RIAA Update

CNET reports that the Washington Post may have been stretching the point a bit when it characterized the RIAA as attempting to criminalize the simple act of copying music to a PC.

Apparently, the RIAA doesn’t take issue with the defendant for copying music onto his computer, but for copying music into a shared folder on his computer — that folder being shared over a peer-to-peer network. Marc Fisher, the author of the Post article stands by his characterization of the suit, quoting Jennifer Pariser (Sony BMG’s chief of litigation) as testifying that “when an individual makes a copy of a song for himself, I suppose we can say he stole a song.”

I don’t think this changes my interpretation of the RIAA’s desire to protect the revenue they get from online distribution. Over time, the RIAA members will see revenues from CD sales decline and revenues from online downloads increase. Piracy and online music sharing, regardless of the source of the bits, will always be the RIAA’s enemy number one.

However, I do think it will become increasingly difficult for the RIAA to use the location of files on a customer’s computer as a measure of malfeasance. The problem, for the RIAA, is the peer network itself. My guess is that eventually we’ll see the RIAA press for legislation curtailing peer-to-peer distributed networks over the internet, probably in conjunction with legislation allowing network carriers to prioritize network traffic (and block peer-to-peer network traffic). That means that the RIAA will be at odds with “net neutrality” and will find itself aligned with major carriers (telcos and cable companies).

As I’ve said before, the future will be decided by Congress — and it will be decided in ways favorable to the long-term vested interests: telcos and the RIAA. Again, I want to make clear that this is not a partisan point. Neither party will be any better in this regard. The fact that regulations serve to further the interests of large corporations is a fact of regulation, not party politics. It’s a phenomenon called “regulatory capture” and it’s an integral part of public choice economics.

More on the RIAA

Eric left a comment on my previous post that prompted a lengthy response. I’ve decided to post my response as a post on its own.

Beware what you wish for.

With new media distribution comes new media tangles. The mix-tape freedom that we enjoyed when we were teens is being threatened by new business models. This new lawsuit isn’t designed to protect DRM — it’s designed to protect revenue streams. Amazon is great, but the RIAA members make money from Amazon. They don’t want us burning CDs because that keeps us from spending money at Amazon.

The problem is that the music publishers are important. Radiohead’s pay-as-you-wish music strategy was successful because they were able to capitalize on a large, distributed network of fans — fans that were acquired in large part due to the efforts of the music companies that Radiohead has now forsaken.

I don’t cry for the publishers; they made plenty of money off Radiohead. But your local garage band — no matter how good they are — can’t match Radiohead’s success. The music companies provide artists with distribution and, even more important, promotion.

Amazon, iTunes, Rhapsody — those are all distribution channels that feed into the RIAA revenue stream, and the RIAA will defend its revenue stream. The internet has changed the method of distribution, but it hasn’t (yet) eliminated the need for promotion.

I expect, over-time, the terms of publishing contracts with artists will change very little. I expect that artists will receive — on average — a greater percentage of revenue, but less revenue over all. As with book (and film) publishing, we’ll see more massive blockbuster hits accounting for a greater percentage of overall profits, while at the same time we’ll see more and more product being delivered to the consumer.

The question is how we monetize that product. If music follows the publishing industry, we’ll see big bands subsidizing the promotion of smaller bands, which may not be such a bad thing. Internet distribution will increase, as will internet promotion. But music companies will remain players so long as they can continue to help match an artist with his audience. The opening, as I see it, is for an association of musicians to band together and create an “artist-owned” promotional agency. With the costs of production declining, musicians would record and produce their own material, and then submit that material to the agency who would act as a marketing and promotional firm, as well as a clearinghouse for distribution. (Sounds like a money-maker to me! Who’s with me?)

But in the near term, I think a lot depend on political will. Copyright law needs amending, and it will certainly be amended during the next administration. But how will it be amended? Politicians being what they are, it will be amended in ways favorable to the RIAA. Regardless of who wins the election.

RIAA and Evil

The Recording Industry Association of America (RIAA) is now arguing that copying your CD onto your own computer is illegal. (No distribution required.) They’ve sued a young man for doing just that.

I doubt that they’ll succeed in their efforts. In fact, I’m a little surprised that they’d bring this suit in the first place, as a defeat would cost the RIAA far more than they’d gain in a win. The right to copy your CD is accepted practice, but it is not ~clearly~ legal. If the RIAA loses this suit, then that practice becomes further insulated from legal challenges. And I find it hard to imagine that the courts would hold that music on a CD is inherently different from broadcast music and video (the right to tape and time-shift broadcasts on VCRs and DVRs being clearly established).

However, it’s likely that the RIAA will use a slightly different tactic in this case than they have in the past. The RIAA has long held that copying and distributing music is a form of theft — theft because the RIAA members lose revenue on CDs that the parties involved would otherwise purchase. Copying music onto your own personal computer, however, is revenue neutral.

Or at least it was.

But now, with the advent of online music sales, copying a CD onto your own computer means that you don’t have to buy the song online. More lost revenue. Therefore copying =

So don’t just blame the RIAA and the record companies, blame Apple and iTunes. And the cell-phone companies too. If this trend continues, we’ll soon have to buy the song once to listen on our portable music player, again to listen in our car, again to play it on our home computer, and again to use it as ring-tone.