While the RIAA does its market research and investing
in litigation, the public is following its passion

by Polar Levine Feb. 27, 2002 for popCULTmedia

I recently I got a hold of the MERRILL LYNCH REPORT: Music Industry: Can Music Control Online Growth? It says some things worth commenting on.

Ģ The five majors generate 76.5% of sales globally

Ģ It claims that a major toll on sales is p2p (peer to peer) downloading and assumes that as the industry develops its own online downloading sites and introduce copy-protection and DRM (Digital Rights Management) software, the p2p problem will be solved.

This is idiocy. The p2p phenomenon has been riding on more than the spirit of opportunistic looting. The music industry has been incurring the wrath of consumers for years by overpricing CD's and sponsoring the astounding level of creative dumbing down through the corporate hijacking of the airwaves. People want easier access to music that is not lite-this or lite-that, classic-this or that, kiddiePop, bland r&b and pop romantic ballads. They also dont want to spend $20 to try something new on a whim.

The p2p issue will not be resolved in their favor by establishing their own sites full of loathsome billboards promoting the same charttoppers and features on more of the same crap; not to mention a pricing system that wont be much better than business-as-usual. Copy-protection is enraging consumers and as soon as the encryption is broken (approximately five minutes after its instituted) their expensive pipedream of controlling the habits of consumers will whack the bottom of the dustbin.

Listen to what the Merrill Lynch report foresees in our downloading future: Music labels can make advantages of their disadvantages. DRM usage rules could enable the downloader to listen to the music 1-2 times before the software security envelope forms around the content to prevent further listening. The consumer can then buy the content through the attached clearing system. Then, the content provider can encourage the purchaser to email on the security wrapped content to their buddy list, where the recipients can listen to it once or twice before it closes down. If any 10 friends purchase the music, then the original consumer could receive a free album of their choice as incentive.

Ya got that, kids? Please, read that again. And again. Gee, those hipsters at Universal are going to let me push their products on my little pals so I can get free stuff. These creatures dont have a clue that people share because they like to share -- not because theres some sort of prize on the other end of our largesse. There are nice things that humans do -- when not in their offices -- that are not about personal gain. Its probably the only genetic accident that postpones our extinction as a species.

The p2p problem is solved instantly by letting Napster, Gnutella, etc. continue on autonomously, charge a $20/month subscription fee for limitless downloading and make entire catalogues of all record companies available. The labels and copyright holders make $20-40 billion annually off of downloading with no encryption and everybodys happy. The drop in manufacturing and distribution costs makes this scenario sweeter to the majors.

Of course, the industry could be making far more money online if it somehow manages to win this unwinnable war. Heres how: by securing monopoly rights on the web, charging for downloaded digits the same as they do for cds, encrypting every medium imaginable unto eternity, allowing only their signed artists to be heard on the airwaves and live venues and convincing composers to share the remaining 50% of their copyrights with the labels.

Ģ The Report says, We believe the downward pressure on pricing in the download world, plus the need for additional marketing and file management and protection costs, will be offset by the removal of manufacturing and distribution costs.

This really comes down to one issue. Can an industry have the foresight to see that its long-term interests lie not in winning every battle and sweating profit out of every imaginable pore?

Ģ Although the report claims sales losses due to legal downloading, particularly in sales of singles (a 40% drop), it also says that CD album sales actually rose by 2.5%. The damaged economy is also cited as a cause for the recording industry's problems.

What do we make of that 2.5% growth in CD sales despite all the whining by the RIAA? The fact is -- the RIAA's claim of huge losses due to file-sharing has never been substantiated. If anything, studys indicate that people who do the most downloading also make more, not fewer purchases.

Ģ The report mentions the fact that the public moved on from traditional rock and pop formats to more niche area, and the record companies were late to respond.

Is this shocking? Music lovers will always be way ahead of the curve. They are looking for what they love. Industry execs are looking for what will sell quickly. While the industry does its market research and investing in litigation -- the public is following its passion. Musicians can produce music at home, stamp discs and post mp3 versions before the execs finish reading their copies of Billboard. The train has already left the station. And its one of those new fast ones. As long as the industry takes its cues from Americas War On Drugs, it creates a future market atmosphere where the pirates will be toking up as record company execs flee to the banking and widget industries where they belong. And this, I think, is where the passion factor could, and should, shake things up.

The passion factor becomes insurmountable in the case of p2p. The war against p2p will never be won for one basic reason -- every decision the industry makes is based on making itself richer than it was the day before. This requires a gigantic bureaucracy to float like a butterfly and sting like a bee. But it cant. All it can do is steamroll over what ever is in front of it. p2p is a guerrilla force that is driven not by profits, but by passion for music and passion for watching this ridiculous megalith burp itself to death on its own over-indulgence. So one site drops from lack of funds. Three more have just opened shop with no illusions of becoming the next AOL/Time Warner. Its just about the music, folks. Its about passion.

Out of this morass, ultimately, the final equation is this: Love is blind. Love of music is blind. Love of money is blind. Love of power is blind. The blind are leading the blind are leading the blind. Passion will win in the end. But which blind mouse are you putting your money on?


Polar Levine
Editor, popCULTmedia