Future of Music Newsletter #44: 2005 Policy Wrapup

 
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November 22, 2005

In this special policy focused FMC newsletter, we want to update you on the variety of issues we’re working on here at FMC, both macro and music. FMC is continuously tracking policy matters in Congress and at the FCC and the US Copyright Office. Whatever the venue, FMC supports these core policy goals:

• Expanding the opportunities for non-commercial voices in the public space
• Keeping radio ownership caps in place and encouraging localism and diversity
• Combating negative effects of payola on access to airwaves
• Fighting for a transition to digital radio that will encourage more voices, more diversity, a seamless consumer experience, and a fair licensing scheme for musicians and songwriters
• Encouraging copyright reform that reflects technological changes but also respects the balance between creators and the public.

In this 44th edition of the FMC newsletter we’re going to blast through some key policy issues:

1. Feingold Introduces Payola Bill
2. A New Telecom Bill
3. Media Ownership Proceedings
4. HD Radio and the Broadcast Flag
5. Public Performance Right for Sound Recordings
6. Indecency and Censorship
7. Orphan Works
8. Newsstream
9. What’s in your RSS?
10. How are we doing?

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1. Feingold Introduces Payola Bill
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Several years ago, FMC worked closely with Senator Russ Feingold to draft legislation that held radio consolidation at bay and made it illegal to leverage radio play off of appearances at concert venues.  Today, FMC is pleased to announce that Senator Feingold has gone even further with the October 18 introduction of the Radio and Concert Disclosure Competition Act.  This piece of legislation will expand the definition of payola to account for today’s consolidated marketplace; provide more leverage for musicians who are forced to play radio station-sponsored concerts at sub-market rates due to the threat of having airplay withheld; and end the cross-ownership of radio station ownership, concert venues and promotions companies in the same market.

Here’s a portion of the statement issued Friday by FMC on the announcement of the bill:

“Senator Russ Feingold should be personally thanked by every independent musician in America. Finally we have a bill that expands the definition of "payola" to eliminate the inside dealing and structural abuses in consolidated radio that have locked local, unaffiliated and independent artists off the airwaves for years.”  Read more here

It is our sincere hope that this legislation, the ongoing investigation led by New York Attorney General Elliot Spitzer and possible action by the FCC will finally lead to a more equitable and healthy radio marketplace.

Feingold Revisits Radio Consolidation, Payola
Senator Russ Feingold, (D-WI) introduced a bill Friday (Nov. 18) that seeks to close loopholes on payola-like practices and stop alleged “muscling” practices by broadcast-venue owners from forcing performers to play for reduced fees or for free.
By Bill Holland, Billboard Radio Monitor, November 18, 2005

Making Sense of Payola
Ever get the sinking feeling that the same terrible Celine Dion song is on the radio every time you turn it on? It’s not your imagination.
By Timothy Karr, Alternet, October 21, 2005

Music Promoter to Abandon a Radio Policy He Developed
Jeff McClusky, a music entrepreneur who emerged as an influential behind-the-scenes player in the 1990's by devising a technique to curry favor with radio programmers while sidestepping laws against bribery, said this week that he was dumping the business model he pioneered.
By Jeff Leeds, New York Times, November 3, 2005

KEXP plays what it wants to -- and listeners love it
At KEXP, the DJs choose what they play, with a few limitations: Certain bands are in rotation, and a local band must be played once an hour at minimum. The station's dozens of volunteers dedicate themselves to helping discover bands. The DJs consider themselves curators and aspire to juxtapose songs in a way that illuminates them.
By Gene Johnson, Seattle Post Intelligencer, October 22, 2005

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2. A New Telecommunications Bill: Who’s the Master of My Domain?
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In 1996, Congress passed the Telecommunications Act, a bill that has had profound effects on artists and consumers.  In many ways the Telecom Act led to the vast and rapid expansion of new technologies and services that consumers and musicians enjoy today.  But the bill also had its downsides, especially related to commercial radio as it eliminated a cap on nationwide station ownership and increased the number of stations one entity could own in a single market. This led to an unprecedented period of ownership consolidation in the industry with significant and adverse effects on musicians and citizens.  You can read about the impact of the 1996 Telecom Act in our 2002 report “Radio Deregulation: Has It Served Citizens and Musicians?”

