The RIAA’s Uphill Battle

Since Napster burst onto the scene in 1999, the Recording Industry Association of America (RIAA) has fought tooth and nail to retain control over the way people obtain and share music. Some new research suggests it’s not a battle the RIAA is likely to win anytime soon.

Last month, Digital Music News and the media-tracking group BigChampagne released a study that found that one-third of all PCs worldwide have some peer-to-peer (P2P) file-sharing application installed, with Gnutella client LimeWire appearing most often.

“LimeWire continues to be the iTunes of P2P by a wide margin,” said Richard Menta, research analyst at Digital Media News.

The study found that LimeWire’s growth over the past several months has been modest, but the continued pervasiveness of P2P applications used in file-sharing comes as a blow to the RIAA. The group has been vigorously encouraging migration to paid online music services that operate through licensing agreements with labels.

Unfortunately for the RIAA, researcher NPD Group suggested that online music purchasing continues to see little uptake among most PC users.

The group found that Mac users were the most likely to pay for their downloaded music, while non-Mac users continue to shy away from legal downloads.

Apple’s user base has grown dramatically over the past couple of years, but the company holds only a 9 percent share of the market, according to NPD’s most recent figures. As a result, Mac users also represent the minority in paid music purchasing from sites like Apple’s own iTunes.

One-half of all Mac users purchased their downloaded music during the third quarter of last year, NPD found, while only 16 percent of PC users did the same.

“There’s still a cultural divide between Apple consumers and the rest of the computing world, and that’s especially apparent when it comes to the way they interact with music,” NPD vice president and entertainment industry analyst Russ Crupnick said in a statement.

“Mac users are not only more active in digital music, they are also more likely to buy CD’s, which helps debunk the myth that digital music consumers stop buying music in CD format.”

Even as it encourages the proliferation of legal digital music services, the RIAA continues to extol the merits of the CD.

In a report the association released in August, titled, “The CD: A Better Value Than Ever,” it found that, relative to inflation, the price of a music album has gone down over the last four decades. Further, since 1983, the RIAA said the price of a CD (as measured by suggested retail value) dropped from $21.50 to $14.90 in 2006.

This holiday season, however, that message was lost on shoppers. CD sales from Thanksgiving to Christmas Eve were down 20 percent from the same period last year, according to Nielsen Soundscan figures reported in Variety.

The new developments come as the RIAA continues to face intense criticism for pursuing what many have characterized as a failed strategy, and for alienating customers in the process.

To critics, the most objectionable component of that strategy has been its energetic litigation policy: The association has filed more than 20,000 lawsuits against individuals and businesses for illegally downloading music.

On this point, the RIAA is blunt. Regarding unauthorized downloading, its Web site says: “It’s theft, it’s illegal and there can be real consequences. Legal downloading doesn’t cost much. Every fan has a choice: Pay a little now or a lot more later.”

The association also makes a moral plea: “When you go online and download songs without permission, you are stealing. The illegal downloading of music is just as wrong as shoplifting from a local convenience store — and the impact on those who create music and bring it to fans is equally devastating.”

Many of those suits have been brought against university students, a group that the RIAA claims engages in illegal downloading to a degree well out of proportion with its size. To that end, it has launched education programs promoting legal music-sharing services, successfully lobbied Congress to pass a bill compelling universities to make those services available, and, in considerable detriment to its public image, sued students.


Next page: Changing tactics

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Historically, the RIAA has generally kept out of court with individuals by sending “pre-litigation” letters offering to settle the infringement dispute for a lower amount than it would seek in a trial.

The RIAA’s pre-litigation “John Doe” letters are generally directed at IP addresses, rather than individuals. In the case of college students, the RIAA sends the letters to schools with suspected infringing users, with instructions to deliver them to the students who are registered with the offending computers.

Because college students frequently share computers, however, some schools have become wary about passing the letters along without independently confirming that their owners were actually sharing music.

In November, officials at the University of Oregon refused to deliver the RIAA’s letters. The school is now involved in a legal battle with the RIAA that is being handled through the Oregon attorney general’s office.

More recently, officials at the University of Washington have decided to hold off on delivering the letters until they can determine which students are at fault, the Seattle Post-Intelligencer reported.

During the second half of 2007, the RIAA also began changing its own stance, shifting to full-blown litigation against users accused of file sharing. The case against Jammie Thomas of Minnesota came to court for the 24 songs she downloaded and shared over the peer-to-peer network Kazaa.

The RIAA won a $222,000 judgment against Thomas, amounting to $9,250 per song. Last month, the Department of Justice rejected her appeal, upholding the initial settlement.

The most recent case is unfolding in U.S. District Court in Arizona, where Atlantic Recording Corp. and other labels under the RIAA filed a suit against Pamela and Jeffrey Howell of Scottsdale, Ariz. The two are charged with copyright infringement of 54 songs, despite the fact that the songs at issue were ripped from legally purchased CDs.

The labels are asking for an award of $750 per song, for a total $40,500, plus $350 in costs.

Like Thomas, Jeffrey Howell had an account with Kazaa. His case differs from hers, however, because he is not formally accused of illegally downloading songs through the service. Instead, his charge is based on making music of his own collection available to the network by placing them in his shared folder.

Media reports from outlets including the Washington Post often have suggested that in the Howell case, the RIAA is trying to establish a precedent that ripping music from legitimately purchased CDs onto your computer is itself illegal.

That position isn’t accurate, RIAA spokespeople said.

“The record companies did not allege that ripping a lawfully acquired CD to a computer or transferring a copy to an MP3 player is infringement,” RIAA spokesman Jonathan Lami wrote in an e-mail to InternetNews.com.

Ira Schwartz, an attorney representing the plaintiffs with the firm DeConcini, McDonald, Yetwin & Lacy, would not comment to further clarify the position. However, he did reference the supplemental brief (PDF format) filed last month.

The brief claims that the “defendant unlawfully distributed all 54 of plaintiffs’ sound recordings by making unauthorized copies of the recordings available to other Kazaa users for download.”

Much of the media coverage in the Howell case thus far conflates “unauthorized” with “illegal.” While the brief’s language may sound severe, strictly speaking, it’s not asking a judge to declare ripping all music illegal. In this case, “unauthorized” is the plaintiffs’ parlance for the process of converting a song into a compressed MP3 file.

Nevertheless, the claims call to mind the Thomas lawsuit. The lead attorney for plaintiff Sony BMG, Jennifer Pariser, famously argued in that case that ripping a song from a legally purchased CD is “a nice way of saying ‘steals just one copy.'”

On the subject of what constitutes illegal distribution, the plaintiffs in the Arizona case cite in their brief as precedent the instructions the jury received from the court in the Thomas case:

“The act of making copyrighted sound recordings available for electronic distribution on a peer-to-peer network, without license from the copyright owners, violates the copyright owners’ exclusive right of distribution, regardless of whether actual distribution took place.”

Given the number of lawsuits the RIAA has filed since 2003 and the uncompromising rhetoric it invokes to assess the problem, paired against the continued popularity of LimeWire and other similar services, particularly among PC users, there appears no end in sight to the battles over online music distribution.

But with more individuals like Thomas landing on the wrong side of a six-figure damage award, the RIAA might eventually succeed in forcing its point.

The next hearing in the Howell case is scheduled for Jan. 24.

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