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Each week there are more and more news stories about the failings of the music industry and labels having financial troubles. This week's victim is Bertelsmann, the largest media company in Europe. The German-based company reported a $69 million loss due to legal settlements over the funding of music-downloading service Napster. In 2004, in an effort to stay ahead in the growing digital industry, Bertelsmann invested in the file-sharing company. But, shortly thereafter, the other major music labels sued Napster for copyright infringement. Now Bertelsmann is paying the price.

It's clear that the industry's old model is dying though, and two music veterans think they have the solution. Jim and Greg discuss the much talked-about profile of Rick Rubin in last week's New York Times Magazine. Rubin, who co-founded Def Jam and launched the careers of artists like The Beastie Boys and Slayer, was recently appointed the co-head of Columbia Records. In the article, writer Lynn Hirschberg talks to Rubin about how he plans to save Columbia, and possibly the entire music business. In addition to implementing a subscription-based music service, the crux of Rubin's grand scheme is to put the focus back on quality and back on quality and the art. Jim and Greg completely agree that the key to pleasing music consumers is having better music, but they question Rubin's role as tastemaker. The man has had a golden ear at times, but, as Jim explains, he's also produced a lot of "crap."

Another music man who commented on the state of the union is Creation Records founder Alan McGee. In a blog in the UK newspaper The Guardian, McGee proclaims that consumers don‘t want to pay for music at all anymore. Period. He recommends that labels invest in the scope of an artist’s career and focus on making money through ticket sales and merchandise, not small worthless discs.

In more news about the money-making of music, BMI announced record-setting royalty distributions to the tune of $732 million. But, while the music performing right organization is reporting its success, another is seeking more funds. Earlier this summer ASCAP announced that it has filed 26 separate infringement actions against nightclubs, bars and restaurants in 17 states. Jim and Greg are curious about the goal of the crackdown, which seems to focus on the little guy. First they talk to Vincent Candilora, ASCAP's vice president and director of licensing. Mr. Candilora explains that ASCAP doesn‘t desire filing lawsuits, but that the organization wanted to remind people that there are laws against playing copyrighted music without a license, whether the song is recorded or performed, and whether the venue is large or a dive bar. He realizes that most of these establishments aren’t specifically music venues, but compares paying for the right to play music to paying for the right to serve parsley; it's not something you order off a menu, but it's something that's included in a business' operating cost.

Mike Miller, owner of the bar Delilah's on the north side of Chicago, gives the other perspective. He explains that as a music fan and a supporter of the local music community, he is totally happy to do his part and pay licenses to all three performing rights organizations. But, Mike is dubious about how his payments get disseminated. He also questions the effectiveness of such lawsuits, and wonders if ASCAP can do something better to support individual musicians and the community-at-large.

Go to episode 93