Category Archives: Music

A brave new world: the music biz at the dawn of 2008

Is the music industry dying?

An anecdote in a recent Economist perfectly summed up the problems facing the major music labels. After EMI, the smallest of the Big Four, invited a teen focus group to its London headquarters in 2006, it wanted to give the teens something for their time. The response is worth quoting in full.

At the end of the session the EMI bosses thanked them for their comments and told them to help themselves to a big pile of CDs sitting on a table. But none of the teens took any of the CDs, even though they were free. “That was the moment we realised the game was completely up,” says a person who was there.

Given the years of declining revenues at the major labels and the constant stream of stories in the mainstream press about music’s decline, you’d be forgiven for thinking that the music industry’s pallbearers are already lined up and waiting in the hallway. But music isn’t on its deathbed yet; in fact, people are listening to more artists than ever before, on more white earbuds than ever before, in more places than ever before. They’re just not paying as much.

Don’t put all the blame on file-swapping, either, or chalk the problems up to an inability to “compete with free.” Digital music sales soared in 2007, and in fact, the total number of “units” moved during the year increased over 2006. eMusic, the number two music download service in the US behind iTunes, doubled its own projections for the Christmas season, pushed out 10 million tracks in the month of December, and added 50,000 new paying customers in the last six months.

And all of this happened without the four major labels even offering DRM-free tracks online. Now that Sony BMG has finally capitulated, 2008 is poised to be the year digital goes so mainstream that even your parents use it.

All that good news means that music is alive and well—but it doesn’t mean that things are rosy at the major labels. Let’s run the numbers from 2007, then do a case study on eMusic’s recent results to see just what kind of success can be had in the digital download world by competing with free.

Major label blues

Revenues at the four major labels (Warner, EMI, Sony BMG, and Universal) have been on a slow decline throughout the decade. From 2002-2006, the majors’ revenue declined by 11 percent even as movies held steady at the box office and video games grew. Despite the downturn, the chart below makes clear just how large the major label music business truly is.

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Things have gotten bad enough that the labels themselves are demanding change even from their trade groups. EMI has recently been pushing both the IFPI and RIAA to restructure their operations, for instance, and all four labels have tried to adjust to a new world by dropping DRM and launching innovative programs like “Comes With Music.”

Is the downturn due to people not paying for music, though? Hardly; it’s due in large part to people not paying for CDs.

Again, looking at data from 2002-2006, we can see that CD sales have seen sharp decreases in all but one year, with 2006 having the sharpest drop of the bunch (2007 may have been worse).

 

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  But unit sales have actually been rising over the last few years, with 2007 being another strong year. Reuters recently reported that overall unit sales rose 14 percent in 2007, with digital sales jumping by 45 percent.

 musicsales2.jpg

What’s happening is obvious; consumers are making far more purchases than ever before, but are often choosing to grab only selected tracks rather than complete albums. The album may not be dying in a general way, but it has certainly lost its importance as the primary way that buyers in the digital era get their music. Bands with a track record of putting out uneven albums won’t be able to milk that strategy for massive profits anymore, nor will any labels that nurture such acts.

That has translated into a grim situation at the major labels. Warner Music’s stock price is down more than 70 percent from its IPO price in 2005. EMI, recently acquired by private equity firm Terra Nova, was appalled by some aspects of the business it had acquired. In a recent interview with the Financial Times, new EMI boss Guy Hands asked rhetorically, “Can you imagine what would happen if most consumer industries over-shipped by 20 per cent? Can you imagine any consumer industry having 10 per cent of employees as middle management? Can you imagine only 6 per cent of staff in production?” Things are so bad that EMI has been spending $50 million a year just to destroy CDs it couldn’t sell, and has announced plans to lay off as many as 2,000 employees.

The situation is reminiscent of a Tim O’Reilly essay from 2002 in which he pointed out that “File-sharing networks don’t threaten book, music, or film publishing. They threaten existing publishers.” The same holds true of music. As long as the demand is present, there are huge opportunities to make money by giving consumers what they want—but that’s no guarantee that existing business models will continue to support companies.