With technology moving at lightning speed, Congress is now poised to update the Telecom Act. A draft bill was “leaked” by key House offices in mid-September.  Since then the draft has been adjusted twice, mostly to meet the wishes of large telecom providers.  A packed House Commerce committee hearing in early November indicated just how much is at stake, as cable/telecom providers pushed policymakers to reduce regulations that, they say, create hurdles to the rapid and broad deployment of broadband and other communication technologies.

While this new telecom bill covers a huge range of topics, one of the key issues for FMC is fighting to preserve network neutrality.  Basically, that’s a fancy phrase that describes how the internet works today – as an interconnected network that allows users to browse or search freely without corporate gatekeepers controlling access to it.

Preserving this is important in ensuring citizens unmitigated access to the internet and musicians to audiences in the future. We will watch the developments of the telecom bill closely, as not everyone favors this openness. For example, a few weeks ago SBC’s CEO Ed Whitacre created a stir in an interview when he said that internet “pipes” belong to him and anyone who wants to use them will have to pay.

At SBC, It’s All About ‘Scale and Scope’
“The Internet can't be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo! or Vonage or anybody to expect to use these pipes [for] free is nuts!”
Roger O. Crockett interviews SBC CEO Ed Whitacre, BusinessWeek, November 7, 2005

US Telecom Bill Worries Google
The internet was designed with no gatekeepers over new content or services. The bill could “fundamentally alter the fabulously successful end-to-end internet.”
By Vint Cerf, p2pnet

Telecom Bill Faces Forceful Opposition
As members of Congress debate the latest telecom bill, critics fear the proposals put forward will only benefit large carriers and ultimately squash their smaller competitors.
By United Press International, November 10, 2005

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3. Media Ownership Proceedings…Redux
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The FCC is expected to announce the next round of media ownership proceedings within the next few months.  This is in response to the Third Circuit Court of Appeals’ 2004 action remanding many rule changes back to the FCC for further review. 

We expect that radio station ownership caps and other radio issues will be back on the table in this round.  This means lots of work examining and articulating the current state of radio, but also many opportunities for musicians and recording artists to register their opinion on proposed rule changes at the FCC.

FMC is preparing to submit relevant data and reports to the FCC.  We will also give musicians the chance to co-sign letters that express musicians’ perspective on changes to radio.  There will also probably be local hearings where you’ll be able to speak to commissioners directly.  We’ll let you know about these events as they are announced.

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4. HD Radio and the Broadcast Flag
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In mid-October, a triplet of bills began circulating on the Hill – the Broadcast Flag Authorization Act (BFAA), the HD Radio Content Protection Act (HDRCPA) and the Analog Content Protection Act (ACPA).  While they each propose slightly different regulations, the end goal of each is the same; to enact regulations that give the FCC/FTC broad authority to adopt regulations that would not allow unauthorized copying of digital TV or radio content.

Content owners and some artist advocates are concerned about a new crop of technology devices that allow satellite or HD radio listeners to store content for playback later, a feature that could cannibalize purchases of CDs or paid downloads.  Though most devises do not allow users to transfer content off their players, there are some worries that these new technologies will lead to rampant piracy.  And, in their opinion, the best way to stop this from happening is to embed content restrictions on the radio receivers themselves. 

RIAA’s Mitch Bainwol on this effort: "We are raising the issue with Congress that whatever the platform is, whether it's over-the-air digital radio, HD radio or satellite radio, that there's a new functionality coming where there will be a convergence of platforms. There's the capability to cherry-pick songs, store them in players and avoid a purchase. That's a concern to creators."

Here’s more of the music industry rationale regarding the need for copy protection on digital radio

Let’s look briefly at the HDRCPA, which would require device makers to implement “functionality” to restrict the following actions:

Listeners could record or store content off the radio for later listening, but only in 30 minute blocks, to a total of 50 hours. This essentially prevents recording on a song-by-song basis. In addition, the legislation would not permit the "automated disaggregation of the copyrighted material," such as separating a music stream into component songs.

