In the brave new game of digital downloading, two recent skirmishes provided object lessons in just how bizarrely record companies are behaving as they confront the new technology. In both instances, the catalyst is laudable efforts by multi-platinum rock bands to do a little charity work. In the first, Sony Music may have spent fully $1 million just to avoid having to deal with Pearl Jam releasing a single song on an MP3 site. In the second, one of rock's hippest acts finds itself, oddly, in bed with a filthy-rich software company doing its best to provide the labels with a copy-proof download standard. Both stories are tied together with marketing plans and branding schemes, but neither has a happy or tidy ending, suggesting that these battles will continue for the foreseeable future.

The first story began as the first wave of refugees crossed the Kosovo border into Macedonia and Albania last March. The relief organization CARE called 26-year-old Adam Werbach to see if he could put together a project -- maybe a rock concert -- to raise money for the refugees. The organization -- solid, no-nonsense and focused -- also wanted to raise its profile among young people. Werbach, the former head of the Sierra Club whose aggressive recruiting brought the average age of the graying organization down by a decade, was just the ticket. More than that, Werbach is young and handsome, and has cool friends, like the Beastie Boys.

In the end, Werbach directly facilitated only a small portion of money to CARE -- about $50,000. But indirectly the organization went on to raise a lot more money -- $1 million or more -- with help from Pearl Jam, the Beasties and a dozen smaller bands. It all began with Werbach and a brainstorm with partners at his San Francisco production company, Act Now, and a small company called Zeitgeist Artist Management. The group decided to assemble a benefit record instead of a concert. But they had an even better idea: They would release the record online for digital download via MP3 files. The brilliance of the idea was that the record could in effect be released as soon as the group collected the songs, without waiting for (or paying) manufactures or distributors. As buyers downloaded individual songs or the full record, the proceeds would go immediately to CARE.

CARE loved the idea. "We were thinking about delivering a project online," says LMichael Green, CARE director of marketing. "We really wanted to embrace the Web and online technology."

Werbach and Zeitgeist's Jordan Kurland figured they could land a couple of good-sized bands and several smaller groups through their own connections in the music industry. "The idea was to go for bands that were so big that they could say, 'Fuck off,' to the label," says Kurland. "Or go to bands that had just been dropped [from majors] -- like Luna and Cracker."

The MP3 digital download Web site Emusic -- which was called GoodNoise until last week -- agreed to sponsor the record. Emusic, like other MP3 sites on the Web, is a "content aggregator" and is constantly looking to acquire new music it can sell online. Like most Internet sites -- and certainly the majority of the sites attempting to sell music online -- Emusic is in the business of drawing traffic now and cashing in later. Although the company licenses dozens of smaller record labels and features hundreds of bands, it has yet to land a huge, high-profile act. Even a few bands with recognizable names would help promote the site.

From this point on, not one source was willing to go on the record about the particulars of the deal. However, several sources familiar with the project independently confirmed each other's stories. (Pearl Jam's manager, Kelly Curtis, did not return several phone calls for this story.) If Werbach and Kurland could deliver three or four good-sized bands, Emusic promised to donate $100,000 in advance to CARE, plus all proceeds earned from selling downloads.

In the process of rounding up bands, Werbach's team contacted Pearl Jam, which had a benefit single called "Last Kiss" in the works for CD release. Pearl Jam apparently liked the idea and agreed to consider it over the weekend. Werbach and Kurland went back to Emusic with the news and asked for more money. Emusic knew that a name like Pearl Jam would guarantee a successful project, and by extension draw larger crowds and more media attention to the Web site. The company upped its initial offer to $250,000, plus all sales receipts.

After examining a pile of information about CARE and Emusic over the weekend, Pearl Jam told Act Now and Zeitgeist that the band members were ready to commit. They still planned on releasing the single on CD (which they did, Tuesday), but they said that Emusic could sell it online and have it available before the street date. Pearl Jam just had to check with its record label to make sure that the record label didn't have a problem with the project, specifically the MP3 issue. The group records for Epic, part of the Sony conglomerate. Even though all of the world's six major labels have agreed to not use any MP3 technology until it includes some sort of copyright protection, Pearl Jam had Sony in a bit of a tight spot. What was the label going to do -- tell the band it couldn't donate a quarter million to refugees?

Next page | As a matter of fact, Sony was about to do exactly that