It’s often said that it’s hard to compete with free, and that may be true for some segments of the population. (Are college kids ever really going to cough up much cash?) But for most adults who don’t get off on breaking the law or on stiffing artists, it’s easy enough to compete with free. Make something that’s faster, more reliable, with better metadata and album art, and a huge DRM-free selection. Throw in charts, some editorial staff, and some community features, and money is there to be made.

Even as the majors have found their revenues declining, indie-focused companies like eMusic are growing rapidly. Ars talked to eMusic CEO David Pakman to get some insight into how his company fared in 2007.

Case study: eMusic

eMusic remains the number two source of digital music downloads in the US. While it’s a bad time to be in the business of physically distributing music, the converse is also true: it’s a great time to sell songs online. eMusic blew away its own internal sales projections for the holiday season, moving more than 500,000 songs on Christmas Day alone, and 10 million in the month of December.

In the last few months, the service has seen subscriptions surge from 350,000 to more than 400,000, with each of those users paying at least $10 a month to download a set number of tracks (each song can cost as little as a quarter, but you can’t buy only one track).

“We really crushed it,” CEO David Pakman told me last week, in an obviously ebullient mood after doubling his company’s own sales projections for the holiday season. That stands in stark contrast to sales of physical CDs, which were down 20 percent over the same time period.

Convenience isn’t the only thing at work here; price is also a major factor. Pakman believes that the CD is priced “completely wrong,” and points out that hundreds of major DVDs can be had for $4 or $5. Despite the pressure that music labels have been under the last few years, CD prices have never approached this level (not counting those Beatles Greatest Hits! (as played by the Western Ljubljana State Radio Orchestra) discs you find in value bins).


David Pakman

Whatever artists and labels might think their music is worth, Pakman believes that consumers see music as simply being worth less than movies. If a thriller can be made for $80 million but be sold for $7.50, why should music remain in the $11 to $14 range? At those prices, fans would much rather 1) use P2P services and pay nothing, 2) pay a tiny amount to pick up the “hits” from online music vendors, or 3) purchase digital albums online for under $10.

The CD, with its lossless music, album art, and (general) lack of DRM, could move more units if it were appropriately priced, Pakman believes, but he doesn’t see this happening. Instead, his view is that we’ll see another 20-30 percent drop in CD sales in 2008.

But the divide here isn’t just between physical and digital distribution; it’s also between major labels and the indies. eMusic only distributes independent music. At first, this was simply a response to the fact that the majors refused to release their music without DRM, and the music has always offered MP3s. Now that the DRM walls are coming down, though, the company still has no interest in the vast majority of major label catalogs. Pakman says that eMusic might like “portions” of major label music, but much of it is not targeted at the eMusic demographic (music lovers 25 and older).

So eMusic’s success this year is also good news for the independent labels. The indies can now move serious units and have become much more than the major label’s “farm team.” Just consider a few of this year’s indie releases: Paul McCartney, James Taylor, Arcade Fire, David Gray, Spoon, Taylor Swift, the New Pornographers, and John Fogerty. Hardly a group of no-name lightweights.

Internet distribution has opened up music (like many other products) to the effects of the “long tail.” Since huge quantities of goods costs so little to store and deliver, online venues can offer products that appeal only to very small numbers of people and still make money. “The long tail does better online,” said Pakman, saying that eMusic is proof of that fact.

That’s great news for smaller labels, which have been grabbing a larger percentage of the total music market for the last few years. One major music conference coming up next month is even running a session called “The Indie Takeover?” to discuss the shift.

The majors haven’t helped themselves by pushing legendarily shifty contracts over the past 50 years, and artists are well aware of the pitfalls. Now that other options are proving workable, groups like Radiohead are publicly telling other artists to “think different.”

Diagnosis: Competition

So, in conclusion:

  • Indies gaining market share
  • Digital downloads up 45 percent in one year
  • Well-known artists going indie
  • DRM-free downloads from all major labels
  • Major label revenues declining
  • CD sales in a death spiral

Those don’t suggest that the music business is dying so much as changing, and the center of gravity is shifting to individual artists and to smaller, more focused operations. There will always be a role for what are still called the “major labels”; who would put out all those American Idol and Hannah Montana albums, for instance?

