Behind the Deal: An Interview with Attorney General John Ashcroft

The day before Attorney General John Ashcroft announced his resignation on Nov. 9, I entered the Department of Justice in Washington, D.C. to talk with the nation's top law enforcement official.

The day before Attorney General John Ashcroft announced his resignation on Nov. 9, I entered the Department of Justice in Washington, D.C. to talk with the nation's top law enforcement official.

Carrying a bag filled with travel necessities for my trip from New York to the capital, I expected an extensive security search, judging from my experiences at airports.

I dropped my bag on the conveyer, walked over to an area shielded by see-through glass of some sort, and entered an area similar to a revolving door – but with room for only one person rather than a few.

After the door shut, I stood waiting for it to open on the other side, wondering if I would be "beamed up" to the Enterprise. When I heard the sliding door swoosh open and I walked to the other side, my bag was waiting for me. I was led away by my escort – all in less than one minute.

Commenting to the security officer that the process was much faster than airport screening, he smiled and assured me it was quite thorough. I had no doubt.

Before reaching the AG's private office, I was led through a few front offices where I was very impressed with the professionalism and kindness of the people working in these inner circles.

When I entered the AG's office, Ashcroft was working on a computer at his desk, pushed up against a wall. No pomp-and-circumstance, no desk placed in a "power" location within the room; simply a lawyer who appeared to be working hard and taking care of matters at hand.

Joined by Deputy Chief of Staff David Israelite and Director of Public Affairs Mark Corallo, we sat around a coffee table with lemonade and talked about the state of the music industry from a legal perspective.

After talking about the rise of ringtones and Billboard's new ringtone chart, we discussed the following:

What do you think of first when you hear the phrase, "music industry"?

Well for me, it's Nashville. Recording studios, country music, songwriters. The industry is not the pirates; it's the other guys who are pirates.

Have you had a chance to meet with people in the music industry?

I was governor of the state of Missouri for quite some time. With [the city of] Branson being an entertainment sort of manifestation of the music industry, I got to know a few of the folks. And because I've been involved in music all of my life, I've probably gotten to know some of the others.

How did you get involved in music?

My father played a lot of musical instruments, so music was a part of our family life. And church -- a lot of people get involved in music through the church because you go to church before you go anyplace else as a family.

Have you spoken to many people about the state of the music industry?

Yes. Now they talk about the fact we're losing a lot of jobs in the industry. Writers and those who are involved in developing creative ideas in the industry are hard-pressed because the work product that they generate is stolen. This so-called piracy, I really prefer to call it thievery because piracy has such a romantic sort of air about it -- but this is just stealing.

I know stories of people who have been in the industry and who at one time had firms -- they're just pretty much sole operators now because what they used to do prior to the thievery was to be able to employ other people to work with them on things. But they've been hurt by it -- a collapse in their revenue at the same time their product has exploded. Usually when your product takes off, you mean that it takes off commercially, not that it leaves. Product has taken off, but too many people are victims of their product being stolen.

Have you seen a change in theft since the Internet, comparing that to theft of finished goods or counterfeit copies?

I think there are some aspects of the Internet which allow an illegal taking of music to be so quick, so easy and so private -- and you don't have the stolen good on something that was stolen. You have the stolen good on something that you bought and paid for -- your computer or on your own disc. I think that some people even avoid their kind of conscience they would otherwise have. They think, "I paid for this CD" -- they paid for a blank -- "and I paid for my computer, and I'm entitled to this." Whereas if they went out and bought a counterfeit CD or if they acquired a counterfeit, they'd have a sense that what they had was something with which they might be afraid of getting caught. I think what we've got to do is help people understand that thievery is stealing -- to wrongfully download music -- and the fact that you are transporting that music on what was once a blank CD for which you paid doesn't make it yours.

Have you had an opportunity to talk with anyone in the industry about contracts? When I talk with recording artists, surprisingly they don't mention piracy as much as they mention their contract terms. For example, provisions that grant record companies ownership of the sound recording copyrights although the cost is recouped from the artist's royalty, audit rights that may result in artists' audits of companies revealing money owed but companies not paying the full amount. Some artists tell me they want the government to legislate certain terms in contracts, as California did recently regarding audit provisions. Is there any law that would permit legislation of contract terms on the federal level?

It's possible, but it's unlikely that the federal government would want to limit the kinds of contracts that could be entered into between artists and companies. If you do try to limit the range of contracts, it means you exclude people at the margin who don't get up to that limit. I'm sure that people at the top end, they can tell the record companies what kind of contracts they want. But that's a policy issue, and I think generally in this country we try not to interfere with the freedom that businesses have in terms of contracting with each other.

