Below is an opinion paper I wrote last year detailing the stupidity with which the Recording Industry Association of America has pursued a solution to its hand-wringingly serious piracy problem. The short version is that the RIAA is intensely shortsighted, ignoring the history of recorded music, in denial about the cause of their financial woes, and certain to piss off the estimated 60 million people (music buyers) who share files peer-to-peer online. The longer version below has a title and some quotes from people and an organized structure and stuff like that. So you should read that too. It comes to mind that I might have left out some pertinent facts, so those might pop up on this page sometime. For now, this is it.

Behind the Music Industry: the RIAA loses touch with American consumers

This summer, one of the most-discussed issues on the Web moved past the level of discussion and became for several hundred people intensely personal. The issue is of course file-sharing, an activity engaged in by tens of millions of Americans every day. The Recording Industry Association of America (RIAA), unhappy with falling music sales over the past three years, has pronounced all of these people to be guilty of copyright violation, and after unsuccessful attempts to criminalize the software publishers, they have begun targeting individual users of file-sharing services. Naturally, an issue with the potential to affect such a sizable percentage of the population has spawned multiple controversies about copyright law, music sales, and the rights of individuals. To adequately deal with all aspects of this issue within these space constraints would be impossible. Therefore, I wish to deal briefly with some of the legal, economic, and moral issues that have come up in this debate before making a few projections about the future of file-sharing and the music industry. Within these focal points I will demonstrate the general failure of the RIAA to follow a fundamental rule of business in any capitalist economy: stay in touch with the consumer.

The last three years have marked a steady downturn in CD sales. Although this decline arrives at the same time as a national recession, the RIAA is convinced that file-sharing is responsible for their losses. Their best efforts to legally suppress this practice have met with limited success. Initially the industry heads tried to stop the creators of peer-to-peer software, but the courts ruled earlier this year that these companies could not be held responsible for the content distributed through their services. Stymied in their first bid to block sharing, the RIAA turned to the prosecution of individual users. They scored a major victory when the courts upheld their right to force Verizon to release hundreds of its subscribers’ individual IP addresses, setting the precedent for similar treatment of other ISPs. 2003 also saw the first prosecution of individuals who were found to have downloaded large quantities of music owned by the five major labels that make up the RIAA. The music industry has attempted to project a tough, no-nonsense image as they enter into this massive legal enterprise, boasting of some 361 suits filed in just a few months (already revised down from a staggering initial target of 75 a day). However, it is unlikely that they will be able to keep up even this pace, as they are literally attempting to criminalize tens of millions of people. They have narrowed the field by declaring users found with over 1,000 primarily Top 40 songs shared to be at the highest risk. Although this standard still targets far more people than the Justice Department could ever hope to process, problems have already arisen regarding the accuracy of the RIAA surveys, ranging from incorrect findings of the media surveying software to the apparently mistaken prosecution of a 66-year-old grandmother who uses the Web only for email.

It is interesting to note that the RIAA is handling this litigation campaign with little regard for legal tradition. They have not treated these cases in a way that indicates they are painstakingly establishing a whole new family of legal precedents. Instead, the RIAA has adopted the same phrase for these settlements that they might be expected to use in setting CD prices: “What can people be persuaded is a reasonable price?” In other words, the RIAA is running their lawsuits like a business. Although to follow the letter of the law they base their cases on would mean suing for hundreds of thousands of dollars, the RIAA has been allowing people to settle for around $3,000, apparently in an attempt to show what a merciful conglomerate they can be. Whether or not this will counteract all the negative publicity the suits have already generated is yet to be seen. Right or not, it is difficult to stop the citizens of a democracy from engaging in an activity enjoyed by such a massive amount of their peers.

            Putting aside legal issues, do the actions of the RIAA make economic sense? The argument from the industry is of course that ease of access to the songs that make up their artists’ albums has crippled sales; stop the file-sharing, they claim, and people will be forced to buy CDs again. Sadly, the studies examining this claim have been largely unhelpful. The RIAA has commissioned studies that, unsurprisingly, show substantial correlation between downloading and declining sales. There have been independent studies that showed either no correlation or that downloaders buy more music than those who don’t. The RIAA has pointed out, with some validity, an unusual amount of motivation for survey respondents to lie about their music-buying habits. However, this begs the question “Why wouldn’t people lie in the RIAA studies just as much?”

