December 28th, 2007

Music Recording Industry Will Be First Traditional Media Industry To Be Utterly Destroyed By Digital Technology

by

The maxim goes that new technologies don’t kill off old media — radio didn’t kill newspapers, TV didn’t kill radio, etc. But it’s not clear this maxim will hold true in the digital age. The first industry to suffer the slings and arrows of digital technology was the music recording industry, back when MP3s and Napster gave birth to digital music sharing. Now it seems likely that if digital technology is capable of utterly destroying an old media industry, the music recording industry will be its first victim.

In a desperate, senseless, lunatic attempt to save the collapse of their business, the recording industry has declared jihad on their own consumers — trying to literally to sue their customers back into the stone age. This war on consumers has taken a bizarre and potentially fatal twist as the music recording industry has declared it illegal to to copy legally purchased music to a computer for personal use.

Yes, you read that right:

Now, in an unusual case in which an Arizona recipient of an RIAA letter has fought back in court rather than write a check to avoid hefty legal fees, the industry is taking its argument against music sharing one step further: In legal documents in its federal case against Jeffrey Howell, a Scottsdale, Ariz., man who kept a collection of about 2,000 music recordings on his personal computer, the industry maintains that it is illegal for someone who has legally purchased a CD to transfer that music into his computer.

The industry’s lawyer in the case, Ira Schwartz, argues in a brief filed earlier this month that the MP3 files Howell made on his computer from legally bought CDs are “unauthorized copies” of copyrighted recordings.

And you thought you actually owned the digital bits on the CD you bought. No, silly. The recording industry owns them. Who knows if you even have the right to listen to the music when you have friends over. Maybe they all need to bring their own copies. Maybe you need to buy a copy for each room of your house, or one for listening in the morning and one for listening in the evening, or…

Un-frigging-believable.

The implication of course is that virtually every individual who owns both a CD and a computer — and thus has likely copied that CD to the computer — can be subject to a lawsuit by the recording industry. Imagine the revenue potential from suing hundreds of millions of people, i.e. suing every one of your customers.

Is it possible for an industry to develop a business model based entirely on litigation?

More likely is that both consumers and recording artists alike will continue to abandon major record labels at an accelerating rate, causing at least one major label to declare bankruptcy and shut down, perhaps even in the next 12-24 months.

There is a simple, if cliched lesson in the recording industry’s bizarre death spiral, which every media company needs to carefully note:

CHANGE OR DIE

“Change” means that you should assume, worst case, that everything you know is wrong, that nothing that has worked in the past will continue to work, that complacency and resistance to change = failure, and that anyone who doesn’t get with whatever the new program is needs to be show the door as quickly as possible.

Of course that’s stating it in the extreme, but never has the disruption of technology moved so rapidly and with such extreme impact as it has in the media industry.

Don’t become the buggy whip — or the music recording industry — of the digital age.

  • You guys must be joking, right? Come on, you think they are just going to lay down and die? Not hardly. This is the same thing that happened when I was a kid and vinyl was superseded by tape. They panicked then, but they will live on.

    I can tell you what is really gonna happen, I am in the industry, but you wouldn't believe it if I told you. Nobody does.

  • Jason The Saj

    First mistake...

    "The first industry to suffer the slings and arrows of digital technology was the music recording industry"

    The music recording industry is alive and well. In fact, there are more recording studios now than ever before thanks to digital technology. The difference, is that most of these studios are now owned by the artists and exist in their bedrooms and basements.

    What is being killed is not the recording industry but the marketing cartel that controlled it for several decades.

    "In a desperate, senseless, lunatic attempt to save the collapse of their business, the recording industry has declared jihad on their own consumers"

    Actually, it hasn't. The customer of the recording industry cartel was not us the consumer, but rather the "artists" who's only means of getting their content delivered to us the consumer was thru this fraudulent cartel which acted as a gatekeeper to both the radio industry and the retail shelves. The internet simply opened a new gate. This was not the only gate, college radio had existed for decades, however this gate was huge - big enough to rival the recording industry cartel. For the first time, thanks to digital technology, an artist could record an album, design it's packaging, (manufacturing is actually cheap), and now find and reach a customer to deliver it to - all without the need for the recording industry cartel.

    "Is it possible for an industry to develop a business model based entirely on litigation?"

    No...thankfully...

    Many think this is a first time case. It's not...it happened before in American history with the automobile, we just don't remember it. Ford ran into legal issues when it launched it's automobiles. At the time their was an automobile manufacturer association which required payment for any automobile manufactured. Ford was not a part of this association. The battle went to the court. Ford Motor Company showed they could deliver a better product, for cheaper, without the said organization. At first public opinion was torn. But when the association started suing the purchaser's of Ford public opinion began to swell against the association.

    We see the same thing occurring today. As RIAA focus' more and more on litigation (much akin to recent SCO case involving Unix/Linux). Public opinion is growing against RIAA. Furthermore, a large group of artists, long ripped off by said organization are also opposed to RIAA. Now, as RIAA tries to expand their claims further and further beyond a realistic scope in an attempt to counter a revenue coffer running dry, they are essentially digging their own grave. While in the immediacy RIAA may have moments of success, new laws passed with harsher penalties and expanding their control. Eventually, RIAA will stand before the U.S. court system and on the other side of the aisle will stand the consumers, artists and new vendors like Apple's iTunes. Who will make the case that they can offer a business model that is more profitable for the artist and more affordable to the consumer. Furthermore, this battle will rip open the history books - in which case, all of RIAA's fraudulent book keeping and accounting practices and contract loopholes for avoiding paying their artists that made them uber-profitable over the years will equate to the hammer that nails the coffin shut.

    So no, an industry is not dead....merely a marketing company that was ripping off it's client, it's client's customers will die.

  • Actually, the Washington Post article was misleading. Read the comments at Mathew Ingram's weblog. The filing the RIAA made was that the person violated the publication rights under copyright to copy the music from CDs and load this music into a file sharing subdirectory. The point where the copying became unauthorized is the point where he loaded them into his file sharing directory.

    In other words, ripping the CD in order to share the files on a P2P file sharing site. NOT, as has really been erroneously communicated in most places, _just_ ripping the CDS to your computer for backup, or loading to your iPod.

  • Rob

    Scott -

    Wow, your headline is so "2000."

    I always enjoy your commentary, but I really think just like anything else, it's all about the content and not the distribution method. If the Beatles were all alive and released some new stuff and only put it on vinyl, it would still be #1 and sell millions. The Internet has without a doubt allowed new artists to be discovered and get their talents to a large audience without the need of big record companies promoting it and taking their share.

    At a recent concert I went to, the band told everyone to send a text and they would receive the song they were just about to perform on their phones. Doing this along with bands offering live recordings of their shows (I think Kiss was the first band to do it) is thinking "out-of-the-box."

    Happy New Year, Scott.

  • actually you're not stating it in the extreme at all, it's all common sense, but with the scent of the dread of change.

    try to imagine it backwards: what if the music industry of today were that of the future - as Jon is projecting it(i.e. an industry of many, small players, each with their own niche audience and fair copyright policies) and suddenly it had to change into the industry we all know (i.e. a centralized money machine that spits out the same artists on a conveyor belt, scoffs at diversity and small artists and puts a tiny lawyer in each cd case).

    we'd be similarly scared, wouldn't we?

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