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v4.1 - 13th August, 2003
(updated on 10th November, 2015 only to update links)
In the media-drenched information age world that we live in, it's hard to imagine that there is someone in the connected Western world who has not heard about the RIAA over the last couple of years. From its successful attempt to close down the Napster filesharing software to its current legal campaign to sue filesharers into compliance, it has rarely been far from the centre of attention.
The RIAA is the Recording Industry Association of America, a trade group that represents the interests of a substantial majority of the record labels of America. They claim that "RIAA members create, manufacture and/or distribute approximately 90% of all legitimate sound recordings produced and sold in the United States". Given that these members include the big five labels (BMG, EMI, Universal, Warner and Sony), this number is not hard to believe.
The RIAA describes its mission as "to foster a business and legal climate that supports and promotes our members' creative and financial vitality." Bear in mind that these members are record labels and not artists, a common misconception in the press that seriously affects our understanding of the issues involved. The RIAA is also responsible for issuing sales awards such as gold, platinum or diamond discs, something that by its very nature is publicity-associated.
How the RIAA is portrayed depends on the media company bringing you information, but as many media companies are owned by subsidiaries of the same global conglomerates that own most RIAA member labels it is hard to accept that they are all being impartial. There's a big difference between fact and opinion, and media spin is a very powerful force indeed.
For instance, the common view being publicised is that the current exploits of the RIAA are a valid response to something that concerns them and their members greatly: the solid decrease in CD sales that has been consistent for the last few years. The following describes this decrease in numbers reported by the RIAA themselves:
|CD Sales (in millions of units)|
|CD Single Sales(in millions of units)|
As you can see, CD sales enjoyed a solid growth from 1993 to 1999 with a single blip in 1997. There was a slight 0.4% increase from 1999 to 2000, followed by a 6.4% decrease in 2001 and a steeper 8.9% drop in 2002. CD sales in 2002 were below 1998 levels.
Over the same period, CD single sales exploded from 1993 to 1997, then dropped off even more steeply to 2002. The last three years have seen 38.8%, 49.4% and 74.1% decreases, obviously massive numbers. CD single sales in 2002 are far below even 1993 levels, at the point where they are almost negligible.
One hint of the future may come from the UK where CD singles are still major sellers in a market a mere fifth of the size of the US. In the UK In 2002, total CD singles brought in seven times as much as their US equivalents, but according to the Mobile Data Association, they are expected to be outsold this year by mobile phone ringtones. A single ringtone sale makes more money for the record labels than a CD single sale, and the US is catching up to the world in widespread use of mobile phones, suggesting an imminent major new market.
That's where the statistics end and the discussion begins. There is obviously a major cause for concern, but why have CD sales decreased steadily since 2000, and why have CD single sales haemorrhaged since 1997?
The RIAA (Recording Industry Association of America)
List of Members of the RIAA (link updated 2015)
RIAA Facts & Figures (at the Wayback Machine)
The RIAA puts the blame squarely at the feet of the filesharing industry. The first filesharing software was Napster, created by Shawn Fanning, a student who left Northeastern University after a single year to work on his creation. It started operations on 1st June, 1999, allowing sharing of music files, and was an instant and massive success with the public.
The RIAA soon claimed that because consumers could easily download songs for free through Napster, they consequently stopped buying those songs on CD at their local record store. It was quick to raise this issue directly with Napster, and negotiations between the two continued until November 1999 when they collapsed after the parties failed to agree on a means to make distribution legal. A month later, the RIAA sued Napster for copyright infringement. The legal battle went on for a couple of years with temporary victories for each side that have proved to be important milestones in the industry.
By July 2001, however, Napster had fundamentally lost and the courts ordered the system to be shut down. This could be done simply, as Napster used central servers that could physically be switched off. These were located in California, within the jurisdiction of the court. Without these servers, the software could not function and, overnight, Napster ceased to be. However, during almost two years of legal battles, other filesharing software applications had quickly emerged that got round such a dependence on central servers. They use a concept known as peer-to-peer because users communicate directly to each other rather than through a server.
