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Why the RIAA Still Stands a Chance

Why the RIAA Is Fighting a Losing Battle

by Steve McCannell

The Recording Institute Association of America (the trade group that represents the U.S. recording industry) has been up in arms about the distribution of music online, claiming piracy and copyright infringement. As someone who has been keeping up with this thread, I believe their accusations do have validity, but their actions to fight this problem will not do much in their crusade.

People who use the Internet to download music will always find a way around the RIAA, much like my dog always comes up with a way out of my backyard. Build up a new barrier, it will be dug under or jumped over eventually. They have the notion that they can control online music just like they have controlled the market in the past, while not accepting the fact that they are doing too little, too late.

The dog is already out of the kennel

The RIAA has started a war, without seeing that the war has already been lost. There is too much technology, too many hungry music fans, and too many computer programmers. Most people who download music off the Internet have a passion for it. Ever since the MP3 format was introduced, it has been the format of choice for these music fans that now have access to thousands of songs and artists that they didn't have access to before. The lid has been lifted from the musical box that we have been living in, and now we have access to the music outside of the box.

As much as I believe the RIAA is fighting to preserve their income from copyrights, they are also fighting to limit the amount of music you have easy access to. They don't have control over the market like they have had for the past 50 years, and are losing more control over the industry each day. If online music distribution becomes the mainstay for consumers to recieve music, that means that record companies will have to eventually lower their retail prices. If the record companies drastically lowered the price of a CD, maybe online music fans would realize that plunking down $8 for a CD is easier than looking for that particular CD online for free.

I sympathize with the RIAA, I agree that they should have the right to protect their interests, and I'm totally against Napster. The people behind Napster claim ignorance, saying that they can't control what people do with their product. Napster in my mind gives its user a quasi-riot mentality. If everyone else is looting the store, why shouldn't I be doing so as well?

The problem is that those stores have insurance (hopefully), and will eventually have their losses covered by the insurance company. Well, if you are an artist who is signed to a label and struggling to sell albums, wouldn't you be a little peeved that no one is buying your album because they can download it for free? There is no "online piracy" insurance available, the artist does not get paid for downloads. So when someone downloads anything that is copyrighted material, they are basically walking out of the store with a song under their jacket.

What the RIAA doesn't understand is shutting down Napster isn't going to aid in protecting their copyrights. The idea is already out there, and the offspring has been born. Now there is Gnutella, which was designed to create self-perpetuating networks that grow independent of one company's involvement. Almost any type of file can be downloaded using the Gnutella software, and users can search by file type or name of the content desired. The key to Gnutella is that it does not use a centralized server system to let users share files, so this time there is no one to point the finger at, no warm bodies to sue. I can't put a leash on my dog if it has no collar; the RIAA can't stop Gnutella if it doesn't have a parent company.

This fact may be a lost opportunity for the RIAA. They could have done well with an alliance with Napster, where they could promote music from their labels with an extremely popular web site and program. Since Gnutella has only a creator and not a company, the RIAA cannot have an affiliation with it. Did they throw away their chance to have a little more control on the music that is being distributed freely on these types of networks?

Trying to lure the dog back to its kennel

One thought to aid in their control of online music is the invention of the SDMI (Secure Digital Music Initiative). The key component of the Secure Digital technology is digital watermarking; embedding an electronic identification in music files. In theory, if you don't have a SDMI-compliant playback device, you won't be able to use the CD. If the SDMI format does succeed, that doesn't mean that the RIAA has protected themselves from copyright infringement. Somebody will come out with a way to remove the watermark, rip an SDMI to the MP3 format, post the file on Gnutella, and make it freely available.

Sony is currently selling singles online for a hefty $3.50 a single, and you don't get the jacket to look at. Major label BMG is partnered with six different companies to try to get their music online. If you were to download one of their songs, you would have to also download new software to play it back, and you could possibly have to download a different piece of software for every music single that you choose to download. As absurd as this sounds, they feel that it is the only way to protect themselves from piracy while trying to put themselves into the online music industry before it becomes too late for their attempt to join in.

Why the dog will continue to get out

The majority of those who download music off the Internet do so because it is free, and this trend will not change when SDMI hits the Internet. MP3 has already won the battle over preferred format, even over higher quality formats that were late in throwing their hat in the ring.

You can bet that there will be a format that comes out in the next few years that will gain momentum and eventually share the pie with MP3, but it will be a format that is non-proprietary. Those who download music online usually distrust the music industry, so chances are that the SDMI format will probably fail because there is no grassroots backing from music fans. MP3 did not become popular because it was a corporate format, it became popular within the underground Internet music crowd, much like Linux has bubbled into popularity after being at a grassroots level for years.

What makes MP3 difficult to overthrow is that consumers have been using portable MP3 players to listen to music away from the desktop, and the ability to play MP3s on your home stereo will probably be available by Christmas time. Orignially SDMI was slated to have their standards and specifications by last summer, and be able to sell SDMI-compliant components by last Christmas. This obviously didn't happen, as the specs and standards for SDMI are still being hammered out.

The biggest battle to control the online music community was lost when the RIAA lost its lawsuit against the Diamond Rio portable MP3 player. This ruling paved the way for other companies to jump on the MP3 bandwagon, which means there will soon be more types of electronic goods on the market that have the ability to play MP3s. That is a crushing blow to the RIAA and to SDMI. Now the people behind SDMI have to realize that consumers probably won't want to buy another high-ticket item if they already have a stereo that plays MP3s.

This isn't like changing from cassette to CD, SDMI doesn't offer anything useful or innovative to the consumer. Electronics manufacturers like Sony, who also owns a major record label, are put into a difficult situation. Will they try to keep up with the electronics market and manufacture stereos that will play MP3s, or will they hold off and build SDMI-compliant stereos months later and risk the lost revenue?

Instead of embracing the MP3 format years ago, the RIAA is now struggling to keep up with it. The courts ruled in the RIAA's favor in their lawsuit against MP3.com, claiming that the My MP3.com service violates industry copyrights and MP3.com's stock plummets. If the RIAA runs MP3.com and Napster out of business, is that going to help their cause? For a short time maybe, but the MP3 die-hards are multiplying everyday, and there are plenty of places to find MP3s on the Web without using either Napster or MP3.com. What is not often mentioned is that the RIAA is crying out that they have lost millions of dollars in revenue due to illegal distribution of their copyrighted material, while this last year was a record breaking year for album sales -- up 8 percent in total dollars and 5 percent in units sold. Does this point to the fact that even though they don't control the environment, the environment is boosting their sales?

You can also bet that the film and television industries are very interested to see how the RIAA fares. Right now an entire filmed program is too large to distribute online, but you can bet on an increased number in broadband connections, which will expose other forms of media to piracy and illegal distribution.

I truly believe that the recording industry will be completely different in 10 years from what it is now, and those involved with the music industry have to adapt and find the niche that will allow them to continue the success that they have had in the past. Unfortunately the war against online piracy was already over before they decided to start one. Once my dog learned that there was a way out of the yard, it doesn't matter how secure I make it -- he'll always figure out how to escape eventually.

Steve McCannell is a writer/producer for the O'Reilly Network and the founder of Lost Dog Found Music.

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