Those who offer a service like singing and those who offer a service like distribution and marketing and recording, they should be free to strike the terms of the contract that are beneficial to both. All that is a general theory. I haven't had any of my associates come to me with those kinds of complaints, but they haven't come to me as a lawyer for them like they may have come to you.

Some artists want to know why intellectual property ownership is different from personal property rights, where you may buy a car and own what you buy?

You can buy a car, you can lease a car. There's virtually any number of ways that you can structure the use of a car. You can rent it for a day, you can rent cars by the hour, you can lease them, buy them, purchase them with an option to sell back -- that reflects the ability of the parties to strike bargains and to develop contract terms that are useful to them.

It seems to me that there are a significant number of recording companies. Some perhaps have different terms than others, and different artists have different terms. If it's really the best way to attract artists and it's a commercially viable way to handle things, [the contracts should reflect that]. Again, if it's not commercially viable, you may learn that you have to make adjustments.

It's not the role of government to try to dictate to people -- either artists or companies -- how they should structure their relationships. The government provides on the civil side of the law an opportunity to resolve disputes over relationships that are memorialized in contracts. That's sort of the philosophy of a free society -- we let people make the kinds of agreements they choose to make, and the role of government is largely limited to providing this arena in which disputes can be settled amicably -- or at least settled -- regarding these relationships when disputes arise.

Have you dealt with any proposed legislative involving the consolidation of the radio industry and co-ownership of concert promotion companies and venues -- consolidation among outlets where artists attempt to promote themselves?

No, I haven't really dealt with any proposed legislation about limiting these avenues. The Federal Communications Commission is obviously interested in the opportunity for competition in media, but there are so many venues now, including pay-per-listen and pay-per-view, such as Sirius Radio and radio stations that I can access on my computer.

…Obviously this just means that this industry is in a dynamic setting where there are a lot of changes -- some involving proliferation of output and opportunity, and some involving consolidation. I'm not an expert of that sort of structure of the marketplace.

Could there ever be federal legislation that requires the creators of music -- artists or songwriters -- to always be permitted to keep at least 50% of their income, something modeled on the way ASCAP, BMI and SESAC require 50% of performance income to always be paid to the songwriters?

I have written a lot of songs myself. I haven't turned them over to ASCAP. I could, but I don't want to be in the music business. If someone wants to use my songs, I would get 100% of whatever royalty they paid.

It just means that for people who want to reserve their music and to be compensated based on it, they can. And people who want to strike the bargain with these opportunities, they can. It just seems to me that for the government to get involved in trying to dictate what the terms of these contracts would be, would be for the government to be inserting itself in the marketplace and suggesting it knows more about this than the people who are actually in it. I don't know of any proposal, and wouldn't take a position on any proposal without knowing the specifics of it.

Do you have any final views on the state of the music industry?

My own view is that we that need to protect the creative works of the people in this country. Copyright employment is at about 5.5 million people, 6% of our gross domestic product, about 4% of the work force. The United States is "the" primal genitor -- the first-rank creator of creative materials in the world.

I think if we expect the world to respect its property rights, we have to respect them ourselves. I believe that stealing someone's intellectual product is just as bad as stealing someone's physical product, and I'm delighted that the music industry has taken steps to correct this by acting in its own behalf with civil suits. This will help provide an environment which our effort -- in the criminal arena -- to target those who steal intellectual property. They will be the focus of prosecutorial efforts.

The music industry was the first industry to suffer because the amount of computer space that was consumed by the song could be downloaded very rapidly, but as computer capacity and speed enlarges, other industries are threatened -- the software industry, other entertainment industries like the film industry -- they're threatened.

I think the recording industry has done a good job of setting the tone, if you will -- no double entendre expressed there -- to say that, "We care enough about our things to protect them. We expect government to do its share to stop thievery," -- we will. I think other industries will follow suit.

I think America has a position in the world: America is about one-third of the recording industry in the entire world, and we're certainly not one-third of the world's population. Similarly, we're around 80% to 90% of the software -- a very high figure as it relates to movies and other things that are the subject of the intellectual property laws.

If we don't signal that we have a respect for intellectual property, we can't really expect the rest of the world to respect the rights of our creators and creative individuals who generate these properties. So it's with that in mind that we embarked on this project related to this [Intellectual Property Task Force] report, and we hope it serves the country well.

We believe that if you want to have a lot of creativity, you have to have an environment which respects it -- and creativity is really freedom. That's why I think that government doesn't want to rush in and make it impossible for creative arrangements to be made about how things are done in the business sense.

But we certainly want to say that once there is property generated -- intellectual property is generated -- it should be protected. It shouldn't be the subject of theft in the marketplace.