It’s too simple to say that the majors suck and indies are the future. Labels like Nonesuch (part of Warner) are putting out great music with a lean staff. They’re also willing to make artist-friendly gestures like allowing Wilco to sell CDs with no Nonesuch logo, no Warner logo, and no copyright information (this is contained on a disposable cardboard sleeve around the jewel case).

But the majors aren’t entitled to their “major” status by an act of God. They have to scrap for it like anyone else. The Economist put it well when it concluded that the majors may have to adjust to lower revenues. Calling it the current experiments with music “a leap into the unknown,” the magazine noted that “some among their number, indeed, may not survive.”

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Trent Reznor Does NOT support an ISP tax


I was asked by Saul’s camp to do some press with CNET explaining my position on releasing Saul’s download numbers to the public. It seemed like a good opportunity to explain where I was coming from. We spoke for over an hour and I left the conversation thinking I’d cleared up the misconception that I thought the entire release of “niggytardust” was a failure.

Well, it appears the story was written before I was involved, and I woke up the next day to find out I’m a supporter of an ISP tax. Thanks, CNET. I believe I was asked for possible solutions for the recording industry to which I replied something along the lines of “perhaps an additional 5 dollars on your ISP bill that allowed you complete, easy access to all the music in the world would work”. Of course in reality this would never work because it would require accurate accounting, agreement among thieves, etc. And, who the fuck cares what I think about this, anyway?

Well, that became the attention-grabbing headline and thanks to Google alerts I can see that lazy journalists all through the internet love a good headline to borrow.

Aside from all that…
Here’s a good read a friend sent:
http://observer.guardian.co.uk/omm/story/0,,2241544,00.htmlread more | digg story

Music Industry Gets An Injunction Against Rapidshare

In March 2007, a court ruled that Rapidshare could be held responsible for copyright violations committed by users who uploaded copyrighted material to their servers. Now, rumors are circulating that Rapidshare has been shutdown – this does not seem to be the case.
Rapidshare is one of the world’s largest file-hosting sites, with a claimed data storage capability in excess of 4 petabytes and offering at least 110 gigabits of bandwidth.

Almost exactly 1 year ago, P2PBlog reported that the German rights organization GEMA had gained a preliminary injunction against Rapidshare which ordered the company to stop hosting and distributing titles which GEMA represent.

Rapidshare made an appeal – but lost. The court decided that Rapidshare should be forced to monitor all uploads which infringed on GEMA’s copyright – a feat which the company said was impossible.

At the time, GEMA boss Dr. Harald Heker said that the Court’s decision shows that it’s not down to the rights holders to police commercial outfits such as Rapidshare for their copyright works. He went on to say that he felt that the decision would send a major signal to all file-hosting sites where copyright works are used to generate revenue for themselves.

Then in April 2007 it was reported that Rapidshare was fighting back, suing GEMA in response – with the aim of clarifying the legal position for file-hosting sites.

Now, rumors circulating on the web indicate that Rapidshare was shut down. Quite a few sites reported the news but this situation does not appear to be true. Rapidshare’s Wiki page is now closed due to vandalism which is believed to have carried erroneous information which contributed to the confusion.

According to a report, a Rapidshare technician said: “There are rumors concerning attacks made on the Rapidshare.com servers. There are also rumors that Rapidshare has been shut down by a court order. These rumors are false. We would like to apologize to our users and inform them that no data has been lost. There have been some hardware issues as a result of high bandwidth and server overload. We are doing our very best to resolve the hardware issues, and users should expect uptime by midnight tonight (GMT)”

There is no doubt that Rapidshare stores millions of files – including lots of music. The operators of Rapidshare claim they have no idea what material they store on their servers and are in no postion (much like a regular ISP) to monitor or police the content. The users upload the content, they say, and as such, it’s out of their control.

However, the injunctions issued by the District Court in Cologne indicate that Rapidshare’s liability for such infringements still exist as they were carried out during the course of Rapidshare’s business. GEMA head, Harald Heker said at the time: “The mere circumstance of shifting acts of use to users and the purported inability of the operator to control content do not relieve the operator of a service from the copyright liability he/she/it possesses for the content made available for download from the operator’s website(s).”

