RIAA crying wolf all the way to the bank

4/6/2006 2:48:28 PM, by Eric Bangeman - Ars Technica

Ever since the rise of Napster in the late 1990s, the recording industry has pointed to piracy as a dire threat to its business model. After years of legal actions and generally irritating their customers, the labels finally figured out how to adapt their business model to respond to changing consumer expectations. Enter the digital music download and subscription services.

Despite the success of the download model, the RIAA has continued to complain about decreasing CD sales and shrinking profits. It is true that consumers are buying fewer CDs. At the same time, digital sales have soared. Including sales of ringtones and revenues from subscription services, digital media now accounts for nearly 9 percent of recording industry revenues and a startling 42.6 percent of total unit shipments.

Looking at the numbers over the past few years, two things stand out. One is the overall decline in sales of physical media (e.g., CDs, CD singles, vinyl, music videos, and DVDs), from 860 million units in 2002 to 749 million last year—almost 13 percent. More importantly, legal downloads have gone from zero to 554 million in two years. Perhaps most telling is that despite a decline of 151 million units of physical media sold since 2002, revenues have only dropped by US$340 million—about 2.7 percent.

(Chart at Ars Technica source)

This should be good news for the record companies. Instead, they're using the figures to paint a gloomy picture of declining music sales, continuing to blame evil college students and others sharing music over campus networks as well as file sharers from all walks of life for their problems.

CD sales may be slipping, but paid downloads are growing at a much faster rate than CD sales are declining. Ultimately, that's good for the labels' bottom line since digital music distribution is much less costly than manufacturing and shipping physical media. Download rates should continue to grow, as digital music players become even more popular and consumers continue to embrace digital distribution.

The labels should also forget about CD sales ever recovering, and should stop using that as a metric for measuring piracy or other industry wores. Like it or not, the album's time has come and gone. Sure, artists will continue to release music in album form (and some of those will be worth buying), but consumers are becoming accustomed to cherry picking their favorite tracks. Why buy an entire CD for one or two good songs when you can buy the tracks you want individually?

If the recording industry has its way with the iTunes Music Store and other online music stores and services, prices for downloaded music will start to increase, especially for the most popular tracks. A year ago, that would have been a suicidal move in a nascent market. Now, the market is more mature and consumers have become enamored enough of the business model that it's more likely that only the most price-sensitive music lovers will be turned off.

Apple just completed agreements with all four record labels that allows iTMS to keep selling at 99 cents a song.

Yeah, this article seems a bit inaccurate and opinion based. (...the opinion that pay-downloads are gonna somehow save the industry.)

99 cents a song is too high in it's own right. If the price were to have been raised, it would have been suicide for the online services. Probably what the industry wanted, no doubt.

I prefer analog. Too bad business got rid of that in favor of money making tactics.

I/O will by definition always be analog, it's only
the processing and distribution channels that have evolved due to digital characteristics.

Whether we allow our traditional analog rights to be eroded by the content cartel remains to be seen. At issue is, for example, the right to record onto cassette an FM radio broadcast while outlawing digital recordings of satellite radio broadcasts.

What's the difference?
Why should one be legal and the other not?

The RIAA tried to make home taping illegal too. (But failed.) It's just the same old song and dance.

...and until we do away with labels in their current form we'll be fighting this exact same battle 5-10 yrs from now when the next format comes out.

Looks like someone is challenging the RIAA's right to claim $750 (or higher) damages per shared song:

Constitutionality of $750-per-song title damages claim challenged in UMG v. Lindor

It's a blaa blaa world for the record companies and the RIAA, who wants to shun music fans of freedom.

But this is a problem just beginning. From 2002, these horrid "CopyControl" disks won't work or makes crackling noises when played in the PC. Then 2005 rolled along and Sony BMG delivered this terrible CD collection that puts spyware on the computers that watches you every move when you listen to the music.

And it's just the beginning. Sony will unleash it's own CD format on the next one, and Sony BMG allready has plans to make it beyond copy protected on it's next format. In fact, Sony BMG wants to cease all permimant licenses and issue all music only by pay-per-play bases, and will require people who purchased the music disc to have internet connection. Every time you play, the disc connects to the internet and tracks you every time you play. In fact, it will cost you around 35 cents per playback on any track on the CD. This is on top of a $19.99 down payment, plus another payment in full price every year. Once it's out of date, Sony will cease the license and will no longer have access to the disc.

Furthermore, the music discs will be region coded. It will also have resale protection that prevents the disc from play on a second machine. In other words, these discs will only work in North America, and will only work on the first machine you have loaded in. When you try to play it on the second machine, it will say: "This machine is not authorized to play". Sounds crazy, but that's what they are planning.

And forget about putting it to your iPod or your MP3 player. You will have to bring a radio instead with you.

Oh, blast the RIAA. They are just so greedy.

And I wonder what in the world could make them think consumers will go along with their kind of crap.

Sometimes it almost seems the RIAA are intellectually challenged. Collectively, if they could get a good brain, they would THEN be in true possession of "intellectual property" rights.
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