The bill would also have the recorder act as a buffer, deleting old content as new content is recorded, and restrict players from recording or playing back content based on metadata, such as searching for a specific song, artist, genres, or "user preferences".

FMC recognizes the music industry’s concerns in protecting copyrighted works in a digital age, but we do not think that creating a legal requirement for DRM-based technologies is the best answer for consumers, innovators or creators. We fear the negative impact on law-abiding consumers who purchase new electronic hardware with expectations about general workability who are then frustrated when broadcast flags restrict them from enjoying music and media in ways that they have come to expect, or that are legal under the Audio Home Recording Act. We fear the consequences for the technology industry that will be forced to adhere to security standards that will, by their very existence, restrict innovation and shut off avenues to business models and delivery systems that the broadcast and music industries have yet to even imagine.

History has shown that technological locks are quickly broken by the handful of consumers who are determined to do so, or shunned by consumers when they’re too intrusive (SonyBMG CDs, for example). By focusing on broadcast flags instead of a public performance right (see below), we’re trading working on the future for maintaining the structures of the past.

Labels Push Curbs on Satellite, HD Radio on Capitol Hill
http://www.digitalmusicnews.com/yesterday/november2005#110905sat

Broadcast Flag Bill Writers Run Drafts Up the Pole
Lawmakers on the House Judiciary Committee are circulating drafts of three bills that would give federal agencies the ability to write regulations preventing digital radio and TV broadcasts from being pirated.
By Brooks Boliek, Reuters, November 1, 2005

House Committee Examines Digital Radio ‘Flag’
Entertainment industry executives attempted to convince lawmakers to approve laws that would ensure copyright holders’ ability to protect content delivered by digital TV and radio broadcasts.
By Brooks Boliek, The Hollywood Reporter, November 4, 2005

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5. Public Performance Right for Sound Recordings
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…which brings us to our next policy topic, the public performance right for sound recordings. This is not a new topic; in fact, it’s something that the US Copyright Office and many recording artist groups have fought for for decades. In recent years, FMC has joined with AFTRA, AFM, The Recording Academy and Recording Artists’ Coalition to urge Congress to adopt this right.

Under current US copyright law, radio stations that wish to broadcast music can do so legally once they pay for a blanket license from the three US performance rights organizations: ASCAP, BMI and SESAC. For an annual fee based on a small percentage of a station’s gross revenue, these licenses allow broadcasters to play music from any of the represented songwriters/composers without having to go through the costly process of clearing individual songs for airplay.

While PRO royalties are distributed to songwriters and composers for public performances, this right does not extend to the performers, recording artists or the sound recording copyright owner. For example, when you hear Patsy Cline singing “Crazy” on the radio, the songwriter Willie Nelson is compensated through BMI, but the estate of Patsy Cline is not compensated for that performance, nor are the studio musicians and backing vocalists, nor the record label. 

This is more than a curious glitch in copyright law; US broadcasters have actively resisted the establishment of a performance right for sound recordings decades. They have argued that radio airplay serves as a promotional tool that leads to album sales, which has traditionally been how recording artists – and record labels – are compensated. But this argument is quickly losing relevance. Digital downloads, digital subscription services, internet radio and satellite radio are all expanding the marketplace for music. Much of this new development focuses not on selling recordings in any format, but rather on selling the opportunity to listen to broadcasts, transmissions or streams of music. In other words, the music industry is moving rapidly away from selling albums to monetizing the value of accessing and interacting with entire catalogs of music. As the music industry changes, we need a copyright system that compensates all the members of the creative team for their work.