Decentralised peer-to-peer systems were quickly adopted by filesharers globally. Even before Napster had been shut down, new networks such as FastTrack and Gnutella had appeared that were decentralised. New clients such as Morpheus and KaZaA, the front ends to these networks, quickly exploded to the degree that KaZaA has now overtaken ICQ as the most downloaded program of all time. These are but a few of a plethora of similar applications and networks and more are appearing all the time. They are also progressively more powerful than Napster. While Napster only allowed music files to be swapped, these new clients can swap any files at all, including software and films, and their user base has become larger than Napster's ever was. Legal battles to shut peer-to-peer networks down are pointless as there are no central servers to switch off. Ordering such is akin to King Canute ordering the tide not to come in.
Newer filesharing systems are also appearing that do have central servers, such as eMule and eDonkey, but these servers can appear anywhere on the network, even in countries outside of the RIAA's remit, and they can be set up or removed overnight with only a slight performance boost or hit to the entire network. While a court order could no doubt be obtained to shut an individual server down, the time period required is prohibitive. Each server would be like a head of the Hydra. As Hercules chopped off each head, two would grow back in its place. Similarly, the server would instantly disappear as soon as a case was raised, only to be replaced by two elsewhere. Hercules solved his problem by burning the stumps so that new heads could not grow, but this is not a viable proposition for the RIAA.
Rather than continue battling the Hydra and its growing number of heads, the RIAA is attempting instead to have filesharing software generically declared illegal. The catch here is that a growing number of users are swapping music, video and software legally, and these users argue that filesharing software is merely a tool that cannot be inherently illegal. Copyright can be infringed easily on devices like VCRs or hifis that have twin cassette decks, but it is the act that is illegal not the tool. Federal Court Judge Stephen Wilson has already ruled in favour of the filesharing applications Streamcast and Grokster for precisely this reason.
It is beginning to become apparent that attacking companies who make filesharing software in the courts has become a waste of time for the RIAA, and attempting to shut down servers that don't exist is merely pointless. In this modern analogy, the Hydra wins.
Grammy.com: Napster Timeline (at the Wayback Machine)
ZeroPaid: The Filesharing Portal
Internet News: Judge Rules in Favour of File-Swapping Sites
The RIAA is still sniping away at both of these targets, but it also realises that it cannot win the battles so has changed the front on which it is fighting in order to win the war instead. Rather than exclusively concentrating on the legality of filesharing and the closure of filesharing companies, it has started a highly publicised campaign to sue individual users of filesharing software.
To do this, it is issuing subpoenas to ISPs (Internet Service Providers, who are the companies you use to connect to the internet). These ISPs are required to hand over personal contact information for a list of users the RIAA suspects of illegal filesharing, who are then taken to court. The RIAA is seeking substantial damages of up to $150,000 per shared piece of music, though it claims that it is open to out-of-court settlements.
This process is based entirely on a provision in the highly controversial DMCA (Digital Millennium Copyright Act) that enables it to issue subpoenas without following standard procedures. Under normal circumstances, a subpoena can only be issued with the signature of a judge or magistrate, after evidence has been supplied to suggest a crime has been committed. Under the DMCA, the RIAA does not need to provide any such evidence and requires only the signature of a court clerk. It put into motion a blizzard of 871 subpoenas on 19th July, 2003, and is issuing more at a projected rate of 75 per day. It has also been alleged that the barrage of RIAA subpoenas is creating such a backlog at the US District Court in Washington, DC, that the Court has been forced to reassign clerks to process the paperwork.
As it is not uncommon to find users who share over a thousand pieces of music, these requested damages start to seem a little high. No random teenager can afford to give the RIAA $150,000,000 but the aim is not to recoup losses but to scare the public away from filesharing. Given that there are over sixty million filesharers in the US alone (more than voted for George W Bush in the last presidential election), the RIAA is working on the lottery principle. People know they are highly unlikely to win the jackpot in a lottery but buy a ticket anyway just in case. Similarly, while people realise that they are statistically highly unlikely to be sued for filesharing, the RIAA wants them to stop sharing anyway just in case.
