The Big Five subpoenaed my baby

It’s easy to take sides on the issue of file-sharing and, morespecifically, sharing copyrighted material such as music. On onehand, there are people who have essentially grown up using p2p(peer to peer) programs like Napster and vehemently continue todownload music in the face of what they see as draconianlegislative and judicial action by the corpulent corporate entitythat is the mainstream music industry. On the other hand, there arethose who see the simple click of a download as a blow against alegitimate business and against the artists that it represents andfeel that it’s unreasonable for a person to expect to be able tobreak the law free of repercussions.

The Recording Industry Association of America (RIAA), whichrepresents the “Big Five” record labels (Sony, EMI,Universal, BMG and Warner Brothers), has been the most outspokenopponent of file-sharing and, to date, the only one who has takendirect action to stem the tide of copyrighted material flowingfreely from computer to computer.

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

The Big Five’s expansive rosters of artists have access to themarketing and promotional muscle that only a multinationalconglomerate can provide them, with access to mainstream radio andtelevision, which undoubtedly reach a greater audience than anyother format.

The RIAA claims that digital piracy has accounted for the slumpsin sales that their data show, up to 7 percent in 2003, accordingto a statement made at a March broadcasting conference by RIAAPresident Cary Sherman. Based on this, they have aggressively filedlawsuits numbering over one thousand, subpoenaing Internet serviceproviders for information on clients that have large numbers ofcopyrighted MP3 files on their hard disks. However, in the past fewmonths the RIAA’s presentation of data has come into question,seriously damaging the validity of their extrapolations about thewoes that file sharing causes their business.

RIAA market data is collected by SoundScan, a division of theNielsen corporation, the same corporation that is responsible fortracking television viewership. SoundScan analyzes record salesfrom data collected weekly at the cash registers of music storesaround the country. This is then used to (among other things)calculate chart success. However, the presentation of these data onthe RIAA Web site focuses on units shipped rather than unitssold.

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

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

The industry may be shipping fewer records, but retailers areselling about the same amount, and DVD and digital music go a longway to make up the gap. If anything, this means that labels arestreamlining the process of distributing records to retailers, withless overstock and a more on-demand approach to sales.

Is illegal downloading responsible for the relatively smalldecreases 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 iTuneshave opened up, with catalogs of music that can compete with thewide variety of official and bootleg material available on thelarger p2p networks such as Kazaa or WinMX.

Not only that, but since the turn of the century the country hasbeen falling progressively deeper into an economic recessionsimilar to the one experienced in the early ’80s with Reaganomics.Interestingly enough, at that time there was also a significantdrop in record sales. Is this a coincidence or a trend?

The RIAA’s reactionary view of digital album distribution isreminiscent of the past.

The early ’80s saw an industry backlash against the newtechnology of cassettes, which were supposed to herald the death ofthe music business at the hands of this new, easily duplicated andeasily distributed music format. Music buyers were greeted by amenacing skull-and-crossbones logo warning them not to pirate theirnew recordings, lest they destroy the livelihoods of the musiciansthat they loved.

This ended up not being the case. Cassette format became astaple until the CD took its place. Many people, including anincreasingly large number of musicians, believe that digitaldistribution of music is now the most viable method. Digitaldistribution supersedes physical media such as CD and vinyl albumsdue to its global reach and ability to grant such huge distributingpower to individual artists, independent of a record company.

With the increasing homogenization of radio and musictelevision, artists that aren’t big sellers and don’t enjoy thefinancial and promotional support a huge label bestows on such cashcows have a hard time gaining exposure, and the Internet provides avenue 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 hasbeen made obvious over the past few years that the demand fordigital music is present, with up to 200 million worldwide userswilling to risk legal consequences to have access to their choiceof free music.

The Big Five were slow to exploit this market, however, and onlynow are they beginning to establish online stores that can hope torival the pioneering iTunes. Some IT professionals even feel thatif the music industry is unable to adapt to the changing way peoplelisten to, obtain and distribute music, they will cease to becomerelevant players in that process and may face extinction.

