The RIAA has finally concluded what any young person could have told them ten years ago -- that you can't invade an entire generation's Internet and expect them to pay record store prices for music.
I always knew the RIAA effort to sue its way onto the Internet with a brick and mortar strategy wouldn't work. Many of you knew it, too.
When I became a professor of music industry at the University of Southern California something very telling happened that I don't believe I ever shared with you.
First day. First class. One young man gets up and says, "professor, we can hack anything". Coming from the media world I was taken aback by such a brazen stand but he was right. The kids controlled the Internet "mall" in the way record labels used to control Sam Goody at the Mall of America.
I wondered how an increasing number of young people could be so open about what was considered by many as stealing music.
Look, I never much cared for the RIAA's tactics. To me they represented the supreme arrogance of the record labels that has not served the industry well. But still -- music theft is piracy, isn't it?
One day I invited a rep from RIAA to speak to my students. One young man, who was sued by the RIAA and offered a $5,000 one-time deal to settle the claim, was in the room and clearly still nervous. (His parents picked up the tab, by the way).
Here's the RIAA spinmeister in a surprising civil dialogue with these very bright students. While the student who got caught was very penitent, the rest of the students were not at all intimated.
They basically told the RIAA's rep that neither they nor anyone else short of God (and maybe not even God) could stop them from discovering music online, sharing it and helping to promote and recommend the artists they liked.
You might find it hard to believe that many of these young people thought they were doing nothing wrong -- even though a minority refused to download music for free based on ethical issues.
You're familiar with many of their arguments:
• The record labels are greedy -- they rob from the artist (that argument, they felt, was juxtapositioned with the RIAA's assertion that stealing music hurts bands and singers -- still, the students felt it was the other way around).
• You can't get music variety on the radio -- the Internet is necessary to discover new music (they've certainly got a point there if you go by how radio is taking a dive as a viable music medium these days).
• "We still buy CDs and things" -- positing that their generation has considerable money available to them (or did prior to the recession) and they go to concerts, buy t-shirts and merchandise. And for those of you who want to say The University of Spoiled Children is not typical, forget it. Every college campus -- and for that matter high school -- has students who steal music, buy CDs, go to concerts and purchase merchandise.
The RIAA rep talked, maybe listened, but could do nothing that day because it was the stupidity of the record labels that got them defending the silly notion that suing kids and terrorizing universities with the fear of litigation would work.
In fact they were wrong.
Now the RIAA by their actions is admitting it -- and I want you to keep this in mind because in a moment I'm going to give the labels another piece of advice that they will probably not take -- until it is too late.
Oh, and if you think the RIAA has had the Scrooge beaten out of them just in time for the Yuletide season, think again.
They are proceeding with all present lawsuits against alleged pirates. That may sound ridiculous to the uninformed but you and I know that it makes perfect sense for the labels to admit a huge mistake and keep on making it. Anything less would be -- well, not the record industry.
And, if you think the labels will just wrap up the outstanding lawsuits now in progress and give back the money they got from settlements or successful litigation (of which there was not much), you would be drinking too much spiked eggnog too soon this season.
You've no doubt read a lot of news accounts about the kinder-gentler RIAA, but I'm from New Jersey and we don't believe no one -- I mean, anyone. And I sure as hell don't trust the RIAA.
They have some cockamamie arrangement with some -- keyword some -- Internet Service Providers (they won't say which ones) to send letters to people who the RIAA informs them are sharing music illegally. The new, "nice" RIAA would then not demand to know the customers' identity although the labels reserve the right to sue the pants off heavy file sharers.
Now that's more like it -- the old RIAA we've come to distrust and dislike.
My friend Eric Garland of BigChampagne is quoted in a recent Wall Street Journal article as saying he likes a solution that works more with consumers.
Wink. Wink.
What Eric is saying basically is that just nicely informing people they are stealing music will never stop it. He's being very diplomatic and he's too smart to mislead anyone into thinking this juggernaut can be stopped.
Meanwhile, don't rest easy.
I just think the RIAA is headed for a different strategy that forces -- that's right, forces -- ISPs to become part of their solution. Right now there is no public or governmental sentiment for it. A few months ago New York Attorney General Andrew Cuomo was trying to help the ISPs and the labels negotiate an agreement that would address piracy concerns. The Attorney General's office wants the lawsuits over this matter to stop.
There's another factor.
The record business is taking on water faster than the Titanic. CD sales are off again and when the 2008 figures come in, all razor blades will be kept away from record label mid-managers.
I say mid-managers because the top guns are living in a cushy world with benefits and no repercussions for being screw ups. Sounds like radio, eh?
There are lessons to learn here but it doesn't appear that the record labels will learn them any time soon:
1. You can't sue your way out of music piracy. Like it or not, until the labels can control the front door of the Internet the same way they can control the front door to a brick and mortar record store, free filesharing is here to stay.
2. Music is still too expensive -- the price is what makes stealing music even more attractive.
3. Young consumers do buy things. They buy a lot of things. They get robbed by TicketMaster. Held up once they go through security at concert venues. And they still buy merchandise, CDs and support bands that they love.
4. Radio died a long time ago for music discovery. The stations actually did it to themselves with ultra-short playlists. The genie is out of the bottle now and the Internet is the gateway to music discovery.
5. iPods are not a passing fancy. They are in fact, the institutionalized official music player of an entire generation. The labels and radio industry turned out to be wrong.
6. Record labels are pompous. They are part of the problem and not the solution in today's music industry.
7. Labels should be concentrating -- not on getting chummy with ISPs -- but going out and (forgive me because I'm going to use some dirty words) make music. Lots of music. All kinds of music. Helping artists get their product professional enough to find its market.
8. Wal-Mart and Best Buy are not even close to an answer for slumping CD sales. Going direct to Wal-Mart is like going directly to hell for the industry. Marketing in big box stores is the physical manifestation of big egos that think going around the labels will make them -- a label.
So, as it turns out -- the labels finally took my advice and stopped the lawsuits that were having absolutely no effect on halting free filesharing.
And here's my next advice -- which they are free to ignore because I'll just write a lot of pieces right here for the next five years and then do a story about how they finally decided to take it.
Sell music -- tons of music online and via mobile devices.
Sell each song for a nominal price -- say, the same price as a text message -- five or ten cents a tune.
Feed the music monster until the next generation is even more addicted -- make music accessible and too cheap to steal.
When consumers get hooked on hundreds of downloads a month -- or week, for that matter -- offer them a package for $20 a month -- same as many mobile operators charge for unlimited downloading.
The consumer owns the songs and can discard them the way they discard (or save) a text message.
This system is far different than the labels' feeble attempt to sell all-you-can-eat music packages to consumers without first creating the addiction. Again, I refer you to how text messaging developed into such an accidental success for mobile operators. No young person can live without text messaging -- no one! But at higher prices, they would have to. Instead, volume sells the unlimited monthly fee package.
Labels can feel free to deduct your fee and mine for this advice. We don't want anything, do we?
Except a music industry that discovers new music, helps artists succeed and cooperates with the inevitable which is...
Music must be free or close to it.
The labels need to go from being retailers to bulk wholesalers -- in a hurry.
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