How to Tell the Pirates From the Sharks

As someone who has made (at times) a good living in the music business, you would think I’d be firmly in the camp of the RIAA, the large trade association that represents the major record labels. Their position on the issue of file sharing, copying and the ripping of CDs for use elsewhere can be easily summed up: “Anyone who trades music over the Internet or rips CDs is taking the bread out of the mouths of our hard-working artists and their families!”

Oddly enough, I don’t agree with this position at all…probably because I know all too well how the music business really works. I’ve been in it long enough!

I’m not saying we should be able to make backup copies of CDs or download music simply because record company executives often flagrantly exploit their artists, but I feel it is important to understand the realities of how big record labels make their money—it helps to put the issues of copying and downloading in perspective.

Here are some concrete examples of the strange accounting practices in the music industry: after reading them, it will be hard to take the claims of the RIAA seriously. The first one is a rant by Steve Albini that’s a couple of years out of date, but you’ll get the idea. It shows, in gruesome detail, how a typical band can make $3,000,000 in profits for a record company while the band members themselves lose $14,000 instead. 150 years ago this was known as “indentured servitude.”

Last year, the infamous Courtney Love testified in front of Congress and laid bare just how the music business works in 13 pages of lurid deposition. Salon captured every juicy detail in the riveting Courtney Love Does the Math.

In addition, a recent article in New York magazine shows that things have gotten worse, not better, since Steve Albini’s article. Author Michael Wolff shows how the actual market for music is shrinking, even though record execs don’t seem to realize it. He states:

This glum (if also quite funny) fate is surely the result of compounded management errors—the know-nothingness and foolishness and acting-out that, for instance, just recently resulted in what seems to be the final death of Napster.

You can find out how the Music Business is now like the Book Business (minus the literacy) by reading Facing The Music.

Finally, things are now so bad in the music business that the artists themselves are uniting in protest. Not against the copying of CDs or the downloading of free music, but against the record companies they work for and the RIAA! Find out what led Don Henley, Clint Black, and other musicians to form the Recording Artist’s Coalition.

What about the RIAA’s contention that music-swapping services like Napster have negatively impacted CD sales and wreaked havoc with the music industry as whole? Is it really true? Maybe not.

The Los Angeles Times ran an article by Jeff Leeds on June 20, 2001 showing that, when Napster was at peak popularity, CD sales actually went up, and that the dip in sales started almost at the same time Napster was cut off at the knees in March of 2001. (If you want to read the article, you’ll have to search the archives at www.latimes.com and pay a small fee.)

Wired looked at the issue and also found the RIAA’s conclusions specious, mainly due to flawed research. Several instances are cited where CD sales have risen dramatically on various e-tailer sites like Amazon and CDNow when free downloads of songs from various artists and albums were offered.

Add up these facts and you get a different picture than the one the RIAA is painting.

Tripping (and Falling) Down Memory Lane

For those of us with long memories, this situation has a familiar ring to it. Didn’t we go through entertainment industry hand-wringing over new technologies before? Of course we did…several times.

For example, I’ve read in Musician’s Union publications about the panic in the music business when records first became popular, and the fervent belief that it would kill off live music.

The first time I can personally recall a full-blown technological media panic happened when audio cassettes became popular. I remember it well.

It was 1968 and I was attending Los Angeles City College while also spending time at KPFK. I spent a lot of time in the LACC broadcasting department, learning the audio skills I still use today. For a couple of years, I never went anywhere without my trusty Norelco portable cassette recorder; it weighed around 8 pounds but was much easier to use and less bulky than a Nagra portable reel-to-reel. I used it for interviews, documentaries, and other features during my “radio days.” At times, people would stop and ask me what it was. “A ‘compact cassette’ recorder invented by Philips” I would tell them. (Remember that Norelco was—and still is—owned by Philips.) For a while it remained an oddity, and then (it seemed like it happened overnight) everyone had a cassette recorder or player. In their home, their car, and after Sony’s “Walkman” appeared several years later, just about anywhere else.

It didn’t take long for people to figure out how easy it was to make cassette copies: just patch two decks together and hit the record button. (Portable boom boxes would come later with two decks built-in.) By the early 70s, homemade audio cassette copies of popular albums were as prevalent as homemade CDs are today. The record companies made the same noises then as well. “Stealing music is wrong!” they cried, and even came up with a cute “skull and crossbones” logo that was put on all the pop records of the time to remind people not to make illegal copies.

Yet, strangely enough, record sales continued to rise—at times, spectacularly—during the same period. The contention that cassettes were killing the music business was never proven.

Fast forward to the mid-70s, and a new technological terror is born: Sony’s dreaded Betamax video cassette recorder. Now people could make copies of their favorite TV shows (and in some cases, movies) all by themselves. The phenomenon became as widespread as audio cassettes, with the same predictable results. By the early 80s another “sky is falling” press release came, this time from Jack Valenti’s MPAA, which was soon picked up by the mainstream press. Screaming headlines such as “Video cassettes will be the death of the movie business!” appeared in the LA Times and other papers as Universal brought suit against Sony in 1984.

Universal charged Sony with contributory copyright infringement, saying it was illegal to tape certain broadcasts on public airwaves, a capability that Sony’s technology made possible. But the US Supreme Court ruled that if new technology had substantial, noninfringing uses, it should not be squelched, even though the technology may be used for illegal purposes as well.

This ruling, now commonly referred to as the “Betamax Defense,” is still being used today but is under escalating attack from an increasingly conservative judiciary.

The Oldest Trick in the Book

If all that weren’t bad enough, convincing the public that copying and downloading music is wrong goes against one of the cornerstones of modern retailing: the concept of “try before you buy!”