Whether this approach will work for the RIAA is an open question. Initial reports were that numbers of filesharers has dropped, but this loss has already been reversed and current reports suggest that the numbers are continuing to rise. In a potentially more important statistic, a recent independent survey by the Pew Internet and American Life Project, taken just before the RIAA's onslaught of subpoenas, suggests that most US filesharers are simply not concerned with copyright and thus have no moral reason to avoid filesharing. Those unconcerned range from 61% of users aged 30 to 49 up to 82% of full time students. It will be interesting to see a similar survey performed in another month's time to give an accurate picture of any change of opinion.
Already one Republican senator, Norm Coleman from Minnesota, is investigating the subpoena process because he is worried that innocent people will be caught up in the RIAA's net. This suspicion has already proved to be the case when the RIAA notified Penn State's Department of Astronomy and Astrophysics that copyright material was being shared from their department. It turned out that the RIAA's automated copyright crawlers had discovered the word 'usher' in close proximity to the file suffix 'mp3' and assumed that a song by the musician Usher was being shared. In reality, the department hosted work on radio-selected quasars by a professor emeritus named Peter Usher and also an mp3 of astronomers performing an a capella song about the Swift gamma ray satellite that they had designed. The RIAA has now apologised and provided Professor Usher with an Usher CD and t-shirt. Other people sued so far include parents and grandparents who often did not know either that filesharing was illegal or that their children or grandchildren were using such software. It is quite likely that some are technophobic or merely technologically challenged enough to not even know what filesharing is.
Recently, a few major ISPs such as Verizon and Pacific Bell, as well as some universities such as Boston College and MIT (Massachusetts Institute of Technology), have counter-sued the RIAA over the issue because they believe that the RIAA is riding roughshod over due process. They are especially upset that all subpoenas are being issued from Washington DC rather than the local jurisdiction, that the rights of their subscribers to privacy has been eroded and that these subscribers are not given appropriate time to prepare a legal response. While Verizon have lost their case and the relevant appeals court is currently proving reluctant to take it on, a Massachusetts court has now ruled in favour of MIT and Boston College. This sets interesting precedents for the upcoming Pacific Bell case which covers far more ground than any of the others.
Whatever the result, a popular opinion is that it is only desperation that can cause an industry to sue its own customers. As innocent people are caught up in the net and their cases are publicised, there may well be a noticeable increase in public backlash against the RIAA. Even outgoing RIAA CEO Hilary Rosen has publicly stated that she does not approve of the action.
United States Copyright Office: The DMCA (link changed 2015)
CNN: Music Industry Wins Approval of 871 Subpoenas (at the Wayback Machine)
Pew Internet & American Life: Music Downloading, File-Sharing and Copyright (link updated 2015)
Regardless of whether the RIAA wins or loses its cases, are they right? Is filesharing the cause of the massive decreases in CD sales? CD single sales started to plummet two years before Napster was even released, though album sales did start slowing that year in preparation for a drop the year after. Filesharing is certainly not the only factor involved and there are other flaws in the RIAA's assumptions, many of which have been publicised on forums and message boards globally. Some are more important than others but one is fundamental.
The RIAA is treating every song shared illegally as a lost sale. While these issues are all open to debate as to the level of their validity, this particular assumption is patently incorrect as can be seen by the sheer volume of illegally downloaded files. Logic dictates that people make purchases in limited amounts according to how much money or credit they have available. With free filesharing, people can download as much as they like, whether their interest is strong or merely fleeting. It stands to reason that they will download more than they would be willing to spend money on. Calculating losses to the music industry based on the number of illegally downloaded tracks through filesharing is manipulation of statistics, pure and simple.
Other convincing arguments put forward to explain the decrease in CD sales include the following:
Some of these arguments are backed up by official statistics while others are merely commonly held opinions. All, however, are convincing. If each has contributed only a little, the combined effect would be to explain away the missing sales in entirety and then some. Maybe the RIAA is trying to find solutions to the wrong problems.