It’s high time that the United States enact a public performance right for sound recordings.  In mid-October, FMC sent a letter to the Senate Commerce Committee explaining that modifying existing copyright law to include a performance right for sound recordings, would:

• Equalize Rights and Licenses Among Competing Media Providers. Returning to our prior example, if you hear Patsy Cline singing “Crazy” on your terrestrial radio, she is not compensated. However, if you hear the same performance on XM or Sirius, or via a webcast, or on a cable music station – even on that terrestrial radio station’s webcast – Patsy Cline’s estate is compensated.  A public performance right for sound recordings will create parity among the platforms and ensure that incumbent radio broadcasters pay the same set of royalties as other media platforms.
• Harmonize US Copyright standards with compatible countries. The US is one of the few industrial countries – if not the only one – that does not have a performance right for sound recordings. The lack of a performance right in the US confounds international licensing and royalty distribution mechanisms, and leaves millions of dollars of foreign performance royalties un-distributed.
• Reduce the importance of imposing broadcast flag for HD radio. As we explain in the previous section, the music industry is concerned about new technologies that would allow listeners to download and store songs played on HD or satellite radio, and are calling for content protection. FMC urges Congress to see the value in choosing licenses over locks. Congress will not restrict technological innovation, and ensure that consumers have the ability to use digital technologies in ways that expand their access to music and entertainment. Most importantly, when united with the existing performance rights, a broad performance right in sound recordings will ensure that songwriters, performers and record labels are compensated for the public performance on terrestrial radio or on the expanded HD radio of the future. 

You can read FMC's October 2005 letter here. We also submitted three documents to Congress and the FCC in 2004.

Work continues on many fronts on the public performance right.  We’ll keep you posted on any developments.

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7. Broadcast Indecency
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After a few months of simmering, indecency is now back on the front burner. On November 9, Senator Stevens (R-AK) – a strong advocate for increased fines – announced at a broadcaster’s meeting that he’d like to see cable TV and satellite television and radio subject to the same indecency regulations as over-the-air broadcasters.  Similarly, FCC Chairman Kevin Martin called on cable operators to act responsibly regarding indecent content and language.

Despite all the talk, a recent Washington Post story illustrates the gridlock at the Commission regarding indecency fines. 

Delays, Low Fines Weaken FCC Attack on Indecency
Broadcasters say the FCC's content guidelines are too tough and arbitrarily applied while some lawmakers, viewers and interest groups blame the agency for being too lax. The issue has even split FCC officials serving on the same commission, hindering the process.
By Frank Ahrens, Washington Post, November 10, 2005

The Senate Commerce Committee is planning a public forum on November 29 to help the legislators determine how to proceed with indecency legislation, especially as related to subscription based models like satellite and cable TV that have been exempt from these rules.

Here’s the problem.  The Senate and the FCC want to raise the fines to make indecency charges more burdensome on broadcasters.  But there are at least two groups that will be severely impacted if these same fines are applied to them: performers and noncommercial radio stations.

Some policymakers would like to hold individual performers accountable for indecent actions.  In some cases, the action of the performer should be taken into account.  But what about a pre-recorded CD played on a radio station? Should a performer be held liable when they had no control over the programming choices at the radio station? FMC thinks not.

Also at risk are noncommercial stations. The ability of noncommercial radio to provide insightful and thought-provoking programming is vastly impeded when licensees are constantly worried about being fined for broadcasting potentially controversial art, political discourse or social commentary. Noncommercial stations may self-censor and not air important political or controversial topics for fear of fines. Entire genres of music may be boycotted for fear of being labeled indecent.  FMC urges Congress to consider the impact of fines on these entities and ensure that performers and noncommercial voices are not silenced by unjust fines.

Here’s a letter FMC sent to the Senate on March 10 regarding broadcast indecency

Martin Urges Broadcast, Cable Channels to Take ‘Responsibility’ on Indecency
FCC Chairman Kevin Martin said television affiliates should have more leeway to block network fare that they consider inappropriate for their communities.
By David Hatch, Technology Daily, November 10, 2005

An All-Out Assault on Sexual Conduct
Many in Congress want to give regulators more power. Senate Commerce Committee Chairman Ted Stevens (R-Alaska) is crafting a bill to raise fines and give the FCC three-strikes authority to revoke repeat offenders’ broadcast licenses.
Business Week, November 21, 2005

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7. Orphan Works: Study Finds Most Sound Recordings are Not Available
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Throughout 2005, the US Copyright Office has been seeking comment on “orphan works”, or copyrighted works whose owners are difficult or even impossible to locate. Concerns have been raised that the uncertainty surrounding ownership of such works might needlessly discourage subsequent creators and users from incorporating such works in new creative efforts, or from making such works available to the public.