“Basically, the labels have a choice,” said MitchellReichgut of Jun Group, a communications firm that studies filesharing. “They can fight and continue losing money, or try totweak this 100-year-old model and get immediate results forartists, consumers and sponsors.”


2003 Music Industry Statistics*
•Internet album sales increased by 3,621,326 units from 2002to 2003.
•Overall music business down by 0.8 percent units sold.
•Overall album sales down 3.6 percent.
•CD album sales, which comprise 96 percent of all music sales,down 2 percent.
•19.2 million digital tracks sold from June 29, 2003, toDecember 28, 2003.
•Overall Music Video sales up 78.5 percent.
•DVD Music Video sales up 104.5 percent.
•Alternative, jazz and Latin album sales up.
•Cassette album sales down 39.8 percent.

*Information provided by SoundScan

Top Ten Selling Albums in 2003*

1. 50 Cent – Get Rich or Die Tryin’
2. Norah Jones – Come Away With Me
3. Linkin Park – Meteora
4. Evanescence – Fallen
5. OutKast – Speakerboxx-Love
6. Beyonc퀌� – Dangerously In Love
7. R. Kelly – Chocolate Factory
8. Hilary Duff – Metamorphosis
9. Toby Keith – Shock N Y’all
10. Coldplay – Rush of Blood to the Head

*Information provided by SoundScan



How do musicians feel about the recordingindustry’s actions against file-sharers?

“They’re protecting an archaic industry.”
Bob Weir, Grateful Dead

“Lawsuits on 12-year-old kids for downloading music, duping amother into paying a $2,000 settlement for her kid? Those scaretactics are pure Gestapo.”
Chuck D, Public Enemy

“I don’t know that there’s any one factor behind the industry.Maybe it’s downloading, or maybe people just didn’t feel likebuying so many records. So Metallica makes $10 million instead of$20 million, who cares? To me, the sympathy is unwarranted. Some ofthis is just the hazard of doing business. It’s the nature of theworld. At the end of the day, it’s just rock ‘n’ roll. It isn’tthat big of a deal.”
Wayne Coyne, Flaming Lips

“For the artists, my ass.”
David Draiman, Disturbed

“Record companies suing 12-year-old girls for file-sharing iskind of like horse-and-buggy operators suing Henry Ford.”
Moby, on his website

“Downloading is a great way to find out about music. I’m notgoing to criticize somebody for loving music. People come up to meand say, ‘I downloaded your album, and I can’t wait to go out andbuy it.'”
Alex Kapranos, Franz Ferdinand, to Rolling Stone

-Quotes reported by San Francisco Chronicle in “Artists BlastRecord Companies over Lawsuits Against Downloaders,” Thursday,Sept. 11 2003, unless marked otherwis


Indie label MP3 distribution
Most of the fuss about online music piracy seems to come from majorlabels, with smaller independents having a more holistic approachto the distribution of their music. Labels such as Seattle’s SubPop Records, home to such luminaries as Kinski, Mudhoney and Ironand Wine, aren’t afraid to post a few dozen MP3 files on their Website to draw people in and turn them on.
“We believe any way you can get people to hear the music isgood,” said Chris Jacobs, Sub Pop’s head of publicity.Although there’s really no way for the label to track the effectthat downloading has on their sales, it’s relatively easy to inferthat having samples of their music readily available hasn’t hurteither. “In the past year or two we’ve been doing better thanwe ever have,” Jacobs said.
The files made available help offset the lack of radio andtelevision exposure, even for a larger indie like Sub Pop.”Downloading and people passing around songs can sort of fillthat gap in a way,” Jacobs said. The label already has a footin the door in terms of digital distribution, as Sub Pop’s catalogis available on their Web site by mail and they have alreadypartnered up with Apple’s iTunes distribution service as well.