BBC News: Stopping the Pop-Swappers
Compact Disc Minimum Advertised Price Antitrust Litigation Settlement (at the Wayback Machine)
MacWizards Magic: RIAA Questions Validity of Own Information (at the Wayback Machine)
'Copyrighting Culture' by Jessica Waye and J C Twinning
If even one of these arguments is correct, by extension filesharing has had less of an impact on retail CD sales than the RIAA claims. However, there can be no doubt that filesharing has had an impact of some sort, and that impact must be most apparent to the music industry.
While there is also a trade in pirated films and books, this is far less important than the equivalent trade in pirated music. Watching an illegally downloaded DivX copy of 'Terminator 3: Rise of the Machines' on a PC screen does not compare in any sense with the big screen surround sound experience of watching the same film in a modern cinema. Also, while there have been massive advances over the last few years in clear print technology for e-book readers, almost all readers prefer the feel of a physical book, something not easy, cheap or quick to illegally duplicate. Technological advances such as flexible screens are continuing to push e-book readers closer and closer to be able to effectively imitate real books but this process is ongoing and is not likely to make a serious difference for a number of years yet.
Copyright infringement has still been an issue for the publishing trade for a number of centuries. Most recently a number of amateur translations of the latest instalment in the 'Harry Potter' series have been made by fans in countries where an official translation does not yet exist. This has led to the individual translators being taken to court for copyright infringement, even though many of them only worked on a few pages in a distributed effort for no profit. However, even author J K Rowling would be hard pressed to demonstrate that these fans would not have bought the book anyway once it had been officially released.
In comparison, it can often be difficult to tell the difference in sound quality between an illegal album of mp3s and the original CD. In this instance, many filesharers would not feel the need to buy an official CD copy because they had already acquired the same material in a sufficiently high quality through filesharing. The added bonus of a CD cover and liner notes is not worth the $18 cost and they can easily burn the album to an audio CD for the cheap price of a blank CDR.
So, can we come to understand why people use filesharing and how they feel about their actions?
The RIAA sees the downloading of a song through a filesharing network as blatant theft. That single download equals a single lost sale, and the artists affected will suffer because their music is being stolen for no financial compensation.
Blatant theft is hard to defend. While there are many valid philosophical arguments over intellectual property and whether it should or should not exist, it still remains illegal to violate copyright in most countries. As such, downloading music without any means of payment to the artists is illegal.
However, illegal comes in many shapes and forms. There is a major difference between serious crime (think Jeffrey Dahmer) and civil disobedience (think Rosa Parks). Both committed illegal acts but history views one as a villain and the other as a heroine. While most downloaders of chart music are simply taking something for nothing, many people downloading music are quite aware that they are breaking the law but see their actions as a blow against an organisation (the RIAA) that they see as an evil empire. They believe that the future will see them as heroes rather than villains.
To back up their position, they cite the antitrust suits that the RIAA has lost as well as evidence that, far from representing musicians, the RIAA is actively the most damaging force that they will ever experience. Possibly the most erudite explanation of this philosophy came from the musician Courtney Love, who explained how major record labels mistreat the artists under their control in an article for Salon that is impossible to dismiss.
She starts with the following statement: "Today I want to talk about piracy and music. What is piracy? Piracy is the act of stealing an artist's work without any intention of paying for it. I'm not talking about Napster-type software. I'm talking about major label recording contracts."
Love explains how the RIAA has configured the industry to make sure that almost nobody gets paid. A million sales of a record earns the record label $6.6 million but the band absolutely nothing. She further explains that artists do not even own their own product. While a book is usually made copyright of the author who wrote it, music is made copyright of the label that releases it, often leaving the songwriters and the artists who perform it no rights whatsoever. These rights may become available for sale at a later date but usually for an exorbitant fee that the artists themselves cannot afford, which is why almost the entire Beatles back catalogue is currently owned in a half and half split by Michael Jackson and Sony Music.