Now, a recent study concludes that the majority of US sound recordings are not available. A report by the Council on Library and Information Resources suggests that a significant portion of historic recordings is not easily accessible to scholars, students, and the general public for noncommercial purposes.

There are many reasons for this, but there are primarily two factors. The first is that the physical barriers created by recording technologies change often and have rendered most such recordings accessible only through out-of-date technologies (cylinder players, wire machines) usually found only in special institutions. Second, copyright law allows only rights holders to make these recordings accessible in current technologies, yet the rights holders appear to have few real-world commercial incentives to reissue many of their most significant recordings.

Extensions of copyright law have severely reduced the possibility of such recordings entering into the public domain, at least until 2067. While there is no reason to assume that the law intended to create or sustain such an imbalance between the private and public domains, the evidence suggests that it has, in fact, created such an imbalance. This study indicates that there is an active and hardy network of foreign and small domestic companies, associations, and individuals willing to make historic recordings available; indeed, some do this in spite of laws that force them underground or overseas.

Here’s the report executive summary

FMC filed comments at the Copyright Office about Orphan Works in March 2005:

And in related news…

Dead composer Sibelius still earns most among Finnish artists
Jean Sibelius, who passed away in 1957, earned EUR 1.5 million in 2004. His royalties are distributed through the Sibelius Estate to his grandchildren and great-grandchildren.
http://www.helsinginsanomat.fi/english/article/1101981545216

Google’s Tough Call
For works under copyright, a search would produce snippets around the search term used. But for books in the public domain, a search would also yield access to the full text of the works. Almost 90 percent of the books Google might scan are out of print.
By Larry Lessig, Wired Magazine, November 2005

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8. Newsstream
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And now onto the fun stuff – the enormous amount of news about new business models rocking the music world right now.

NEW BUSINESS MODELS

Click your mouse, say yeah!
Three weeks ago, Sheffield's Arctic Monkeys entered the charts at number one with their second single, “I Bet You Look Good On The Dancefloor”. They had just played their second London gig, before an audience of 3,000. Even by the hyper-speed standards of modern rock and pop, this was a remarkable rise, apparently made possible only because the band had posted their songs on their website and thus built up a vast virtual fanbase before even securing a record deal.
By Alexis Petridis, The Guardian (UK), November 11, 2005

Opening the Door on a CD-less Music Label
Jac Holzman’s Cordless Label is the first all-digital music label operated by a major record company. Music from the label's first six bands is being sold only online for now, in three-song "clusters" instead of full albums. Instead of big tours, the bands will be promoted on blogs and sites like MySpace. Even more interesting, artists get to retain ownership of the master recordings they release under Cordless. And, if they want to release their music elsewhere after a short contract is up, more power to them.
By John Borland, CNET News, November 10, 2005

The Hit Factory 
Who needs major labels, marketing, or airplay? A social networking site is getting more hits than Google -- and turning invisible bands into mini entertainment networks. How MySpace became the MTV for the Net generation.
By Jeff Howe, Wired Magazine, November 2005

Innovative Band Combines Vinyl Release, Digital Download
A new release from London-based group The Clientele can be purchased in the classic LP format, but the album also comes with a coupon to download the album digitally from their record label Merge’s website. Cool!
Digital Music News, October 27, 2005

Korn, My Chemical Romance Cut New Deals
As digital music soars and CD sales sag -- down seven percent in the first six months of 2005 -- record labels are desperate to earn profits elsewhere. In a historic two-album deal, EMI Music reportedly paid Korn $15 million for a percentage of the band's touring, merchandise, publishing and licensing revenue.
By Evan Serpick, Rolling Stone, October 27, 2005

American Orchestra Unveils Digital Label
The Milwaukee Symphony Orchestra recently announced plans to digitize its catalog of performances, and distribute those tracks across various digital music stores. Helping the effort will be the Independent Online Distribution Alliance, or IODA, which will flex its existing relationships with partners like MSN Music, iTunes, Sony Connect, MusicNet, eMusic, Loudeye, and Rhapsody. The new eLabel will carry the name MSO Classics.
Digital Music News, October 5, 2005

