The Big Five subpoenaed my baby

It's easy to take sides on the issue of file-sharing and, more specifically, sharing copyrighted material such as music. On one hand, there are people who have essentially grown up using p2p (peer to peer) programs like Napster and vehemently continue to download music in the face of what they see as draconian legislative and judicial action by the corpulent corporate entity that is the mainstream music industry. On the other hand, there are those who see the simple click of a download as a blow against a legitimate business and against the artists that it represents and feel that it's unreasonable for a person to expect to be able to break the law free of repercussions.

The Recording Industry Association of America (RIAA), which represents the "Big Five" record labels (Sony, EMI, Universal, BMG and Warner Brothers), has been the most outspoken opponent of file-sharing and, to date, the only one who has taken direct action to stem the tide of copyrighted material flowing freely from computer to computer.

These five corporations have a huge influence over distribution and creation of music, as they are responsible for the bulk of CDs and other media that reach stores.

The Big Five's expansive rosters of artists have access to the marketing and promotional muscle that only a multinational conglomerate can provide them, with access to mainstream radio and television, which undoubtedly reach a greater audience than any other format.

The RIAA claims that digital piracy has accounted for the slumps in sales that their data show, up to 7 percent in 2003, according to a statement made at a March broadcasting conference by RIAA President Cary Sherman. Based on this, they have aggressively filed lawsuits numbering over one thousand, subpoenaing Internet service providers for information on clients that have large numbers of copyrighted MP3 files on their hard disks. However, in the past few months the RIAA's presentation of data has come into question, seriously damaging the validity of their extrapolations about the woes that file sharing causes their business.

RIAA market data is collected by SoundScan, a division of the Nielsen corporation, the same corporation that is responsible for tracking television viewership. SoundScan analyzes record sales from data collected weekly at the cash registers of music stores around the country. This is then used to (among other things) calculate chart success. However, the presentation of these data on the RIAA Web site focuses on units shipped rather than units sold.

For 2003, the industry's data claims a 7.2 percent drop in units shipped. But the SoundScan year-end data, as reported by Business Wire, points to an overall sales loss of only 0.8 percent for 2003, with purchases peaking at the end of the year and gaining 9.2 percent over the sales at the end of 2002. If all media is taken into account, including the exploding markets of DVD music and legal download services such as iTunes, then there was a 10.5 percent increase in sales.

So where did the extra 6.4 percent loss come from? Essentially, by presenting the number of units shipped instead of the number of units actually sold, the RIAA is able to put a spin on their numbers to better serve their cause against digital music.

The industry may be shipping fewer records, but retailers are selling about the same amount, and DVD and digital music go a long way to make up the gap. If anything, this means that labels are streamlining the process of distributing records to retailers, with less overstock and a more on-demand approach to sales.

Is illegal downloading responsible for the relatively small decreases in sales that the music business has suffered since 2000? There's really no way to be sure, but it seems somewhat unlikely, especially now that legal download services such as Apple's iTunes have opened up, with catalogs of music that can compete with the wide variety of official and bootleg material available on the larger p2p networks such as Kazaa or WinMX.

Not only that, but since the turn of the century the country has been falling progressively deeper into an economic recession similar to the one experienced in the early '80s with Reaganomics. Interestingly enough, at that time there was also a significant drop in record sales. Is this a coincidence or a trend?

The RIAA's reactionary view of digital album distribution is reminiscent of the past.

The early '80s saw an industry backlash against the new technology of cassettes, which were supposed to herald the death of the music business at the hands of this new, easily duplicated and easily distributed music format. Music buyers were greeted by a menacing skull-and-crossbones logo warning them not to pirate their new recordings, lest they destroy the livelihoods of the musicians that they loved.

This ended up not being the case. Cassette format became a staple until the CD took its place. Many people, including an increasingly large number of musicians, believe that digital distribution of music is now the most viable method. Digital distribution supersedes physical media such as CD and vinyl albums due to its global reach and ability to grant such huge distributing power to individual artists, independent of a record company.

With the increasing homogenization of radio and music television, artists that aren't big sellers and don't enjoy the financial and promotional support a huge label bestows on such cash cows have a hard time gaining exposure, and the Internet provides a venue for them to do so.

Instead of trying to quash this new technology with litigation, it would seem beneficial for the industry to embrace it. It has been made obvious over the past few years that the demand for digital music is present, with up to 200 million worldwide users willing to risk legal consequences to have access to their choice of free music.

The Big Five were slow to exploit this market, however, and only now are they beginning to establish online stores that can hope to rival the pioneering iTunes. Some IT professionals even feel that if the music industry is unable to adapt to the changing way people listen to, obtain and distribute music, they will cease to become relevant players in that process and may face extinction.

"Basically, the labels have a choice," said Mitchell Reichgut of Jun Group, a communications firm that studies file sharing. "They can fight and continue losing money, or try to tweak this 100-year-old model and get immediate results for artists, consumers and sponsors."

Indie label MP3 distribution
Most of the fuss about online music piracy seems to come from major labels, with smaller independents having a more holistic approach to the distribution of their music. Labels such as Seattle's Sub Pop Records, home to such luminaries as Kinski, Mudhoney and Iron and Wine, aren't afraid to post a few dozen MP3 files on their Web site to draw people in and turn them on.
"We believe any way you can get people to hear the music is good," said Chris Jacobs, Sub Pop's head of publicity. Although there's really no way for the label to track the effect that downloading has on their sales, it's relatively easy to infer that having samples of their music readily available hasn't hurt either. "In the past year or two we've been doing better than we ever have," Jacobs said.
The files made available help offset the lack of radio and television exposure, even for a larger indie like Sub Pop. "Downloading and people passing around songs can sort of fill that gap in a way," Jacobs said. The label already has a foot in the door in terms of digital distribution, as Sub Pop's catalog is available on their Web site by mail and they have already partnered up with Apple's iTunes distribution service as well.

Be the first to comment on this article!

Add comment


I am not posting spam. I understand posting spam or other comments that are unrelated to this article will cause my comment to be flagged for deletion and possibly cause my IP address to be permanently banned from this server.

Enter the characters in the image above:

log out