Further yet, the work of recording artists has been reclassified as 'work for hire' under a little known amendment to copyright legislation, brought in unnoticed to most as part of the Satellite Home Viewing Act of 1999, not something that people would usually associate with music. What it means is that the names of artists and the domain names of their websites (often the same thing) remain registered by record labels even the artist moves labels, thus denying them use of their own names. The most widely known example of this came with the battle for the rights to the name Prince, leading the musician to record for a number of years as The Artist Formerly Known as Prince or even as an unpronounceable symbol to make a point.
The RIAA even successfully lobbied for legislation to prevent artists from becoming bankrupt to get out of restrictive contracts, so that they could continue to exploit them. Toni Braxton sold $188 million worth of CDs but went broke because of a contract that only gave her 35c per album sale, and blues legend John Lee Hooker initially refused to come out of retirement, even at the request of a wide swathe of the next generation of artists who saw him as a major influence, because he'd never made a single dollar from the hundred or so albums he'd released.
Given these revelations, it's easy to start seeing the RIAA as Al Capone. The USA's constitution and bill of rights were designed around the ability to fight corruption and so it suddenly becomes hard to condemn those 'stealing' RIAA material. Instead it can be demonstrated that the force most hurting artists is the RIAA itself who purport to represent them. There is now a blanket organisation built around boycotting the RIAA and protests are taking place across the nation. The assumption is that as the RIAA's actions are more widely publicised this grass roots opposition will grow.
At the end of the day, whatever the RIAA achieves with its current campaign of suing its own consumers, it has certainly fostered a good deal of bad feeling while bringing a massive amount of attention to itself. If there is the slightest shred of truth in Courtney Love's accusations, as seems highly likely, then attention is the last thing that the RIAA needs.
Salon: Courtney Love Does the Math (link updated 2015)
One thing is for sure: people participate in filesharing networks for different reasons. Blatant theft is certainly one but it is equally certainly not the only one. There is no reliable data on which reasons are more important or widespread than others, but we can at least list all the following as valid reasons and accept that they all exist.
Blatant theft aside, these other three reasons have a common denominator: getting music heard.
Part of the reason that many forms of music are hard to hear is because there's just so much music out there. In my investigations into extreme music I've not just found new artists but entire new genres that I'd never heard of, such as power electronics, lowercase sound and glitch electronica. If I, as a thirtysomething explorer of music, have never heard of these genres, what chance does a fifteen year old teenybopper have?
However, there's another, more sinister reason for the decreasing diversity of music in the public eye. It's called ClearChannel and it is the company that has gobbled up the vast majority of radio stations across the United States. While a US Senate committee has recently emphatically rejected easing restrictions on media conglomerates, there is nothing to protect radio listeners from the same fate.
On 2nd June, 2003, the FCC voted to overturn a few fundamental rules that have been in effect for decades. Previously media conglomerates were not allowed to own a television station and a newspaper in the same market, and were limited to two television stations in the same city. With this decision, broadcast networks could collectively reach up to 45% of US households, a notable increase from the previous 35%. However a mere two weeks later, the Senate Commerce Committee rejected these proposals outright. Senator Kay Bailey said that she "would like the FCC to start all over" as the proposed changes were "potentially dangerous to media diversity in this country".
To be fair, the FCC also proposed a slight limitation on radio station ownership but this would make an insignificant impact on the full horror that can be seen from statistics.
Before the 1996 Telecommunications Act, one company could not own more than forty radio stations in the entire country. In the six years after this act relaxed limits on a massive scale, ClearChannel Communications spent �30 billion to gobble up as much competition as possible. By 2002 it owned 1,225 stations in 300 cities and dominated the audience share in 100 of 112 major markets. In comparison, it's closest competitors CBS and ABC owned only a fifth as many. In San Diego, ClearChannel owns every radio station in the market plus three more that broadcast across the border from Mexico.
ClearChannel has often been accused of anti-competitive tactics such as negative synergy to increase its audience share and obtain control of live entertainment. Negative synergy involves threatening to withdraw artists from airplay if they do not perform at ClearChannel live venues. These live venues are also widespread as ClearChannel owns, operates or exclusively books most major venues in the United States. It also controls the largest promoters with 27 million concert tickets sold in 2001, compared to its closest competitor who sold a mere 4 million.