In the meantime, Rapidshare.com and Rapidshare.de continue to operate.

This article has been updated

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Music Industry Gets An Injunction Against Rapidshare

In March 2007, a court ruled that Rapidshare could be held responsible for copyright violations committed by users who uploaded copyrighted material to their servers. Now, rumors are circulating that Rapidshare has been shutdown – this does not seem to be the case.

Rapidshare is one of the world’s largest file-hosting sites, with a claimed data storage capability in excess of 4 petabytes and offering at least 110 gigabits of bandwidth.

Almost exactly 1 year ago, P2PBlog reported that the German rights organization GEMA had gained a preliminary injunction against Rapidshare which ordered the company to stop hosting and distributing titles which GEMA represent.

Rapidshare made an appeal – but lost. The court decided that Rapidshare should be forced to monitor all uploads which infringed on GEMA’s copyright – a feat which the company said was impossible.

At the time, GEMA boss Dr. Harald Heker said that the Court’s decision shows that it’s not down to the rights holders to police commercial outfits such as Rapidshare for their copyright works. He went on to say that he felt that the decision would send a major signal to all file-hosting sites where copyright works are used to generate revenue for themselves.

Then in April 2007 it was reported that Rapidshare was fighting back, suing GEMA in response – with the aim of clarifying the legal position for file-hosting sites.

Now, rumors circulating on the web indicate that Rapidshare was shut down. Quite a few sites reported the news but this situation does not appear to be true. Rapidshare’s Wiki page is now closed due to vandalism which is believed to have carried erroneous information which contributed to the confusion.

According to a report, a Rapidshare technician said: “There are rumors concerning attacks made on the Rapidshare.com servers. There are also rumors that Rapidshare has been shut down by a court order. These rumors are false. We would like to apologize to our users and inform them that no data has been lost. There have been some hardware issues as a result of high bandwidth and server overload. We are doing our very best to resolve the hardware issues, and users should expect uptime by midnight tonight (GMT)”

There is no doubt that Rapidshare stores millions of files – including lots of music. The operators of Rapidshare claim they have no idea what material they store on their servers and are in no postion (much like a regular ISP) to monitor or police the content. The users upload the content, they say, and as such, it’s out of their control.

However, the injunctions issued by the District Court in Cologne indicate that Rapidshare’s liability for such infringements still exist as they were carried out during the course of Rapidshare’s business. GEMA head, Harald Heker said at the time: “The mere circumstance of shifting acts of use to users and the purported inability of the operator to control content do not relieve the operator of a service from the copyright liability he/she/it possesses for the content made available for download from the operator’s website(s).”

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Are “American Idol” Stars for Real, or Just for Reality TV?

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 Taylor Hicks, Katharine McPhee and Ruben Studdard were all dropped from their record labels recently, while Kelly Clarkson’s weathering a storm of bad press. (AP Photos)

“American Idol” makes its triumphant return to TV tonight, and with the Hollywood writers strike still going strong, more viewers than ever may tune in to see Simon Cowell, Paula Abdul, Randy Jackson and Ryan Seacreast try to turn a brand new batch of contestants from off-key shower singers to polished pop stars.

But will the seventh season of “Idol” produce a music legend in the making, or just another reality TV trophy-holder?

The last six months have made clear that not all who grace the “Idol” stage go on to find fame and fortune. Season one winner Kelly Clarkson split with her management, sparked a storm of negative press around her third album, and canceled her summer tour. Season four finalist Jessica Sierra made more headlines for her drug and alcohol abuse than her “Idol”-honed talents.

Poor album sales got three “Idol” stars booted from their record labels: Season two winner Ruben Studdard, season five winner Taylor Hicks and season five runner up Katharine McPhee.

And while 2006’s “American Idols Live” tour practically sold out, last year’s run saw only 68 percent capacity crowds.

Is “American Idol,” one of the highest-rated programs on TV, losing its touch?

“I think the program is kind of showing its age right now,” said Sean Fennessy, Vibe magazine’s associate music editor.

