The Future of the Record Industry

     iTunes recently upped the price for a single song, making the biggest hits $1.29 instead of 99 cents. While that 30 cent raise will eventually leave a dent in your wallet, it's still a deal compared to what one Boston University student had to pay. Joel Tenenbaum, a postdoctoral student at BU, had to pay a whopping $22,500 a song after being found guilty of illegally downloading and distributing 24 copyrighted songs. In retrospect, I'm sure Tenenbaum would gladly have forked over $30 for those same songs instead of becoming the target of a record industry lawsuit.

     The Recording Industry Association of America, or RIAA, is on a mission to stamp out online music piracy. As album sales continue to tumble and the record industry faces a massive loss in revenue year after year, this is their game plan.  It seems to make sense; illegal downloading has coincided with dwindling album sales, so sue the downloaders and start making money again.  The only problem is, it doesn't work.

     It all began in 1999 when Shawn Fanning, a Northeastern University student created a peer-to-peer file sharing network that allowed Internet users to download and distribute music and other media files easier than ever before, and for free.  Trouble emerged in 2000 as acts such as Metallica, Dr. Dre, and Madonna filed lawsuits after their music leaked online.  It did little to slow Napster's massive popularity and growth.  In February 2001, Napster was reported to have 26.4 million users.

     By July 2001, Napster was shut down.  In its place, other illegal downloading sites sprung up across the web.  For the record industry, it was all downhill from there.  1999 was the highest profile year for the industry, with $14.6 billion made.  By 2009, those figures were down to $6.3 billion with no signs of getting any better.

     Despite the dwindling revenue, there was a silver lining to the dark cloud of online piracy.  British alternative band Radiohead demonstrated this in late 2000 when they released their first No. 1 album, Kid A.  Kid A wasn't a particularly commercial album, in fact, no music videos were made for it, and no singles were released from it.  The band actually credited their album's success to the buzz it received after leaking online three months before its release.

     "Most of us really are criminals. Almost everybody owns a little stolen music," said Lev Grossman in a Time magazine article.  "But a little piracy can be a good thing. Sure, O.K., I ripped the audio of the Shins' Phantom Limb off a YouTube video. But on the strength of that minor copyright atrocity, I legally bought two complete Shins albums and shelled out for a Shins concert. The legit market feeds off the black market. Music execs just need to figure out how to live with that."

     The record industry has a point - illegal downloading is illegal - there is no way around that.  Stubbornly suing pirates however, doesn't solve the problem.  Rather than attempting to irradiate illegal downloading,  they need to find a new business model that works in the Internet age.

http://www.baldguyweb.com/blog/2010/02/compensating_musicians_and_rec.php