cyberspacial musings
bits about the real and virtual worlds

03 Jul

Catching Up On Digital Music With The RIAA

Apologies on the length of time between posts — it’s summer.

On Tuesday, 25 June 2002, I attended a panel discussion on the future of digital music. On that panel were the following individuals — Michael Bracy of the Coalition for the Future of Music, John Coletta from BMI, Philip Corwin from the law firm Butera and Andrews, Mitch Glazier of the RIAA, David Liebowitz of Verance, and Lee Shubert of KMZ Rosenman.

The notables on the panel were really John Coletta, Philip Corwin and of course Mitch Glazier. Mitch came off as the devil himself, blasting people who download MP3s as pirates and denouncing Kazaa and Morpheus as criminal tools. He wouldn’t go so far as to say that actually downloading those software packages was criminal, but indicated that there are ongoing court cases to make that determination. Obviously he was cautious about making statements to further alienate consumers of music, but it’s clear where the RIAA falls in all of this. They believe that the MP3 trade has caused a decrease in CD sales (I believe them, in spite of some of the studies) and are going to go to great lengths to convince consumers that trading MP3s is wrong.

Philip Corwin represents the folks over at Kazaa and Centerspan, P2P technologies that are all about trading music on-line. He believes that we’re not far away from compulsory licensing — a mandate by the government that MP3s can be traded on line and that a tax (or similar) will be added to Internet service (or similar) to pay for those licenses. This is the same arrangement that the music industry has with radio stations.

There were some great statements made at this discussion:

  • “The one that gets the most eyeballs will determine the business model.” This remarkable comment came from Mitch Glazier. I found it unbelievable that he could even make a statement like this considering that the most eyes right now are on Kazaa and Morpheus and were on Napster. I think the problem is the eyes of the RIAA are blind.
  • “Drawing consumers to legitimate business sites is a real problem for the RIAA and will thus continue to litigate.” Yup, another one from Mitch of the RIAA. So, let’s see if I have this right — can I expect the RIAA to send in the cops to raid my network?
  • “The ones with the fewest rules will win.” I forgot who made this statement, but it’s probably true. This is why the record industry keeps failing with their own attempts to put music on the Internet — they have too many rules.
  • “The Internet is a p2p technology.” Well, it used to be anyway. Philip Corwin made this comment and, technical realities aside for the moment, it’s true. He made the statement to justify the Kazaa approach to MP3 sharing.
  • “Financing the development of bands is a good business model.” Philip Corwin made this statement also. I tend to agree with him, but the RIAA rep seemed to think otherwise as the next comment indicates.
    Every consumer thinks that he has the right business model.” Guess who said this? Mitch from the RIAA of course. He’s really right — everyone thinks they know best. He did make a couple of points that were important to realize. The record companies have a number of contracts in place now that dictate how they do business with artists that will have to be reworked in this new Internet era. He mentioned that this could take years, but I think that’s an excuse for not reading the writing on the wall.

  • Technology has not been developed yet that will drive the business model.” Lee Shubert said this to indicate his optimism that MP3 sharing will change as technology improves. I disagree with him on this point, however. The genie is out of the bottle and it’s important to recognize that consumers are now going to expect free music. This is the same situation that occurred in the software industry as it was emerging and now you can barely start a company to sell software to consumers.
  • “It’s important to look at radio as a cautionary tale.” Michael Bracy said this as an intro to the comments on compulsory licensing for radio stations. The caution goes both ways. The record industry ought to act fast regarding licensing their content in a way that’s palatable to consumers or they will definitely be hit with a compulsory license. Similarly consumers need to watch out for big Internet taxes from their ISPs.
  • “Piracy and P2P are not the same thing.” Philip Corwin’s comment, asserting that Kazaa and Morpheus and others are perfectly legal and you just can’t help what consumers do with them. Not that I disagree with him, of course :-).

What conclusions can one draw from all of this? Well I found a certain amount of cluelessness in the room. The big assumption is that everyone in the music sharing is doing it for profit, but that’s clearly not the case. There are companies that are trying to make money on sharing MP3 files, but there is clearly open source code out there that many use. I get my music from Limewire or USENET these days, neither of which is a money making venture.

I believe that the RIAA needs to sharpen up. They don’t have enough technical juice to really engage with the community of folks that will be continuing to crack every last method of securing music. They need to educate the consumer, not litigate. They need to allow some of the services to exist and just work on extracting a license from them. While the RIAA probably worries that this will open the floodgates forever, that’s truly doubtful. Things change very quickly out here in technology land. With some real options that are supported directly by the music labels, options that don’t look like crass attempts to command $15 for 10 songs, things could change.

But I don’t think that they are smart enough to realize it. They are too busy trying to preserve the bottom line that they are willing to sacrifice virtually everything in the process. Look for a huge crash in the music industry in the next year or two — you know it’s coming.

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