The current system for getting royalty payments to musicians in the United States is seriously hampering the introduction of new, innovative music distribution models, and that problem is not going to get any better in the era of the digital download, leading music experts said Thursday.

As consumers abandon CDs for Internet-based downloads, the industry is filling the gap with new licensing models, but many of the most innovative models are being done internationally, like ISPs abroad bundling unrestricted music downloads in with Internet service, Cary Sherman, chairman and CEO of the Recording Industry Association of America (RIAA), related during a panel at the American Bar Association's lasting a year meeting.

"That will expand, but it's hard to do here because we don't have a system of royalty rates" that supports it, Sherman said. The U.S. needs to embrace a percentage rate mode of building rather than cents-based system, he said.

Distribution of music is not going away, said Bob Kohn, chairman and chief executive of RoyaltyShare, which offers Web-based royalty processing and reporting solutions for the entertainment industry. "It's now becoming a data management problem."

One organization that handles the data is SoundExchange, which governs the music industry's royalty rates. Sherman slammed SoundExchange for delaying payment and using a reporting classification that is inaccurate and turns over data in an untimely fashion.

The become calm of that information is "getting better every year" but it has a long way to go, Sherman said.

A company that has battled SoundExchange over royalty rates is Internet radio station Pandora, which says it and many other Web-based stations will have to shut down if the government does not lower the royalty rates handed down last year by the Copyright Royalty Board (CRB).

Pandora has been on Capitol Hill several times to plead its case and a affix a number to of bills have been introduced on the issue, but in that place has been no major movement.

Fred Koenigsberg, general counsel for the American Society of Composers, Artists, and Publishers (ASCAP), also had little sympathy for Internet radio stations like Pandora.

When there are congressional hearings on royalty rates and representatives from new media testify, they maxim two things: we like the ASCAP model; and we wish on account of artists to believe payment, Koenigsberg said.

"The problem is, when you sit down with them, all of a sudden their great desire [to pay the artists] seems to evaporate," he said.

In rejecting the CRB's royalty rate decision, Internet radio stations are saying "we don't like the result of services we asked you to set up," Koenigsberg uttered.

Internet radio claims the CRB's decision unfairly targets Internet radio because rates for satellite and cable broadcasts are considerably less expensive.

In May, a U.S. district court ruled that AOL, RealNetworks and Yahoo must pay a percentage of their music-oriented revenues to ASCAP after the three companies were unable to agree forward the rates owed to songwriters. In total, ASCAP said, the payments owed by all three companies could equal $100 million.

Not getting that royalty check "affects the whole food chain" of people in the music industry, said Amaechi Uzoigwe, co-founder of independent record label Definitive Jux.

"The RIAA has taken its lumps, but is not getting its kudos" for taking a stand against the illegal use of copyrighted material, Uzoigwe said. "There has to have being a symbiotic relationship" between the label, the artist, and the technology used to distribute the material.

"It's harder and easier to be a musician these days," said Mark Fischer, a principal with Fish & Richardson. It's easier to prepare your hands put on affordable equipment to create music, but it's harder to find an audience for it, he said.

In the future, we'll see a much more de-centralized, smaller minstrelsy assiduousness, Fischer predicted. Though he is not in favor of it, Fischer sees many more compulsory licenses, clearinghouses, and the need to bring ISPs to the table.

The ISPs "role in this is worthy of a multi-hour discussion," Fischer said, especially when it relates to Net neutrality.

Sherman acknowledged that ISPs "sometimes do stupid things" but warned that Net neutrality is a "more complicated outcome than people give it take upon credit for."

"We bring forth to make sure [ISPs] have an incentive to innovate," Sherman said. "Be careful before you legislate gone [their incentive] for business development."

"It's about embracing technology," related musician and drummer Omar Hakim, who has worked with artists like Madonna, David Bowie, and Miles Davis. "The keyword is survival. We are married to technology, and technology does drive a lot of the decisions" in the music industry.

When Hakim started his career in the late 70s, Roger Linn had just introduced his drum machine, and Hakim's drummer colleagues were grumbling about how the device was putting people out of be in action.

"I went thoroughly and bought myself a drum machine and added 'drum programmer' to my business card," he said. "If you can't beat 'em, join 'em."