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U2's manager says the 'free' ride for music via the Internet is over* [UPDATE]

September 20, 2010 | 11:40 am

U2-Paul McGuinness

As far as solving the music industry’s financial woes, U2 manager Paul McGuinness still hasn’t found what he’s looking for. But he's not about to stop beating the drum.

The new issue of Rolling Stone has an abridged version of a piece McGuinness wrote for the UK edition of GQ addressing the file-sharing and piracy issues that he believes are largely the source of the meltdown of the music business in recent years. It’s an update and expansion on ideas he put forth at the international MIDEM music conference in Cannes two years ago, an event at which I spoke with him at length about some very specific recommendations on how to address those issues.

Now, as then, he holds Internet service providers — and the giant telecommunications corporations that control the vast majority of ISPs — responsible, arguing that they’ve built their industry to a large extent by providing free content, often irrespective of the intellectual property rights of musicians and other creative types responsible for that content.

When I sat down with him in Cannes, he noted that ISPs have no qualms about promptly shutting down the accounts of users who don’t pay their ISP bills; they should do the same for those who illegally share copyrighted Web content like music.

More than two years later, he writes that little has changed in that regard.

“For the world’s Internet Service Providers, bloated by years of broadband growth, ‘free music’ has been a multi-billion dollar bonanza,” McGuinness writes. "Unfortunately, the main problem is still just as bad as it ever was.

“Artists cannot get record deals. Revenues are plummeting. Efforts to provide legal and viable ways of making money from muse are being stymied by piracy. The latest industry figures, from IFPI [the International Federation of the Phonographic Industry], show that 95% of all the music downloaded is illegally obtained and unpaid for….A study endorsed by trade unions says Europe’s creative industries could lose more than a million jobs in the next five years.

“Finally,” he adds, “maybe the message is getting through that this isn’t just about fewer limos for rich rock stars.”

Many of those rock stars have been reluctant to go on the offensive, because the problem is often cast in precisely those terms: millionaire musicians whining that they aren’t making even more money.

McGuinness still thinks, as he did back in early 2008, that music subscription services should be the way of the future and that ISPs should be sharing their windfall profits with the artists and labels that have helped them pull in that money. If they don’t do so voluntarily, government intervention should be the next step. He points to laws passed in France, England, South Korea, Taiwan and New Zealand aimed at tipping the scales back toward equity for musicians. But that still leaves much of the world without any such protections.

“I think we are coming to understand that ‘free’ comes with a price,” McGuinness writes, “and in my business that means less investment in talent, and fewer artists making a living from music.”

The $64-billion question is: How many musicians, managers, record company executives or even ISP bigwigs will be willing to get behind McGuinness?

[*Update at 3:57 p.m.: A hyperlink to McGuinness' original article in GQ for the UK was added.] 

— Randy Lewis

Photo: U2 with manager Paul McGuinness, right. Credit: U2.com