Dance Floor Pirates
by Matt Kalkhoff

Do you own any dance music compilation CDs? How about remix tapes from your favorite DJs? Do the names Masterbeat and Go Girl! sound familiar to you? I bet most of you answered yes to at least one, if not all, of the above questions. Did you know that many of these compilation CDs and DJ tapes are illegal?

Piracy Abounds

I always assumed that if a compilation CD was being sold in a reputable store, professionally packaged just like other mainstream CDs with a nice cover photo and tight cellophane wrapping, it was legitimate. Many, however, including the above compilations, are piratical recordings -- material that is produced and released without first obtaining the proper copyright permission from the respective record labels and without having paid licensing fees for the songs that are included.

According to the Recording Industry Association of America (RIAA), the music industry’s watchdog, the law is quite simple: "Duplicating copyrighted sound recordings for professional disc jockey purposes without the authorization of the sound recording copyright owner is a violation of federal and/or state copyright law." In other words, the unauthorized reproduction or distribution of recorded music is illegal. The penalties for violations of this nature can also be quite severe. Civilly, an offender can be liable for anywhere from $500 to $100,000 for each song that is pirated. Criminally, this same person can be jailed for up to five years and/or fined up to $250,000.

So why would anyone take such a big risk by producing illegal compilation tapes and CDs? The answer is as simple as the law: Because there is a huge demand for these dance music compilations, and very few are currently being legitimately produced by the major record labels. Oh yeah, music piracy is also a $4.5 billion dollar business worldwide.

The Industry and the Feds

The RIAA declares that in order for DJs to "create and manufacture multi-disk compilations of top hits," they must first obtain the "appropriate licenses from the copyright holders." This is no easy task. First, it typically takes a couple of months for such licenses to be secured, and we all know how short the life-span is for dance music. Second, it is generally cost-prohibitive for independent labels, which produce the bulk of dance music in the U.S., to purchase these licenses as the fee for a single song often exceeds $1,000. Independent labels also do not have the immense resources of the major labels. Thus, advertising and distribution of their CDs is on a much smaller scale, thereby resulting in modest profits, if any at all. Of course, just because consumer needs are not being met does not make it okay for people to break the law. But perhaps the law needs to change.

In an effort to "protect the creative content of their member companies and their artists through an aggressive anti-piracy program," the RIAA, in conjunction with the FBI and local law enforcement agencies, conducts random raids of businesses that sell illegal tapes and CDs. Most recently, a couple of gay businesses in California were targeted which created quite a commotion in the gay community. Of course, these agencies were not discriminating based on sexual orientation; it just happened that a lot of press was generated from these particular raids. This eventually caused the gay community to question the appropriateness and effectiveness of the raids. Although it is unfortunate that any business would have to suffer through such a raid, justified or not, it has finally prompted this very important issue to be publicly debated on a large scale.

DJs and Labels

In late July, a malicious e-mail made the rounds inciting its readers to boycott certain writers and DJs based upon some paranoid delusion that the RIAA and the FBI were solely targeting gay businesses. The writer of this e-mail also claimed that earlier in the month a secret task force consisting of Billboard reporting DJs and record company executives was organized during the Billboard Dance Summit in Atlanta to help the RIAA and the FBI gather information on gay stores that sell illegally produced tapes and CDs. This e-mail provoked many fervent responses including rebuttals from DJ Julian Marsh, the alleged head of said task force, Nick De Biase, President of Centaur Entertainment (one of the legitimate companies whose product was seized in the raids), and Frank Ceraolo, A&R Director at Sony Music, an outspoken participant in the Billboard Dance Summit who strongly supports the recording industry’s efforts to protect its rights. Michael Paoletta, the gay dance music editor at Billboard magazine who was singled-out in the original e-mail as "attacking his own community by writing a scathing article about the state of dance CD’s and illegal compilations," also continues to follow this heated debate in Billboard.

