The RIAA's Win Is Yet Another Loss

It's another pyrrhic victory for the music industry.

The Recording Industry Association of America (RIAA) won another battle against music piracy this week, and by won I naturally mean lost.

Awarded $1.92 million in a case against a 32-year-old mother who presumably downloaded and shared 24 different songs, the RIAA is toast. It knows it can't collect the money from the woman of modest means, and all this case does is make more music fans turn against the major record labels.

Come on: $80,000 per track, for making a Richard Marx song available on peer-to-peer trading site KaZaA? Are you guys out of your mind?

The music industry will argue that it's sending a message. You don't have to be a power user, swapping countless MP3s or BitTorrents, to be nailed for piracy. Unfortunately, that message will get drowned out by the wider perception that the music industry is just greedy and out of touch.

No torch and pitchfork for me, thanks
I'm not one of those RIAA haters. I fully grasp that pirated music, movies, and software are illegal. I would like to think that the same person who downloads the new Green Day album or the latest James Bond flick would never walk into a store and swipe a CD or a DVD.

I was young once. I was in a band signed to Sony's (NYSE: SNE  ) Columbia Records. I respect the time and effort it takes to write, rehearse, and record music. Unfortunately, the music industry also assumes that someone who would illegally download a track for free would otherwise pay for it.

That is what the four major labels -- Universal, EMI, Sony, and Warner Music Group (NYSE: WMG  ) -- don't get. Illegal downloading isn't what doomed the industry. It's the greater presence of the Internet that has made the labels less relevant.

Cyberspace killed the radio star
The Internet armed garage bands with the tools to reach the masses. An unsigned band from Austria can set up a free page on News Corp.'s (Nasdaq: NWS  ) MySpace Music in minutes, and an hour later, it can make a new fan in Des Moines. Some of the more popular channels on Google's (Nasdaq: GOOG  ) YouTube similarly belong to acoustic guitar-strumming vocalists.

It's not just the Internet that leveled the playing field, of course.

  • Home-computing cats like Apple (Nasdaq: AAPL  ) have turned quality home-recording software into a reasonably cheap art form. There's no longer a need to spend five or six figures in a recording studio, so bands no longer need to be bankrolled by a major.
  • Terrestrial radio used to own the eardrums, and labels had an easy time influencing music directors' playlists. These days, you have commercial-free options such as Sirius XM Radio (Nasdaq: SIRI  ) that can dig deeper into music genres, as well as an infinite number of smaller Internet-radio startups.
  • Even established artists are embracing what the likes of Live Nation (NYSE: LYV  ) offer. A recording contract is valuable only if it's lumped together with revenue sharing on the merchandising and performance fronts, and cheap direct distribution helps artists achieve those more complete solutions.

Clueless, the soundtrack
Maybe the RIAA and its labels were high-fiving on their way out of the courtroom this week. Maybe they also don't realize that in their ideal world, where not a single label-owned track would ever be pirated, their artists would be even less relevant than they are now. Music fans would just move on to smaller, more accessible bands that realize that the Web and free digital distribution are promotional tools, and more than just a standalone business model.

Nice going, RIAA. You're the Kobe Bryant of the music industry. You may have won it all this month, but that just means that even more people despise you now than you'll ever know.

Other ways to rock the RIAA:

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Longtime Fool contributor Rick Munarriz has been a music fan since birth. His band Paris by Air was once signed to Sony's Columbia Records label many moons ago. He owns no shares in any of the companies in this story and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


Read/Post Comments (6) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 19, 2009, at 5:01 PM, neal157 wrote:

    How about if I start giving away an exact copy of your site with no email mining or advertising?

  • Report this Comment On June 19, 2009, at 6:15 PM, deemery wrote:

    > Nice going, RIAA. You're the Kobe Bryant of the music industry

    There's a HUGE difference between Kobe Bryant and the RIAA.

    Kobe has actual talent. (The RIAA only has lawyers that feed off of the talent of the performers. Do you think Richard Marx will see a penny of this jury award to the RIAA???)

    I'm not condoning file sharing, but these awards are hugely disproportionate. Coupled with the RIAA's tactics, the RIAA is a synonym for "lawyers out of control."

    dave

  • Report this Comment On June 19, 2009, at 6:38 PM, TMFBreakerRick wrote:

    B3Neal, my point isn't about piracy. It's wrong. I say as such in the article. The real point is that the industry has evolved, leaving the labels pointing the fingers at piracy for the shortfall when it's really evolutionary.

    If you had to pay to read this article -- which you don't -- and hundreds of thousands of "garage band" aspiring financial writers wanted to write the same thing -- and the Internet provides free tools like Blogger to get them noticed and Twitter to get them distributed, then I would never blame someone who copied my article (or this site) for being less successful. It's wrong, just as downloading pirated music is wrong, but it's not the point.

  • Report this Comment On June 19, 2009, at 9:56 PM, stustanton wrote:

    I'll be soooOOO glad when they're gone.

  • Report this Comment On June 19, 2009, at 10:57 PM, hollandmc wrote:

    Excellent article... Another interesting point is the pittance that artists actually receive for music sales -- fourteen bucks a CD comes out to very, very little in profit for the performer. Radiohead claims to have made more money with the release of In Rainbows than any of their former albums, which, barring the fact that it probably mostly has to do with the elimination of countless middlemen, is a rather striking thing to say. Thurston Moore of Sonic Youth releases what songs of the band's he can via the Internet and asks that people download his music rather than buy it, as do The Offspring and Trent Reznor. As you said, music and music distribution has evolved. I would say that it has changed to the point where record labels are becoming obsolete and unnecessary in lieu of online exposure, in fact -- but that's just me.

    I'm not justifying pirating, mind you, but it is truly a mind-bogglingly complex subject, and I thought the above was worth adding.

  • Report this Comment On June 20, 2009, at 12:22 PM, GandalfDDI wrote:

    Interestingly enough music pirates are 10 times more likely to buy music:

    http://www.guardian.co.uk/music/2009/apr/21/study-finds-pira...

    Per the article:

    "According to research, those who download 'free' music are also the industry's largest audience for digital sales"

    Gee ... Looks like a market to me. The tech industry has to reassess it business model at LEAST every 3 years because of technology. Apparently the music industry has issues with that idea.

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