“Jordin Sparks had the lowest debut of an ‘Idol’ winner on the charts,” he added, noting the season six winner’s November debut at No. 10 on the Billboard 200 album sales chart. “That is exceedingly low for someone from a show that had millions of viewers a week.”

The Sanjaya Factor

Sure, Sparks’ less than stellar debut could be pinned on declining sales throughout the music industry or poor timing. But it could also be because by many accounts, the biggest star of season six was not Sparks — it was Sanjaya Malakar, the “ponyhawk”-ed pretty-boy who baffled the “Idol” judges by sticking around far longer than his voice warranted, thanks to a cult following among the show’s viewers.

The Sanjaya phenomenon — the 18-year-old spawned YouTube spoofs, conspiracy theories and a legion of “Fanjayas” — proved again that the “Idol” audience doesn’t necessarily care about talent as much as personality. (Engineering nerd William Hung started the trend, scoring 15 minutes of fame and a record deal after belting out Ricky Martin’s “She Bangs” in a season three “We almost don’t have to argue whether the Sanjaya factor undermines ‘American Idol’s’ authority, because the intention of the show isn’t about authority in the industry — it’s about giving the viewers what they want,” said Lizzy Goodman, Blender magazine’s editor at large. “We spend so much time in the industry trying to appeal to the audience, and here’s an example of the audience cutting out the middle man. These are pop stars selected by America for America.”

In other words, if “Idol’s” winners and runners up can’t stand alone as pop stars in the greater marketplace, Americans have no one to blame but themselves. But as sales figures show, not all of “Idol’s” outputs are failing.

Rocker Chris Daughtry came in fourth place on the fifth season of “American Idol” but went on to beat out all those who beat him when his debut album sold 3.6 million copies and Nielsen named him one of the Top 10 selling artists of 2007.

Season four winner Carrie Underwood’s debut album went six times platinum and earned her a Grammy. Her latest CD, “Carnival Ride,” has sold more than 2 million copies in the United States, and scored her a slew of country music awards.

“I think it would be easy to dismiss the show if you had victors who came out with the album and it had some quick and dirty sales and then they were never heard from again,” said Chuck Taylor, Billboard’s senior correspondent. “And certainly, we do have those personalities from the show. But we also have some real long-term talent that has developed as a result of ‘American Idol.'”

As it heads into its seventh season, “Idol” plans to tweak its format: Contestants will be allowed to perform with instruments in early rounds, putting more emphasis on talent.

But yesterday, Daughtry, biting the hand that didn’t feed him enough, told RollingStone.com that the show’s days of relevance may have come and gone.

“I feel like it’s definitely lacking some credibility at this point,” he said. “It’s funny at first, but come on. They spend three weeks on people who can’t sing, and that’s what they’re banking it on. [They should] find some people that you can really invest in.”

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The RIAA speaks — and it gets worse

The RIAA has quickly become one of the most disliked organizations in the world. Working ostensibly with the interests of the artists in mind, the organization has single-handedly instituted a policy of lawsuits and education in an attempt to curb the piracy of music.

Although this has been going on for quite some time now, I recently read a press release from the organization outlining its successes and what 2008 will look like for its College Deterrence program.

The press release tells us that the RIAA (on behalf of the music industry) has sent out “a new wave of 407 pre-litigation settlement letters to 18 universities nationwide as part of an ongoing campaign against online music theft. The letters reflect evidence of significant abuse of campus computer networks for the purpose of copyright infringement.”

Once those students receive the pre-litigation settlement letters, they have the opportunity to surf over to the P2P Lawsuits Web page to settle with the RIAA before a court battle ensues.

Of course, the story doesn’t quite end there.

To get a feeling for why the RIAA has implemented this strategy and has seemingly ignored the piracy cartels all over the world, choosing the soft target instead, I got in touch with the organization and asked a representative 10 questions to clear the air. This transcript will be made available tomorrow on The Digital Home.

Unfortunately, the answers given proved even more damning to an organization that is already sitting on a powder keg.