All of Naxos's catalog is now on eMusic
Naxos Records has joined with the digital music service eMusic to make its entire catalog available for downloading by eMusic subscribers -- about 4,500 CDs and 75,000 tracks of classical music. The new agreement with eMusic also supplements Naxos's two prior electronic distribution systems, which the label runs itself: the Naxos Music Library and Naxos Web Radio.
By Richard Dyer, Boston Globe, October 28, 2005

COPYRIGHT and LICENSING

Hidden Cost of Documentaries
Another article on the costs of licensing music and other materials for documentary films
By Nancy Ramsey, New York Times, October 16, 2005

Ex-Door Lighting Their Ire
Doors drummer John Densmore refuses to let the group's songs be used in TV ads, much to the chagrin of his former band mates.
Los Angeles Times, October 5, 2005

Music managers tackle Apple over royalty payments
Music managers wade into the fight over online royalties with the claim that bands and solo artists are being unfairly squeezed in the digital era.
By Dan Sabbagh, The Times (UK), October 3, 2005

Internet Eavesdropping: It's Music to Mercora Users' Ears
Mercora is busy rubbing out the lines separating radio from music downloading. As with radio, Mercora plays music chosen by someone else, according to the DJ's tastes and rules. But as with downloading onto your iPod or adding a CD to your collection, Mercora lets the user decide what music to listen to. But what are the copyright issues surrounding this service?
By Marc Fisher, Washington Post, October 2, 2005

DRM and FAIR USE

Guest Blogging: The DRM Hullabaloo
Damian Kulash from OK Go, during a guest blogging stint for Coolfer, explains his disdain for digital rights management on CDs, and OK Go’s close call with their latest release.
Coolfer blog, November 15, 2005

Sony Numbers Add Up to Trouble
More than half a million networks, including military and government sites, were likely infected by copy-restriction software distributed by Sony on a handful of its CDs, according to a statistical analysis of domain servers conducted by a well-respected security researcher and confirmed by independent experts Tuesday.
By Quinn Norton, Wired, November 15, 2005

Politicos Wary of Changes to Copyright Law
At a House Commerce committee hearing, members voiced reluctance to rewrite laws and allow people to bypass, in the name of fair use, copy-protection mechanisms on goods such as CDs and software.
By Ann Broache, CNET News, November 16, 2005

NEW ORLEANS

Wynton Marsalis, on "Higher Ground: Hurricane Relief & Rebuilding in New Orleans"
Wynton Marsalis, Grammy winning jazz artist and Artistic Director of Jazz at Lincoln Center, talks about "Higher Ground: Hurricane Relief & Rebuilding in New Orleans" at a National Press Club luncheon in Washington, DC. October 20, 2005

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9. What’s in your RSS?
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We took a quick poll of FMC staff about what newspapers, websites and blogs they read on a daily basis to keep up with the latest music/law/technology/policy news.  Here’s a composite list.

Artsjournal
Billboard
Blog Maverick (Mark Cuban)
BoingBoing
CNET News
Coolfer
Copyfight
Daily Chord
Digital Music News
Digital Music Weblog
Droxy (Digital Radio)
EFF: Deep Links
Free Press daily news feed
Freedom to Tinker blog
The Future of Radio
The Guardian (UK)
HITS Daily Double
Independent (UK)
Inside Digital Media
Joe Gratz
Lessig Blog
The Long Tail
On the Commons
Patry blog
Pho
Podcasting blog
RAIN
Radio and Records
Salon
SCOTUSblog (and a little Anonymous Lawyer for humor)
Sivacracy.net
Stay Free! Daily
WFMU Beware of the Blog
Wired News
Jeff Chang's Zentronix

What are we missing, people? Let us know at suggestions@futureofmusic.org

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10. How are we doing?
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You can always send an email to suggestions@futureofmusic.org with your comments.

Thanks as always,

Jenny Toomey
Michael Bracy
Walter McDonough
Brian Zisk
Kristin Thomson
Peter DiCola
Jean Cook
Wendy Harman

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