This massive homogenisation of available media output is the death penalty for independent artists, something that benefits the RIAA no end by increasing market share for the most publicity-friendly artists. What it means to the consumer in the street is that wherever he goes, both physically and across the radio dial, he will only hear the same ClearChannel authorised material, played over and over. The world-famous diversity of US radio is dead, and its corpse has been further defiled by the banning of certain music at a whim. Most notably, ClearChannel removed John Lennon's 'Imagine' and Cat Stevens's 'Peace Train' from airplay across its network after the terrorist attacks of 11th September, 2001.
Simple logic suggests that if you don't know something exists, you won't buy it. As ClearChannel massively restricts what can be heard, it is also restricting what is going to be bought. Amazingly, the RIAA, who can only benefit from public awareness of its product, has also repeatedly attempted to restrict what can be heard or what is bought, through attempts to make illegal such concepts as music clubs, second hand CD sales or web radio broadcast streams.
Incredibly, it has even attempted to restrict what can be sung by people in their spare time. It notably sued the Girl Scouts of America because they were not paying royalties for songs they sang round campfires, and only in the face of a public backlash allowed the Girl Scouts to continue to sing for a nominal payment to the RIAA of $1 per year. You are also technically infringing copyright every time you sing 'Happy Birthday' to your children, because the song is owned by AOL Time Warner, who aggressively defend their property.
Given such restrictions, what alternative is there for those who hold the opinion that the mass produced cookie cutter product heard on the ClearChannel airwaves is not for them? Where do they go to hear the music that they want to hear?
They may be lucky enough to be in an area served by one of the few independent or community radio stations left that encourage freeform programming. They could go to a large record store that stocks a wide range of music in the hope that they could sample random CDs before they buy. Or they could go to the global anarchy that is the internet and sample artists through filesharing or through websites, archives and other repositories of free downloads.
These internet solutions, both illegal filesharing and its legal download equivalents, offer free word of mouth publicity which artists have benefited from for decades. There is no publicity better than someone telling someone else that your product is great. Because of this, independent artists often give away their music through filesharing, or as downloads from their band's website, purely so that it can be heard. Janis Ian explained in the Los Angeles Times how after forty years of recording and nine Grammy awards, she still found a 300% increase in merchandise sales after she posted legal mp3s on her site. Fans of independent music use filesharing as a means of discovery, downloading songs by artists they may never have heard of because they have nothing to lose. It's free.
Of course, not all of these songs are legal material placed there by the artist. Many were placed on filesharing networks illegally but still remain unheard music. When people download this material it is definitely not a lost sale for the RIAA. On the contrary, it often encourages sales because consumers find artists that they like and then choose to buy the CD or see them live. They also build free publicity for them, telling their friends and sharing the files onwards. Writer and futurist William Gibson has described filesharing as a tax on popularity, suggesting that it may prove to cause lost sales for the most popular artists but increased sales for everybody else. Given that only thirty new artists a year sell a million records, those adversely affected may be very small indeed. Suddenly filesharing becomes a grass roots movement, an antidote to the restrictions of ClearChannel programming.
Filesharing is only one of several new means of distribution that have sprung up in the ClearChannel age, but it's by far the most prevalent. Some independent labels or artists have built street teams that distribute promotional material like t-shirts, stickers or demos. Others have encouraged a concept called droplifting which involves leaving free independent CDs on record store shelves so that casual browsers discover something that they probably wouldn't be able to hear otherwise. No doubt in a world where the distribution of music is at the point of a paradigm shift, more new concepts will arise.
Music and Film Network: Clear Channel: the Media Mammoth that Stole the Airwaves (at the Wayback Machine)
'Links to Tens of Thousands of Legal Downloads' by Michael D Crawford (at the Wayback Machine)
Legal Affairs: 'The Copyright Cage' by Jonathan Zittrain
Adbusters: Droplifting into the Mainstream (at the Wayback Machine)
So, what of the future? The RIAA represents 90% of all legal music created and distributed in the United States. It has demonstrated that it is not going to give up legal challenges to what it sees as threats to its livelihood. The RIAA is not going to go away. Or is it?