Perhaps more than anything, college students simply don’t trust the RIAA and its questionable practices. As Cara Duckworth explained to me, “It was becoming clearer that despite cool new legal services and the ongoing educational efforts, too many students–some of music’s biggest fans–were getting their music illegally and learning the wrong lessons about stealing and the law. Bringing lawsuits was by no means our first choice, but a necessary step we had to take.”

Of course, whether or not lawsuits were not truly the first choice is debatable. In fact, judging by the lack of other alternatives offered except to say that the RIAA is “actively investing resources in the education of students of all ages on the value of music and importance of copyrights,” there isn’t too much evidence to suggest lawsuits isn’t the organization’s favorite form of deterrence.

Beyond that, the general theme of the interview with the RIAA could be characterized by a general lack of understanding and at some points, somewhat insulting.

When asked why the RIAA is going after an easy target–college students–the response made me cringe: “College students have reached a stage in life when their music habits are crystallized,” Duckworth said. “And their appreciation for intellectual property has not yet reached its full development.”

Sadly, this statement tells you everything you need to know about the RIAA. Does this organization actually believe that people who have the right to vote and go to war don’t have the ability to make sound decisions about intellectual property? Maybe it has nothing to do with lack of development and everything to do with an extreme distaste for the recording industry.

The RIAA’s discussion on students (and the general lack of understanding thereof) doesn’t quite end there. Duckworth went on to explain that college students “used to be some of music’s greatest fans, unfortunately that is no longer the case.”

According to Duckworth, students who steal copyrighted music are not fans of music? I simply don’t understand the logic. Look, I’m not here to endorse the stealing of music and I encourage everyone to buy it. But by undermining the intelligence of college students and insulting them because of their perceived “lack of development,” I don’t see how anything could (or will) change.

Beyond that, the real issue lies not with college students stealing music, but with huge piracy cartels overseas that have created a bit of a cottage industry out of stealing and redistributing media. Because of that, I asked Duckworth about it. After telling me that college students have become the world’s largest group of pirates, Duckworth explained that the RIAA wants to “take action against the services themselves” and indicated that the organization is “working with policymakers in Washington to encourage countries whose copyright laws have not kept up with the times or who do not appropriately enforce intellectual property violations” to catch up.

Regardless, it doesn’t seem to me that the RIAA is doing enough. Why are criminal enterprises that contribute a significant amount to the piracy losses that the organization is so quick to cite allowed to run amok, while grandmothers and students who pirate music are targeted? Sure, those people shouldn’t be pirating music either, but shouldn’t the organization go after the kingpins instead of the low-hanging fruit? I certainly think so.

Intriguingly, the RIAA believes its policy of suing violators is working, but depending on the study you read, piracy has flattened out or grown at a relatively steady, albeit slower, pace when compared with its meteoric rise just after the turn of the millennium. According to BigChampagne, a company that specializes in tracking P2P and Torrent use, May 2006 saw 9 million individuals connected on peer sharing sites, compared with 9.35 million just one year later. Beyond that, NPD found that 15 million people downloaded songs from P2P networks in 2006 and an estimated 5 billion files were added to computers–a 47 percent increase over the prior year.

As if that wasn’t enough, a more recent study from NPD claims only 50 percent of Mac users paid for their music in the third quarter of 2007, compared with 16 percent of PC users. If true, are lawsuits really working?

According to Duckworth, lawsuits have made “people more aware of what is legal and illegal when it comes to downloading music.” But if you ask me, the RIAA’s policy of utilizing lawsuits to make people “more aware” is creating a more hostile environment that only harms the organization’s standing in the court of public opinion.

Of course, Duckworth disagrees. She contends that although some may dislike the RIAA, “amongst the general public, the favorability ratings of the record industry remain as positive as ever and surpass other forms of entertainment like movie or TV studios.” Of course, the question is not necessarily whether the public likes Sony BMG or EMI, the real question is whether or not people like the RIAA itself. And so far, very few do.

In the end, Duckworth says that we should be skeptical when we hear news on the RIAA. According to her, she would rather “give [us] the facts and encourage [us] not to believe everything [we] read that aggressively villainies the organization.”

