The RIAA cites the number of dollars lost to the illegal online music trade to be somewhere around $4.2 billion per year. Their calculations are presumably based on the inflated Internet rate of a dollar a song, so we can dismiss at least some of the bulk in the figure right there, but it’s a big number no matter how hard you look at it. The industry lawyers have done their best to deal with the problem. They’ve brought lawsuits against an estimated 20,000 individuals in the United States alone. Some of them were grandmothers, some of them didn’t own a computer, and just for kicks, some of them were dead grandmothers who didn’t own a computer.

Most of these lawsuits, being baseless, have been thrown out. Some have succeeded, bringing rewards of thousands of dollars per offense back into the industry coffers. But the real strategy here is for neither party to ever see the inside of a courtroom. The industry boys bank on their victims being so completely overwhelmed with fear that they settle out of court. Lawyers are expensive, see. Accountants, on the other hand, are a dime a dozen. They even set up a threatening little website where you could pay them $3000 or so in exchange for them not actually suing you. The whole thing is complete with a FAQ page that asks questions like, “Will my parents find out about this lawsuit?”

Lawsuits aren’t the only tool being implemented to plug that $4.2 billion dollar hole in the music industry’s budget. There’s lobbying dollars for new legislation on content protection and huge education campaigns reminding people that what they are doing is illegal. They’ve even solicited artist support so they could let us know that Britney Spears and P. Diddy might go hungry if we don’t shell out $15 for their latest album.

“Would you go into a CD store and steal a CD? It’s the same thing, people going into the computers and logging on and stealing our music. It’s the exact same thing, so why do it?” -Britney Spears

“I understand why people download music, but for me and my fellow artists, this is our livelihood. When you make an illegal copy, you’re stealing from the artist. It’s that simple.” -Sean “P. Diddy” Combs

The way the industry is looking at things is like this: “Someone has stolen tens of billions of dollars from us and we’ve got to find out who.” They did some research, slept on it, and eventually came around to justifying their existence by attacking their customer base. You know, the people who put food on their table. But the notion that self-victimization should be the perpetual public reaction of an international hundred billion dollar a year industry leads one to think that there might be more to it than that. God only knows who gets credit for this quote, but “The clue train stopped there four times a day for ten years and they never took delivery.”

Let’s face it. Compact Discs have been on the market since 1983. MP3s have been around since the mid-90’s. Napster happened nearly 10 years ago. The victim card can only be played for so long. People no longer have empathy for what amounts to little more than the industry’s bruised and beaten hull lashing out because it’s backed itself into a corner. What we’re witnessing is a sour reaction to a missed market opportunity. People were excited about the endless potential music had on the Internet. When the gears finally got turning we were offered poor quality tracks complete with DRM that cost more money than the physical release would have cost us at the record store. They should have expected nothing less than widespread revolt, and that’s exactly what they got.

If the likes of Napster and Limewire were seen as a threat to the record labels, BitTorrent had to have sent a chill down their backs. The original peer-to-peer services were big lumbering giants that were full of spyware, viruses, and single song downloads. BitTorrent trackers are, by comparison, nearly effortless to set up and maintain and allow much greater flexibility over quality of content, but there was one other area in which they shined. With BitTorrent we saw for the first time a functional economy injected into the core of how these sites operated. The share ratio system created a way for users to be rewarded for the time and effort they put into sharing music online and, to the label’s dismay, there were no dollars involved. Music became the new currency of file sharing. The quality and scope of a user’s collection of music and the extent to which they made it available to the public would have a direct impact on their ability to acquire new music. These new developments, coupled with the fact that trackers could be deployed by virtually anyone with very little money or technical knowledge made them a very real threat to the recording industry indeed.

What these guys don’t seem to understand is that they are throwing out millions upon millions of dollars in an effort to recoup millions and millions of dollars. The record labels are obviously scared, and they are obviously in need of help. Instead of reaching out to consumers and creating a viable alternative to stealing, they’ve allowed themselves to get excited about all the fear mongering going on at the RIAA and other trade associations. The RIAA, mind you, is technically a separate entity from the labels themselves and, well, if they weren’t out battling piracy they wouldn’t really have anything to do but certify gold and platinum records all day. That’s got to get pretty monotonous after while and, considering that the whole piracy thing justifies millions in salaries, they’d probably have to undergo some pretty serious downsizing. The whole situation makes you wonder to what extent this is about establishing a need for all those corner offices.

The trade groups receive an estimated $132.1 million dollars from the four major record labels. This doesn’t include fees paid by their hundreds of smaller members. In the first half of 2007 they spent an estimated $650,000 on lobbying the United States Congress. Remember those 20,000 lawsuits we mentioned earlier? Somewhere in the neighborhood of 2,500 have actually come forward and settled their cases. That’s more than 15,000 lawsuits that the legal team was paid to act upon with no return on investment. None of this even touches on the amount of money these guys throw into advertising campaigns, their “research” department, or the questionable notion that they actually allow some of their spoils to trickle down to the artists they are trying so hard to protect. A budget like this would be justifiable if the strategies they employed were effective, but much as is the case with the war on drugs, piracy doesn’t look like it’s going anywhere for a long, long time.

