Motley Fool is advising investors away from putting their money into record companies. Why?
Because, in the words of David Boies, “an industry at war with its consumers is an industry in trouble.” In the case of Jeffrey Howell, they’re prosecuting someone not solely for file-sharing, but also for copies of legally purchased CD’s on his computer.
“Space shifting,” the practice of moving content from one media to another, has been widely held by the courts as a legal and legitimate practice. You’re allowed to tape CD’s you’ve purchased, and you’re allowed to rip them to your computer for personal use. Contrary to what the RIAA wants you to believe, you do have certain rights to content you’ve purchased.
The first major decision was in 1984, regarding the nascent videotape format, and the practice of “fair use” was reinforced in 1999, when the 9th Circuit ruled that Diamond Multimedia’s Rio mp3 player was not a tool for copyright infringement.
The RIAA is hell-bent on maintaining a monopoly on its content, even to the cost of alienating its entire consumer base. Napster didn’t kill the music industry; the RIAA was already killing it with a thousand cuts.
Think about it for a second. When was the last time you were in a record store? Not a big-box store with a “music” section, but an actual record store.
It’s been awhile, hasn’t it? And why? Because they’ve almost all gone out of business. The RIAA will tell you it’s because of “piracy.” Nothing could be farther from the truth.
Record stores were in the business of selling product for a profit, like any other business. This became very difficult to do by the mid-1990s, as the distributors had set prices so high, the average retailer couldn’t afford to sell CD’s for under $18 or so. Avid music consumers had a hard time justifying spending that kind of money, and casual listeners decided not to spend it at all.
Couple this with the fact that the industry has a ridiculously low signal/noise ratio in terms of the quality of its artists and releases, and you’ve got a dismal atmosphere under which it was impossible for actual music retailers to do business.
Then came Napster. Napster was a symptom, not the disease. When the legitimate channels of distribution are too expensive, people will always jump at an alternative. Napster did make a dent in the industry, but nothing compared to what the industry did to itself.
When I was running a record store back in the late 20th Century, the primary complaint I got from customers was due to what I called the “front-loaded album.” The labels would sign an artist, write two or three guaranteed radio-friendly singles, then pad the rest of the album with apathetic, second-tier sludge. People got burned by this enough that they were no longer willing to sacrifice three hours’ pay on what was essentially a gamble. Since the industry had phased out the single earlier in the decade, consumers were looking at paying $18 for one or two songs.
Napster changed that by removing the gamble. Someone could download a low-quality copy of an album and hear the whole thing before making their decision. This was the great achievement of file-sharing: it allowed customers to make informed decisions.
And that’s something the RIAA hates.
Of course, they started suing left and right, and eventually, Napster shut down. They’re going after everyone they can catch sharing files, and they’re suing them into bankruptcy. Why? Because they’re still insisting on a 1978 distribution model in 2008, and they can’t (or won’t) adapt.
The RIAA releases inconsistent, over-priced content, and they tell their customers that they’re all thieves. What other business could stay in business this long using such practices? Think about it.
There have always been other channels of distribution, such as independent labels. Many artists have not only accepted but embraced file-sharing as a means of circumventing the RIAA’s traditional stranglehold on the distribution system, and in many cases, they’re taking home more money per unit sold because they don’t have a label and a distribution network skimming off the top.
We’re not just talking about local bands, either. Radiohead, Nine Inch Nails and many other major artists are slipping out of the net as well.
The means by which music can be distributed have changed, and until the RIAA learns to change with them, they won’t be competitive. And an industry that’s not competitive cannot hope to survive.