Net Neutrality Repeal: The Live Music Biz Braces For Impact

AP Photo/Mary Altaffer, File – Net Neutrality
In this Thursday, Dec. 7, 2017, file photo, demonstrators rally in support of net neutrality outside a Verizon store in New York. The Federal Communications Commission is voting Thursday, Dec. 14 to undo Obama-era “net neutrality” rules that guaranteed equal access to the internet. The industry promises that the internet experience isn’t going to change, but the issue has struck a nerve. Protests have erupted online and in the streets as everyday Americans worry that companies like Comcast, Verizon and AT&T will be able to control what they see and do online.

At press time The Federal Communications Commission had approved by a 3-2 vote a controversial proposal put forth by chairman Ajit Pai to repeal “net neutrality” regulations. While the full-implications of the statute’s repeal are yet unknown, many in the live business expressed concerns for the future. 

“I think this is bad news for everybody, from the consumer to businesses that are not as big as Netflix and other larger companies,” said Zach Bair, CEO and chairman of VNUE, which records audio from live performances and distributes them digitally through the recently acquired set.fm.

 “What it really means is restrictions are going to be [removed] and Internet Service Providers (ISPs) are going to be moved to do whatever they want,” Bair continued. “Unfortunately, the net result will be that as prices are raised, the big companies can absorb it but for smaller companies like us, it’s gonna be a real drag.”

The “real drag” Bair referred to stems from how the new statute fundamentally alters the way ISPs are regulated, from a utility-style regulation to information-service regulation. In brief, the utility-style regulation means that the FCC must regulate ISPs to make sure they offer the same connectivity and access to high-speed internet to small and large businesses operating websites for the same rate.

To change the regulation to that of an information-service would bring what the document refers to as a “light-touch” regulation, which would essentially allow ISPs to give different access to different companies and consumers, presumably for different rates.

Those that stand to benefit most from this change are the ISPs who will get more control over the services they offer, though Pai’s proposal repeatedly asserts that market forces and antitrust and consumer protection laws are sufficient to address potential abuses.

To buttress that assumption, on Dec. 11 the Federal Trade Commission and the FCC submitted a Memorandum of Understanding  that outlined how the adoption of the “Restoring Internet Freedom Order” would change the FCC and FTC’s regulating practices, particularly those related to disclosing information regarding ISP blocking, “throttling” (intentionally slowing), paid prioritization and congestion management. During the vote, Pai repeatedly asserted that the FTC was qualified as a “cop on the beat” to protect consumers.

“Instead of saddling the Internet with heavy-handed regulations, we will work together to take targeted action against bad actors,” Chairman Pai said of the MOU. “This approach protected a free and open Internet for many years prior to the FCC’s 2015 Title II Order and it will once again following the adoption of the ‘Restoring Internet Freedom Order.’”

Despite Pai’s confidence, many small businesses worry they might have to pay more for potential customers to access their content at a high speed, which some anticipate will chill the growth of startups and small businesses.

Ryan Singel of Stanford Law School wrote in Wired, “When I started Contextly [a service for publishers and bloggers to increase readership], we paid $19.95 a month for one server; a year later … we only paid $288.55 per month for 8 servers.

“But if Pai’s plan had been in effect, I couldn’t have afforded to start Contextly, and I wouldn’t have.”

More than 500 American small businesses in August signed an open letter voicing concerns about repealing net neutrality through nonprofit Fight For The Future. Signatories included Youngstown, Ohio-based Thirdarm Promotions – which  has put on local events in Ohio for years – and California-based image site, Imgur, Inc. Their concern is that they will pay more for large amounts of customers to use their services.

From the ticketing angle, Ant Taylor of fan-to-fan ticket exchange company Lyte said he is concerned opening a higher-speed pay-lane for companies and/or consumers will give an advantage to “botnets,” secondary-ticketing websites that use bots to buy up large amounts of inventory for high-demand shows.

“Who’s got the coin to pay to be in that [higher-speed] lane for an onsale at 10 a.m. on a Friday? I guarantee you who doesn’t have the coin is the consumer. Who does have the coin is scalpers.” Taylor said. “We are all fighting to get tickets into the hands of true fans and you’ve got [someone] at the FCC who literally can hamstring the whole operation.”

In the end, the ticketing exec lamented, “less true fans will get access to face-value tickets because of the path the FCC is going down.”

Content creators have also taken action to fight for net neutrality regulations. Graham Nash, Incubus, Talib Kweli, Bassnectar, STS9, Against Me! and Michael Stipe all were signatories on a letter sent by the nonprofit Fight For The Future to Congress requesting a stoppage of the vote.

Another letter was sent by Music for a Healthy Internet, a coalition between CASH Music and Future of Music Coalition to Chairman Pai Dec. 12.

“To truly make good on the remark-able democratic potential of the internet, the fundamental infrastructure underpinning it all must be neutral and nondiscriminatory,” the MHI letter read. “Allowing broadband providers to control this once-open platform shifts leverage away from individual artists, creators, and small businesses, and interferes with freedom of speech and expression.” It was signed by artists R.E.M., YACHT, DJ Spooky, and Alison Mosshart, among others.

“The entire lynchpin of human progress has been communication. Photographs of Civil war casualties, moving pictures of brutalities as soon as moving pictures were invented, right up to cell-phone videos of police brutality here in the 21st Century,” musician and songwriter Peter Mulvey told Pollstar. “All of this is a direct though line, and all of it has been accompanied by a decline in violence the raising up of living standards and individual liberty on a global scale. To do away with net neutrality is simply wrong. It’s a regression of human progress.”

A refutation to the widely circulating criticism that regulation repeal might give ISPs the ability to block or throttle specific websites is included in Pai’s proposal, citing comments from ISPs AT&T, Frontier, Cox, Verizon and Comcast all to the effect that the companies pledge not to block or throttle any legal content.

“Comcast does not and will not block, throttle, or discriminate against lawful content,” Comcast CEO and President David Watson wrote on Nov. 21. “We will continue to make sure that our policies are clear for consumers and we will not change our commitment to these principles.”

Those advocating for repeal theorize the lack of regulation will create fertile soil for new, smaller ISPs. More than 40 small ISPs signed a letter last summer supporting net neutrality and Title II regulation.

Ultimately, VNUE’s Bair said the consequences of a change in net neutrality regulations would be difficult to predict, but by-and-large he expected increased costs borne by companies providing online services would be passed on to consumers.

Mignon Clyburn, an FCC commissioner and outspoken opponent of repealing net neutrality, in a recent interview with Charleston, S.C.’s Post Courier put a premium on the decision’s importance. “We’re at a very pivotal point in our lives,” she said, “and the decisions we make over the next six months to a year will define where we go and how we go for the next 20 years.”

The FCC does not have the final say in the matter, Clyburn indicated in her comments at during the Dec. 14 decision, and the debate will likely move to the courts where it could be struck down. 

“When the current 2015 Net Neutrality rules are laid to waste, we may be left with no single authority with the power to protect consumers,” Clyburn read at the hearing. “There is a basic fallacy underlying the majority’s action and rhetoric today, the assumptions of what is best for broadband providers is obviously what is best for America.”