I remember the famous music store at the corner of Sunset and Vine called Wallich’s Music City. They had several listening booths where customers could hear any album they chose: they could listen first and then decide if they wanted to buy it. The idea was wildly successful and the store remained a Hollywood fixture for decades as well as spawning imitators across the country. In the 1990s, the Music Plus chain of stores tried the same idea with CDs, but foundered. They tried to blame the “we’ll open and let you listen to one CD per visit” policy for their financial woes, until it was revealed that bad management was really to blame. Today, music stores such as Tower Records and Borders have listening stations, but patrons can only hear what the store and record label reps want them to hear.

The shareware community is also founded on the principle of try before you buy, and has flourished because of it. This is even more remarkable when you consider that, by and large, shareware authors use the honor system.

The Song Remains the Same

The latest record industry copy-protection fiasco is simply one in a long history of failed attempts to control what can’t be controlled, and only serves to antagonize the people who are legitimately buying music.

The RIAA’s logic is bizarre: “So what if a copy-protected CD won’t play in some PCs, all Macintoshes, and approximately 30 percent of all consumer CD, DVD, and even car players? It’s worth it to keep people from making illegal copies!” Call it their “musical scorched earth” policy.

The truth—as any kid will tell you—is there has never been, nor will there ever be, any copy-protection scheme that can’t be broken. History tells us this time and again. History also shows there will always be a segment of the public that refuses to buy your product: they will either make a copy of it or not deal with it at all, but they will not buy no matter what you do.

As to the question of why the current Internet music sharing craze is so popular, the answers are varied. Of course, the allure of free music is strong, as you might expect it to be, but that isn’t the only reason why Napster became so popular, and current file-sharing networks continue to grow. There are other reasons, all of which elude music executives with their heads firmly stuck in the sand…or elsewhere. Here are some other reasons why music-swapping won’t go away, no matter how hard anyone tries:

The economy—A more logical explanation for the rise and fall of CD sales over the last few years is the economy. When times are good, people will spend money on things they don’t really need, but when money gets tight they won’t. Add to that the steady rise in CD prices over the last several years and you would expect to see a drop in CD sales. And now that everyone knows a blank CD sells for $0.30 or less, the idea of paying $17.98 for a CD makes little sense. Yet that’s exactly what Tower Records charges for current releases, with some selling for even more, even though online e-tailer prices average around $12. No wonder the kids headed for the virtual hills.

The death of the 45 rpm record—Not every recording artist can produce 12 songs of pure genius: many pop records contain only one or two good songs on them at best. This is nothing new, but in the past, people got the songs they wanted on inexpensive 45 rpm records that typically cost $0.99 to $1.49. Today’s CD singles cost anywhere from $4 to $6, with the same one song that used to come on a 45 with some filler material thrown in. At these prices, three songs cost as much as a full album, which is why CD singles have never become as popular as 45s used to be.

Lock-step radio—I could write another article on what is wrong with today’s FM radio scene, but so many others have already done so. For a real eye-opener, try the Chicago Tribune’s Rocking Radio’s World.

Here is the first line: “Commercial radio may be in its worst shape ever, with listeners tuning out and legislators calling for investigation into corporate control of public airways.” Just as with the record industry, a few huge corporations have gobbled up most of America’s radio stations, the end result being the same dreary music being played in every American town and hamlet.

FM radio used to function as a medium that exposed listeners to new music of all types, which in turn spurred record sales. When there’s nothing to hear on the radio but the same songs over and over again, whether the station plays rock, country, or urban, there’s no reason to expect record sales to increase. You’ll notice I didn’t mention jazz or classical: stations that play this kind of music have virtually disappeared from American radio, except for the occasional college station. According to conglomerates like Clear Channel, there’s not enough profit in it.

Perhaps one reason sales increased when Napster came on the scene was that people were again free to sample new kinds of music, and if they liked something they downloaded, they could then buy the album already knowing they would like it. There’s that concept of “Try before you buy” again.

Interestingly enough, the latest rage is streaming Internet radio. If you have a copy of iTunes on your hard drive, click on the “Radio Tuner” and you’ll see a healthy selection of stations. Fueled by the proliferation of fast Internet connections in homes and businesses, Internet radio is another attempt by people to break away from the rigid playlists and formats of FM stations run by soulless automatons and bring back a sense of adventure and playfulness to radio. Not surprisingly, the RIAA has just announced a campaign to squash Internet radio as well.

Time to Take a Stand

If you think all this sounds grim, it’s going to get worse. The RIAA has won a few skirmishes, most notably the hobbling of Napster, and this has emboldened them—and other industry trade associations—to go after the Ultimate Dream of Hollywood: the complete and total control of everything you see, read and hear.

In an article called Hollywood Wants to Plug the Analog Hole, you’ll find out what plans major entertainment corporations have for you, your computer, and your future. As the article says, “[Hollywood’s] three-part agenda—controlling digital media devices, controlling analog converters, controlling the Internet—is a frightening peek at Hollywood’s vision of the future.”

If you would like to take a stand on these issues and preserve the idea of the Digital Hub and everything else the Macintosh excels at when it comes to multimedia, I urge you to join, as I have, the Electronic Frontier Foundation. They are one of the oldest organizations promoting the rights of consumers and individuals over the forces of corporate greed. They will make your voice heard, and they will stand up for your rights. If you do nothing—if you believe that all of this will be sorted out by others and that there is nothing you can do about it—one day you will wake up and find your rights have vanished. Your once vibrant Digital Hub will have become nothing more than a Digital Doorstop.

The choice is yours.