There are other questions raised by assertions from within the industry. Can all the files shared represent lost music sales? Orson Scott Card, a best-selling author and social commentator, is one of several that point out the obvious truth: file-share users constantly download music they have no intention of buying. A case in point would be 12-year-old Briana LaHara, recently sued by the RIAA. Is it really plausible that she or her guardians were just waiting for a good chance to go to the store and stock up on a hundred or so CDs to cover the thousands of songs Briana downloaded for the home computer? Card also makes an interesting point that I see made nowhere else: Some percentage of the good CD market of the early/mid-90’s was composed of people looking to re-buy albums they already paid for on cassette or vinyl. Now that almost all artists are releasing their albums straight to CD, the rebuy market has dwindled.

Perhaps the most glaring question that might be posed to the music industry is: Why do you persist in a failed marketing strategy? For the past several years, the RIAA has devoted almost all of its marketing power into reaching a very young demographic – say 15 – 25. The industry wants to reach young people because they don’t have the set loyalties to certain artists or companies that older consumers do. Young people are therefore considered very “brandable”. However, they are also the audience with the shortest attention span, the least likely to buy an artist’s second album, the most fickle regarding an artist’s popularity, and of course, much more likely to download music than anyone else. This is a problem for music labels because their money-making strategy is still based on the idea of pop icons who release four to five platinum albums. This model allows them to save the money they would otherwise spend building an image and creating buzz for a new band. Yet that is precisely what they can’t expect from the younger consumers, who are often bored with an artist by the time they release their second album. Now, of course, the problem has been compounded: the latest generation of brandable young people is already beginning to internalize fear and resentment that they will specifically associate with these five labels, possibly for the rest of their lives. It is precisely this looming backlash that has motivated several independent music labels to request their removal from the RIAA’s list of affiliates. On the other hand, the largely ignored baby boomer market accounts for an estimated 44% of music sales, and significantly less people that age use file-sharing software. However, because their musical tastes are more fragmented and supportive of niche markets than those of their children, the industry sees them as too much of a challenge to market to.        

While it seems that the economic factors in this situation demand new strategies, the RIAA has firmly attached itself to file-sharing as the source of all their problems. (Since the slump began, only one of the labels involved has done so much as dropped its CD prices.) At the same time, they recognize that a massive amount of people don’t share their views, so they have done what powerful people who desire widespread social change usually do: they are presenting this as a moral issue to children in the public schools, as well as running ads on TV and in movie theaters. Their latest message portrays file-sharing as an activity that hurts artists, depriving them of much-needed income. However, anyone close to the industry can tell you that artists derive very little income from CD sales anyway. Labels make artists sign over the copyrights to their work for a reason. The vast majority of an artist’s earnings come from touring, where a flat fee is usually paid directly to the band, and the risk of low attendance falls entirely on the promoter. So why are these artists willing to make these wounded statements for poignant video spots? It all makes more sense if you recall who signs their checks, and who owns the rights to all of their art. Perhaps it would be carrying the point too far to note that around the same time these ads began running, the RIAA announced it was expanding artists’ health benefits…regardless, if artists acting alone had that much ability to reach the nation with a particular message, they wouldn’t need labels in the first place. All of this is not to say that no artists have encouraged file-sharing – many have enthused over the ability of peer-to-peer technology to expand their fanbase. To be sure, most of these are independent artists, but many signed artists have expressed support in ways as subtle as including the phrase “thanks for downloading” in their album notes. The RIAA has made a strong effort to paint file-sharing as immoral, shouting “piracy” in many crowded theaters, but they still have their work cut out for them.     

            To review: the RIAA’s prosecution of file-sharing reveals a disconnect with the music fans, their consumers, across legal, economic, and moral arenas. These industry leaders risk overloading the justice system, embittering artists and music buyers across all age demographics, and losing all moral credibility with the public at large. Without a serious shift in policy, these labels could be digging their own graves. Indeed, an emerging trend in music publishing has many artists attempting self-promotion through websites, email newsletters, and volunteer “street teams” that bring their albums to the attention of local retailers. Also worth considering is the quiet openness of some imprint labels to taking advantage of file-sharing technology. Although it has not been publicized, the entire albums of two new artists for Windup Records were released in their entirety months before the CDs released, flooding the peer-to-peer networks within days. These mp3s differed from most rips in that they had small sound corruptions occurring at regular intervals throughout each song, allowing the listener to enjoy the overall sound, but still creating enough annoyance that the millions who downloaded and liked one or more of these tracks were still willing to buy the albums when they hit stores months later. One of the artists in question is pop-metal act Evanescence, whose first nationally released album has passed double platinum. Although no official acknowledgement has been made (quite understandable, if true), it certainly appears that Windup Records managed to use file-sharing technology the way that labels traditionally utilize radio. In the face of dramatic changes in the way people across the world listen to music, the RIAA would be wiser to embrace such compromises than to follow its present unyielding course and risk turning the American music industry on its head.