tell you it was like talking to a collection agency. She would say, “I’m a student. I don’t have much money. I don’t have credit cards. What, do I have family I can borrow from?” And in the end she was frightened. And that’s not a way to develop a customer base. That’s not a way to build a bright future.

At my hearing, Mitch Bainwol did say the RIAA was going to change its policy by notification up front. Which is a step forward, but the bottom line is that litigation is not going to solve the problem.

It’s certainly sending a message out there. But when you’ve got tens of millions of users, you’re not going to knock it by scaring a few. Or by making scapegoats of a few, you’re not going to change behavior.

There are some conflicting data points, I know that there was a study by Pew that indicated unauthorized music file-sharing had declined, but I also know Eric Garland CEO of BigChampagne challenged those results.

In the end there are a number of pieces that we’ve got to pull together.

I’ll end on this note. Congress isn’t going to solve this problem. We do not have the capacity. First of all, we don’t have the knowledge. And with technology changing so fast, I don’t think we can craft a law that is going to solve the problem.

So what we need is really what you’re about. And I plan on doing this – putting together a technology summit. I want to bring together the ISP and platform folks. And I want to bring together the P2P software folks. I want to bring together the content folks. I want to bring together the retail folks – because really the distributed computing industry represents the future of commerce. I want to bring folks together to sit down and see if we can figure out a way to develop some different business models that allow folks from each sector to get what they need.

Give the customers what they want. Ensure that we have a bright future for the entertainment industry, and allow technology to move forward.

Someone once said, “Governments either do something to you or for you, but they’re going to do something.”

The worst thing government can do is to put a leg iron around technology. The greatness of America lies in our innovation. Our labor is not as cheap as labor around the world. Our competitive edge in the 21st century is innovation. And we have to keep innovating. The last thing we want to do is stifle innovation. And I think we can make it all work. I’m an optimist.

The last piece then is this: that you need these new business models.

The reality is that the nature of my business is that the world belongs to those who show up. And you’ve got to show up. You’ve got to be involved in the discussion. There are some folks who are very well represented at the Capitol — as they should be. That’s America; that’s a good thing. I listen to folks.

But we’ve got to listen to all the voices. If you leave it, if you cede it to others, then in the end your voice is not going to be heard. We’re going to make decisions and we’re going to make them because we don’t have the full range of information and ideas and vision of what we need to do. You really need to be involved. And you need to be engaged at a number of levels. You need to be involved in discussions like this and you need to be working with the DCIA. You need to get involved in politics. We have candidates who share a vision.

Jewish philosopher Maimonides once said, “Each of us should act ourselves as if the law were held in balance. And any single act of goodness on our part can tip the scales.”

You really have the capacity to change the world by being involved. If you’re engaged, you will impact what we do and you will keep an industry alive and build jobs and great technology, and we’ll have a bright future.

It’s really in your hands. I truly appreciate the opportunity to be here with you. I’m actually going to sit back and listen. The Good Lord gave us all two ears and one mouth, and I’ve tried to use them in that proportion. This is my first year in the United States Senate. I’ll sit and listen and see where this goes.

But I really do urge you to take part in the discussion. Have your voices heard; get involved in the political process; make a difference. Help shape a better and brighter future. Thank you and God bless.

Posted in Background