Many people involved in the music business, from artists to labels to consumers, see the current state of pre-recorded music as at a crossroads. Consumers are enjoying the digital revolution made possible by the mp3, making a decrease in CD sales as inevitable as the decrease in LP sales when CDs were first introduced. They want to buy the few songs they want from iTunes rather than buy a full album on CD. They want to burn their music to CDR or copy it to a portable device so that they can listen to it on the move. They want to play mp3s on their in-car stereo.
On the flipside, the RIAA wants to restrict the situation further than it is already. It wants to ban any means of distribution that is not under its direct control, such as second hand CD sales. It wants to ban filesharing outright. It wants to build copy protection into every electronic device that is able to copy, even though it already receives a fee of 2% of the price of every CDR sold. It wants to kill legal downloading outright, while merely dipping its toes in the water through services such as MusicNet, PressPlay and Rhapsody, which are generally not available outside the United States.
Moreover, it uses a concept called DRM (Digital Rights Management) to cripple the files available through these services so that you have to pay individually for each different use. The RIAA wants to abolish the traditional sales model, and replace it with a license model as used in software. You may buy a copy of Windows XP but you can only install it on one PC; and you may buy a copy of Doom for the Playstation but you can't run it on an XBox. To do either, you'd have to buy a second copy. Because these models are long established we don't question them.
The RIAA wants you to apply the same thinking to music. It wants you not to buy a song, but to buy a license to that song that restricts you to one particular use. If you want to play the song on your hi-fi that's fine, but if you want to burn it to CD then you'll have to pay another fee. If you want to copy it to your iPod so that you can listen on the move then that's yet another fee. DRM is the means by which this is accomplished on digital files, similar to the copy protection present on some CDs like Radiohead's 'Hail to the Thief' or Celine Dion's A New Day Has Come' which cannot be played on a PC.
DRM is becoming standard practice for major label audio files, and is embraced to different degrees by all the major label services. Often independent services gain market share purely by advertising that they do not use DRM at all. However, CD copy protection is becoming something of a hot potato, as consumers are now mounting lawsuits against the RIAA because they cannot play what they have legally purchased in the manner that they choose. Further, there have been reports that attempts to play a CD using the Key2Audio copy protection technology, such as the Celine Dion disc, can crash computers and even damage their CD ROM drives.
The two sides are moving in opposite directions. The public want more freedom while the RIAA wants more restriction. It's hard to see a future where both sides are happy.
Cutting to the chase, the crossroads we have reached may only have two viable roads onward. One is for the RIAA to create a viable means of online digital distribution, effectively giving the public what it wants but earning a living from it. There is a strong precedent here in the history of the VCR.
The introduction of the VCR was vehemently opposed by the MPAA (Motion Picture Association of America), the film industry equivalent of the RIAA. It wanted an outright ban on something that it believed was so obviously patently designed to infringe copyright and steal intellectual property. Jack Valenti, who ran the MPAA at the time, famously compared the VCR to the Boston Strangler. It failed in its attempt in the Supreme Court by five votes to four but then went on to make the video sales and rental models incredibly profitable ventures. Many wish the RIAA would follow this example.
The other option is to go the way of the dinosaurs. Whether it is filesharing or a combination of all the many factors I've described in this article, the RIAA is currently suffering a massive slump in sales and thus in revenue. There is nothing to indicate that this trend is being reversed or even slowed, suggesting that the RIAA's current business model may be obsolete. Many would suggest that if the RIAA doesn't take advantage of the digital music revolution, others will fill the void and the RIAA will simply cease to be a major concern.
There is no doubt that there is a huge gap in the digital market at present. Consumers are pleading for a service that fills this gap but the RIAA are consistently refusing to provide one.
Microsoft: Definition of DRM (at the Wayback Machine)
PapMag: Radiohead and the Perils of Copy Control (at the Wayback Machine)
FindLaw: Sony Corp v Universal City Studios Inc (link updated 2015)
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