Musical Delusions

On CNET this morning an interview was published with Cary Sherman the President of RIAA. Sherman says the RIAA was reluctantly dragged into filing outrageous lawsuits - "This was never a step we wanted to take, and we recognized that it would generate criticism in some quarters. It's tough love--for the first time, despite years of educational efforts and the availability of plentiful legal alternatives, we are holding people personally and financially accountable for the theft of creative works. But the backdrop was a community hemorrhaging jobs, careers and investment in new music, amid a pervasive culture of looting in which there was little understanding of the law or the negative consequences of breaking it." Yeah, right.

He then goes on to claim the that the lawsuits created a change in the marketplace - "Digital revenues doubled as a percentage of the market in 2006, from 8 percent in 2005 to more than 16 percent. An illegal marketplace which, prior to the initiation of our deterrence program, experienced exponential illicit P2P use has now mostly stabilized--the average number of households downloading music illegally on a monthly basis was roughly 7 million in 2003 and is now 7.8 million. Compare that with the growth in broadband access to the Internet, which grew from 38 million home users in 2003 to at least 80 million today." Those are impressive numbers but wrong. About the time that P2P was cresting iTunes created a new marketplace, not unlike what Starbucks did for coffee, although there is little evidence that there was any illegal downloading of coffee. The ultimate trick which the RIAA failed to grasp was a way to monetize a change in technology. Ultimately when they acted like idiots claiming more than they should, someone else began to think about a more logical way to improve both the lot of the creators and the end users. In the end that will reduce the influence and authority of the middle men that Sherman represents.

The RIAA claims in this are like their lawsuits, excessive. Ultimately, RIAA chose to persecute (I chose my words correctly) a number of people who had only tangental relationships to illegal downloading. By that they created a large amount of bad will for the industry. Their reactions were thoroughly predictable - in a post I did inFebruary 2005 I described the Kessler Cycle. Sherman's actions and even his justifications are a classic demonstration of the early stages of the cycle.

Sherman concludes his comments with "None of this, though, is about being in court or winning monetary judgments. We would rather be in the record studios helping artists make great music that we can distribute in lots of exciting new ways that music fans want. Because that's what this program is ultimately about--creating a marketplace that rewards investment in creativity and compensates those who make the best music in the world." Yeah, right. It seems that suing kids for their pocket change and grandmas for the sins of their children is not about "winning monetary judgments."