There have, of course, been attempts to legitimize the sale of music online in a way that doesn’t undermine the customer’s intelligence. AllofMp3 was an extremely popular service launched in Russia that charged users based on the size of the files they were downloading, and not the number of songs. The website and it’s user base shared the understanding that they were no longer trading physical media. With digital downloads, there is no duplication of discs, no mass printing of album art, no freight charges, retail contracts, or cashier wages. The digital system effectively sidestepped the entire post-production distribution scheme, so as far as AllofMp3 was concerned, there was no need to charge people the same inflated rates for music.

The RIAA, the labels, and a myriad of international trade organizations were, as you might imagine, less than happy. The industry showed the true force of their vast lobbying power when the United States Department of Commerce made it known to Russia that their desires to join the World Trade Organization would not be fulfilled if they did not shut down the website. In the early spring of 2007, the site was quietly taken down for “maintenance” and hasn’t sold a song since.

Before you allow yourself to see this as another small victory for the industry, it’s interesting to note that AllofMp3’s parent company started a new website as quickly as the old one was shut down. Mp3Sparks.com offers an almost identical service to the version that was found at AllofMp3.com. It’s as if the publicity of Russia taking a stand against file sharing was all that was really being sought. AllofMp3 was becoming a household name, and it seemed sufficient for the record labels to get headlines for a week or two that made them look like they were doing everything in their power to rid the world of piracy, even if their actions didn’t really affect anything but a domain name.

This is the case across the board. The popularity of Napster was replaced by Kazaa, Limewire, and Soulseek. The popular BitTorrent aggregate Suprnova has recently been restarted by The Pirate Bay. When the worlds most popular music tracker Oink was shut down a couple of months ago, two replacements quite literally appeared overnight. One of them is set to release it’s own tracker software within the next couple of months, ensuring that there will be a core group of followers ready to step up as the next standard bearers when they too get shut down.

Aside from the few legal alternatives to the extortionist websites that are supported by the labels, as well as the illegal sharing sites that are not, there’s another storm of dissent brewing in the music world. Remember the Britney Spears quote from the beginning? You know, artists are being robbed by consumers, my livelihood depends on the successive contributions of your meager salaries, etc.? Well, as it turns out, there’s a growing number of recording artists who don’t necessarily feel that way.

Don’t take them the wrong way. Everybody wants to get paid, but there are more and more artists who are starting to see the problem with the industry’s take on things. Courtney Love has spoken out frequently in the past year or so about how artists have little (if any) ground to stand on when it comes to negotiating with labels. With all the work the industry has put into combating piracy, none of it is actually about putting lost dollars back into the hands of people making music.

Many labels are finding popular artists resisting pressure to sign new contracts as their old ones begin to expire. The likes of Madonna, Nine Inch Nails, Pearl Jam, Radiohead, and others are actively taking the steps to cut all ties to their labels. Trent Reznor, who has, ironically enough, been included in the RIAA’s list of celebrity quotes speaking out against piracy, has been one of the most vocal critics of industry practices. When he found out that his album, Year Zero, was selling for $35 a copy in Australia, he immediately called his label to find out what was going on (For comparison sake, most albums were going for just over $20 there at the time). The rep responded:

“We know you have a real core audience that will pay whatever it costs when you put something out - you know, true fans. It’s the pop stuff we have to discount to get people to buy.”

That was apparently the wrong thing to say. Reznor has since produced the latest Saul Williams album The Inevitable Rise and Liberation of Niggy Tardust and helped him release it on the internet. Fans can download the album for free at the slightly sub par bitrate of 192kbps, or they can pay $5 for one of higher quality. This free distribution followed closely to that of the Radiohead release of In Rainbows, which had gone online mere weeks earlier. The Radiohead site offered fans the option to type in the dollar amount they were willing to pay for the new album. Options, of course, included $0.

There’s no telling exactly what will come of the record industry. What does seem certain is that times are changing, and the change is coming on fast. There are, at the present, more songs being downloaded illicitly than are being downloaded via more sanctioned channels. This trend is only going to shift toward legitimacy as innovation permits.

For the first time in a long time, consumers have found a way to effectively protest corporate policy by refusing to spend money. They’ve likely been able to do so because of modern music’s unique ability to let people protest it and listen to it all at the same time. That’s not to say people aren’t putting their money where their mouths are when the opportunity presents itself. Trent Reznor was asked in an interview recently what he payed for the new Radiohead album. His answer? $5000 dollars.

Tags:allofmp3, big music, binary organic, bit torrent, courtney love, file sharing, free music, limewire, mp3, mp3sparks, music, music download, napster, oink, piracy, radiohead, riaa, saul williams, suprnova, the recording industry, trent reznor

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