As many of you are painfully aware, many songs that you hear in clubs never see the light of day beyond the 100 or so promotional copies that are sent to a select group of DJs. Hence, the popularity of the illegal compilation which is often the only place many club hits can be found. If these songs were released commercially (and legally), the pirated compilations’ popularity would certainly diminish. Not only is this a great opportunity for the major record labels to virtually eliminate the extremely high demand for pirated dance music tapes and CDs, but also to produce their own sophisticated and timely compilations. By releasing dance recordings more rapidly, record companies can capitalize on their short-lived popularity, both increasing profits while satisfying growing consumer demand. This may even result in more cross-over hits and, ultimately, higher profits for both the artists and the record companies.

Until this happens, however, DJs and manufacturers who continue to illegally produce and distribute compilations could, ironically, eventually cause many of the independent dance music labels to go out of business. Popular dance hits are sometimes pirated on so many different compilations that the independent labels lose much of the money upon which they rely for survival. "I think we need to educate the gay community better that the unlicensed DJ compilations truly hurt the record labels, dance artists, and our community," says Nick De Biase of Centaur. "This forces many independents to fold, which, in the long run, means there will be less new dance music available."

Time to Change the Law

Major changes need to be made in the production and release of dance music, as well as to the laws governing the duplication of sound recordings. Joseph Nicholson, a partner at the prestigious intellectual property law firm of Kenyon & Kenyon in New York City, thinks "the law will change, as it always does to keep pace with technology. It may not, however, change in a way that will automatically take into account the interests of the DJ community. While it is certainly true that record labels benefit from DJs who play their music in the clubs, it is ultimately the ‘bottom line’ that will motivate change."

Traditionally, domestic record labels have not considered dance music to be a very lucrative market. Considering the vast amount of pirated dance music compilations being produced, however, it is clearly time to challenge this conventional thinking. One only has to look to Europe to see just how popular (and lucrative) dance music is. In Europe, DJs are often sponsored by record labels and radio stations. The record labels then work together, sharing their artists’ work with each other, to create and promote tremendously successful, high quality dance music compilations.

Or maybe we should look to Canada, where CD compilation manufacturers pay a flat fee to record companies for the rights to duplicate music. The industry trade magazine DJ Times, in their June 1999 issue, asked Matt Oppenheim, the RIAA associate counsel for civil litigation, if there is any hope for something like this in the States. He responded, "We have looked at, from time to time, the issue of whether or not we could create a blanket licensing system for DJ compilations in the United States. It is not an issue that is foreclosed, but it is an issue that is very difficult to do, given United States [antitrust] laws." He went on to say, "Our goal is to get music to music lovers around the world and perpetuate an industry that has been very good at rewarding artists and musicians."

When this sentence is coupled with this additional statement by the RIAA, "One of [our] principle missions is to ensure that copyright legislation remains adequate in light of a rapidly changing technological environment, and that appropriate conditions exist to foster creativity in music through increased investment, production, and distribution," one cannot help but believe their heart is in the right place. What is needed now, however, is action. It is time for the music industry to stop talking about the changes that are needed, and to start making them.

Recording artists, music executives, manufacturers, distributors, retailers, DJs, and the general public need to work together in an effort to make dance music more accessible to the masses. Joseph Nicholson agrees. "Right now I don’t see the DJ community as having a particularly strong voice in the debate, mainly because they don’t have a lot of power, even if they were to become more organized. My suggestion would be for DJs to try to align themselves with members of the music industry whose interests are related and try to get their positions developed into a reasonable ‘consensus.’ It would be useful to them to have a more collective position, and preferably one that doesn’t ignore the rights of the copyright owners."

If you, the valuable consumer, want to see more dance music legitimately produced and released in the United States, in a timely manner, please contact the record labels and let them know how you feel. It may be as simple as writing letters expressing your thoughts, or as complex as organizing structured lobbying groups to alter the record labels’ perception of dance music and, eventually, to persuade the Department of Justice to reconsider the antiquated laws currently governing the reproduction of sound recordings. Only then will the United States finally be able to compete with Europe in the dance music arena with you, the American consumer, emerging as the real winner in the end.

© 1999 Matt Kalkhoff

This article first appeared in Miamigo's September 1999 issue.