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A Different and Disturbing Tactic for the RIAA

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Children, grandmothers, and deceased persons can breathe a (metaphorical) sigh of relief. The Recording Industry Association of America (RIAA) appears to be pulling away from lawsuits, its traditional method of combating piracy, which were often absurd in the way they targeted the wrong people.

However, as nice it is that the organization is ditching the silly and ineffectively expensive lawsuit route, a sense of creepy wariness: rumors abound that the RIAA plans to enlist the help of Internet service providers (ISPs) -- companies like Verizon (NYSE: VZ  ) and Comcast (Nasdaq: CMCSA  ) , to police file-sharing consumers. Although neither provider has said anything about cooperating with the RIAA, the new wrinkle in the saga may be that they may be part of a master enforcement plan to cut off Internet service to offenders.

Same story, different day
The concept isn't exactly new. Last year the RIAA tried to get colleges and universities involved in policing file-sharers, an imposition some schools fought against as an "undue burden" handed to them. No kidding: their mission is to educate students, not to police their networks.

Some ISPs have already been involved in some degree of monitoring users and their file-sharing practices. It looks like some of them may be taking it to the next step in which they will now do something about repeat offenders. It's not clear which ISPs are currently on board with the RIAA's new plan, just that some supposedly are.

For now, the RIAA is publicly pooh-poohing notions that some individuals might end up "blacklisted" under such a deal with ISPs. Blacklisting would be disturbing since that would mean people could get shut down by their ISPs and blocked from getting access from another provider. Given the RIAA's track record at falsely accusing people (like the example of the deceased woman who was sued, for example), this could most certainly be a royal mess on many levels.

Unfortunately, it's hard to imagine the RIAA won't make some wrong and blundering moves, given its thuggish track record.

Dinosaur business model
Basically, there are some serious risks to online privacy at stake here. Granted, many of us have voluntarily given up some degree of privacy so that companies like (Nasdaq: AMZN  ) , Apple (Nasdaq: AAPL  ) , Netflix (Nasdaq: NFLX  ) can know what we like and serve up recommendations accordingly.

The RIAA -- whose members include music industry giants like EMI, Warner Music Group (NYSE: WMG  ) , and Sony's (NYSE: SNE  ) musical arm -- has never been on my list of favorite things. Over the years, I have pondered the idea that maybe it thinks we're all thieves, wondered if winning lawsuits was really losing, and railed against its efforts to destroy innovative services like Pandora.

Basically, I think the traditional music industry is a dinosaur, on the verge of extinction, trying desperately to defy evolution and turn back time and technology. I recently argued that a business model like the one the traditional music industry has is the type potential investors should be sure to avoid.

Dark days for media and e-commerce?
From what I've been able to glean from articles all over the Internet, there are still more questions than answers when it comes to exactly how the RIAA's new plans will actually pan out. While this may all be speculation, given recent history, we could all probably be forgiven for assuming the traditional music industry still doesn't get what it really needs to do to protect its business: Innovate, darn it!. One thing's for sure, though: Many people have a great deal of concern about the precedents that might be set, and with good reason.

A sinking ship can pull everything nearby down with it. I fear that may be an apt metaphor for the RIAA, with its losing business model and desperate tactics. E-commerce in general relies on trust from consumers, and so far they've been very amenable to the types of things companies know about them that help provide better service. That doesn't mean they always will -- certain developments could cause a backlash. Who wants Big Brother watching and knowing everything about them? Meanwhile, the Internet is no longer a luxury in our lives -- it's more like a utility. Nobody wants their phone bugged, either.

This new development strikes me as a slippery slope of negative possibilities. If these guys make the wrong move, many consumers may begin to walk away from the commercial possibilities on the Internet. The situation bears watching, for music lovers, e-commerce and media investors, and anybody interested in basic privacy rights. It's also a great time for investors to ponder whether they want any part in investing in companies where the customer's apparently behind enemy lines.

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Alyce Lomax does not own shares of any of the companies mentioned and thinks the term "darknet" is cool. The Fool has a disclosure policy.

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  • Report this Comment On December 22, 2008, at 4:26 PM, ptolaw wrote:

    Verizon is garbage !!

  • Report this Comment On December 22, 2008, at 6:24 PM, JPDemers wrote:

    The scary part of this is that cable and satellite companies that serve as ISPs are highly motivated to cave in to the demands of the movie and music industries... they need licenses to the movies and music they deliver, and the content providers can swing a very heavy club at their heads. If cable companies can cut off those customers who are uploading torrents, they'll probably do so, and they can justify it to themselves because they'll be ditching just those customers who consume a lot of bandwidth.

    Telephone and telecom companies like Verizon, at least, are much less dependent on access to media content, and won't be so easily coerced. They are also well-versed in privacy law, having years of experience dealing with wiretap requests. If the RIAA sends their attorney/goon squads out to screw up yet another industry, I'll be happy to switch from cable to DSL -- and I'm sure I'm not alone.

    Charging customers by the gigabyte is a far more sensible approach. I suspect that the idea of paying for outgoing torrents will not sit well with content pirates; the casual downloader, at least, will be considerably put off. Putting a price on the practice of "seeding" would probably eliminate 80% of it, which would render the whole torrent sharing system impractical and perhaps unworkable. (Bad news for Napster and BitTorrent -- they'll have to come up with a reimbursement scheme to get customers to seed their content.) A pay-as-you-go system would thus accomplish far more than an army of RIAA attorneys.

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