Unfortunately, that is easier said than done. When an objective observer looks at some of the actions taken by the RIAA over the past few years, including hiding behind the Digital Millennium Copyright Act in 2003 to force Verizon to hand over private customer information, asking the court to force a 10-year old girl into a deposition over a lawsuit with her mother, and a host of others where the organization chose to attack low-hanging fruit instead of finding and charging those enterprises that have allowed piracy to become so ubiquitous in the first place, it’s no wonder people dislike this organization.

In an environment where technology is changing by the minute, there are still some organizations that flounder in the past. Is piracy wrong? Yes. Should people pirate? No. But what the RIAA doesn’t understand is that its policy of lawsuits only enrages people and fails to bring about change.

That said, it seems like the writing is on the wall. The RIAA will continue to employ its bullying tactics in the hopes that piracy will stop, but the recording industry will refuse to realize that what we really want as consumers is the ability to take music and do what we want with it. Beyond that, the industry will never realize that although I can copy a track I purchased and send it along to a friend, sales will continue to rise because most people are honest and are willing (and ready) to do the right thing.

I commend the RIAA for standing up to the issues I raised and answering them as forthrightly as possible. And while we may not have received the answers we would have liked, we gleaned even more knowledge of this organization than previously known.

Intriguingly, ArsTechnica reported on Friday that the recording industry has some doubts about the viability of the RIAA and at least one of the major labels–EMI–is considering pulling all of its funding by March 31, if major changes in policy and structure are not made. Regardless, there is no indication that we can expect a major shift going forward. And I, for one, am extremely saddened to hear that.

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EFF tries to quash music labels’ “making available” claims

The music labels’ case against Jeffrey and Pamela Howell has taken on mythic dimensions over the last few weeks after the Washington Post went a little nuts and implied that the labels were suing the couple for making personal rips of their CDs (it later corrected the story). The truth is that Howells are being sued for having those rips in a shared KaZaA folder. But lost in the controversy over the RIAA’s refusal to say that personal CD ripping is legal is the fact that the Howells aren’t being sued for swapping songs with thousands of people around the world; instead, they are charged with making songs “available” for download. In a new amicus brief (PDF), the EFF argues that there’s no such thing as “attempted copyright infringement.” Yet.

The labels allege that 11 specific tracks were shared by the Howells, though the only evidence of such sharing was the fact that the files were in a shared folder and were also downloaded by the RIAA’s investigative arm, MediaSentry (now SafeNet). According to the EFF, though, this simply is not evidence of actual copyright infringement. The group takes no position on whether the Howells are guilty or not, but it does want to challenge this particular method of attack.

Because the law specifically gives copyright owners the ability to control copies distributed “to the public,” the music labels need to show that such distribution took place. The EFF points out that the copyright holder itself can hardly be considered “the public,” and goes on to claim that “an authorized agent acting on behalf of the copyright owner also cannot infringe any rights held by that owner.” Their conclusion is therefore that “where the only evidence of infringing distribution consists of distributions to authorized agents of the copyright owner, that evidence cannot, by itself, establish that other, unauthorized distributions have taken place.”

The music labels appear to be claiming, in essence, that because MediaSentry was able to download the files, it’s pretty darn likely that at least one member of the public did so—but they don’t actually offer evidence that this happened.

The EFF, turning to mathematics to defend its argument, points out that 2.2 million KaZaA users were online back when MediaSentry grabbed the files in question. Because the songs in question were from hit records and not niche indie bands, the EFF says that “it is highly unlikely that, among the millions of KaZaA users who are likely to be sharing them at any time, these 11 songs would have been downloaded from Defendants’ computer.”

The EFF wants to put the brakes on the labels’ “making available” theory and force the labels to show actual distribution to members of the public. The ramifications extend far beyond this particular case and even beyond the music industry’s lawsuits in general, and could affect everything from satellite radio to search engines.

Although attempted copyright infringement isn’t yet illegal, it could be in the future. Rep. Steve Chabot (R-OH) introduced the Intellectual Property Enhanced Criminal Enforcement Act of 2007 last summer. The bill, which was backed by the Justice Department, would allow some prosecutions for “attempted infringement.” That bill, fortunately, has gone nowhere. Yet.

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