Money Matters - Simplified

The RIAA's Win Is Yet Another Loss

It's another pyrrhic victory for the music industry.

The Recording Industry Association of America (RIAA) won another battle against music piracy this week, and by won I naturally mean lost.

Awarded $1.92 million in a case against a 32-year-old mother who
presumably downloaded and shared 24 different songs, the RIAA is toast.
It knows it can't collect the money from the woman of modest means, and
all this case does is make more music fans turn against the major
record labels.

Come on: $80,000 per track, for making a Richard Marx song available
on peer-to-peer trading site KaZaA? Are you guys out of your mind?

The music industry will argue that it's sending a message. You don't
have to be a power user, swapping countless MP3s or BitTorrents, to be
nailed for piracy. Unfortunately, that message will get drowned out by
the wider perception that the music industry is just greedy and out of touch.

No torch and pitchfork for me, thanks

I'm not one of those
RIAA haters. I fully grasp that pirated music, movies, and software are
illegal. I would like to think that the same person who downloads the
new Green Day album or the latest James Bond flick would never walk
into a store and swipe a CD or a DVD.

I was young once. I was in a band signed to Sony's (NYSE: SNE)
Columbia Records. I respect the time and effort it takes to write,
rehearse, and record music. Unfortunately, the music industry also
assumes that someone who would illegally download a track for free
would otherwise pay for it.

That is what the four major labels -- Universal, EMI, Sony, and Warner Music Group (NYSE: WMG)
-- don't get. Illegal downloading isn't what doomed the industry. It's
the greater presence of the Internet that has made the labels less
relevant.

Cyberspace killed the radio star

The Internet armed garage bands with the tools to reach the masses. An unsigned band from Austria can set up a free page on News Corp.'s (Nasdaq: NWS) MySpace Music in minutes, and an hour later, it can make a new fan in Des Moines. Some of the more popular channels on Google's (Nasdaq: GOOG) YouTube similarly belong to acoustic guitar-strumming vocalists.

It's not just the Internet that leveled the playing field, of course.

  • Home-computing cats like Apple (Nasdaq: AAPL)
    have turned quality home-recording software into a reasonably cheap art
    form. There's no longer a need to spend five or six figures in a
    recording studio, so bands no longer need to be bankrolled by a major.
  • Terrestrial
    radio used to own the eardrums, and labels had an easy time influencing
    music directors' playlists. These days, you have commercial-free
    options such as Sirius XM Radio (Nasdaq: SIRI) that can dig deeper into music genres, as well as an infinite number of smaller Internet-radio startups.
  • Even established artists are embracing what the likes of Live Nation (NYSE: LYV)
    offer. A recording contract is valuable only if it's lumped together
    with revenue sharing on the merchandising and performance fronts, and
    cheap direct distribution helps artists achieve those more complete
    solutions.

Clueless, the soundtrack

Maybe the RIAA
and its labels were high-fiving on their way out of the courtroom this
week. Maybe they also don't realize that in their ideal world, where
not a single label-owned track would ever be pirated, their artists
would be even less relevant than they are now. Music fans
would just move on to smaller, more accessible bands that realize that
the Web and free digital distribution are promotional tools, and more
than just a standalone business model.

Nice going, RIAA. You're the Kobe Bryant of the music industry. You
may have won it all this month, but that just means that even more
people despise you now than you'll ever know.

Other ways to rock the RIAA:

  • Good Riddance, Major Labels
  • Warner's Unlike a Broken Record
  • It's So Much Worse Than You Think

© 2009 UCLICK L.L.C.