File-trading is killing record sales.

Unfortunately, this premise is inherently flawed.

If file-trading as practiced today were a true alternative to the purchase of CDs, sales would tank. Why pay for something when you can get it for free? I mean isn't that the RIAA argument? Yet, sales are off less than ten percent. Shouldn't sales be off FORTY or FIFTY PERCENT if the premise were true? Wouldn't everybody with a computer give up buying CDs?

Now one can argue theories all day long, but as a practical matter, it's been PROVEN that file-trading isn't the Darth Vader the RIAA says it is. You've just got to look at the numbers. Of course, you could look at the numbers ANOTHER way, and say there's a HUGE untapped market for music. For millions of people are acquiring songs they wouldn't have otherwise owned. The NUMBERS tell us this. Yup, to say that this online trading is a REPLACEMENT business is to look at a glass that's ninety percent full and say it's empty. No, online is an OPPORTUNITY! To expose new acts, to sell people acts that they otherwise wouldn't have paid a significant amount for, to sell the odd album that IS NOT stocked by the local retailer, to sell the rare and out of print. How the debate has become about KILLING file-trading instead of embracing it flummoxes ANYONE without an investment in the present business model. Even the WALL STREET JOURNAL, the MOUTHPIECE of business, came out in favor of file-trading.

But forget all the foregoing. Forget debating all those trading in quantity. For they're a VERY SMALL percentage of the public. You see broadband penetration in the U.S. hovers around 14%. And, ANYONE who's downloaded songs at 56k will tell you...you've REALLY got to want something to download it at this speed. For each track will take in the neighborhood of twenty minutes to acquire, if it downloads that fast. To download an entire album? AN ETERNITY!

But, one could argue that if you only want one track, it might be worth it to download it rather than buy it as part of a fifteen to twenty dollar CD. But, is that really a FILE-TRADING problem, or a PRODUCT problem? If Mercedes only made the best wheels, people wouldn't buy the entire car. But, the assembled machine is so good, that people will pay a premium price for it. Yes, BMW has better steering. Porsche more performance. But, people won't quibble to that extent. People aren't complaining there are one or two CLINKERS on an album, rather they're complaining there's only one or two GOOD tracks.

Yes, most college students have high-speed access. But college students are notoriously stingy. Living on a budget. It was only during the economic run-up of the nineties that college students' wallets were overflowing with excess cash and they could afford a plethora of CDs.

And scarcity of cash and low-quality product make for DISASTROUS sales figures. Just ask the movie business. About the last half of July, all of August this year. Conventional wisdom is that the movie business is recession-proof. Well, conventional wisdom is WRONG! Sales dipped, SIGNIFICANTLY! They were less than last year. So one might logically conclude that the recession and low quality product are responsible for the less than ten point percentage drop in CD sales this year. Not really a stretch, when one considers that almost EVERYBODY believes the product to be inferior and very little of it is exposed commercially, and that that is, is lowest common denominator stuff.

And yes, employees of major corporations may have high speed access. But, many companies have firewalls that disallow file-trading. And companies are cracking down on personal time on computers anyway. Just last week in "The Wall Street Journal" it was reported that companies are cracking down on online shopping.

So, upon close investigation, it is easily concluded that file-trading is not the pariah the labels say it is. Who knows, when broadband penetration reaches fifty percent of American households, it might be a huge problem. But that won't be for YEARS! Enough time for the RIAA companies to establish a reasonable online business model. FURTHERMORE, once this new model is established, it would BEHOOVE them to have as many people connected via broadband as possible. Music is online's killer app, so labels can use this to partner with ISPs to drive broadband hookups, taking revenue spiffs. And, in the case of AOLTW, they OWN ISPs. So, for them, it's a total win win.

WHO'S IN CHARGE

No, it's not Hilary Rosen. Hilary Rosen is just a MOUTHPIECE! A very good one, at that. For, most of the public believes SHE'S responsible for the RIAA position. She takes the heat off those really making the decisions. And who are they?

Well, it's not EMI. Alain Levy's gone on record that he wants to explore new business models. He just made a deal with Robbie Williams that includes touring revenues. But, in the business at large, EMI's got no leverage. It would be like Maggie Simpson running the household. Never gonna happen.

Bertelsmann. Now granted, since the demise of Middelhoff, BMG's position isn't perfectly clear. But, Bertelsmann was the ONLY major company to embrace the new model/file-trading. By investing heavily in Napster. Do you think THEY'RE the ones directing this offensive? No way.

Time Warner. It's been proven in the past year that TW doesn't speak with AOL, and vice versa. Synergy's a joke. But, AOL has the most to gain from online music, since they own the biggest ISP. Just doesn't make sense that they're the ones complaining.

Sony Music. Losing money. The Japanese want to sell it. But it's a bad time, nobody's buying, not at anywhere near the valuation Sony wants. So, they're hanging in there. Letting Tommy Mottola hold the reins. Tommy may know how to sell talentless wannabe divas, but he knows NOTHING about technology. Yup, how is it that the company with the BIGGEST electronic/high tech infrastructure is SILENT on new technology? Making no headway? Sony sells MP3 players, you'd think that Sony Music would have a strategy to drive those sales. But no, that's not true. Furthermore, Mr. Mottola's tenure may be reaching a conclusion. Based on the placement of stories about his angling for extended employment in the New York dailies, it seems he's more worried about his own job than online piracy.

Which leaves...Universal.

Make no mistake, Universal's the one waving the stick. Creating policy, threatening people.

EMI doesn't have the power to say boo. BMG got fucked with Napster because it didn't realize you've got to be a member of the club. Roger Ames is just trying to compete, with a company that's made his life hell. He sees no upside in pissing the Universal behemoth off further. He just wants to dig in and make his numbers. Sony? Sony's in bed with Universal. Bought into the flawed Pressplay, which didn't even have underlying SOFTWARE until Universal purchased mp3.com. Tommy's beholden to Doug. And Zach.

Doug. He's a record man. He knows how to sign and promote. Get those records on the radio. Chase a reaction at retail. HE'S not responsible for this file-trading witch-hunt. No, that's Zach Horowitz.

Zach Horowitz doesn't get the respect he deserves. How in hell could he survive Irving then Al Teller and become the man under Doug? Meanwhile, folding in the PolyGram operation! Zach obviously knows the politics. He knows how to survive. And win.

Zach is the one in control here. HE'S dictating the policy for the entire RIAA.

So why is Zach so against file-trading?

Well, when Bronfman owned the operation, the cash cow was the record business. The engine that made it all move. The crown jewel. It had to be protected. But then the movie division got hot. And record revenues cooled. But then Messier was fired. And then the new Vivendi rulers saw the record business as an albatross that they'd rather get rid of...but COULDN'T! Because in today's economic climate, no one could lay their hands on the billions involved. Or, if they had the billions, they wanted the operation at a fire sale price.

Now music is just a pawn in the Vivendi game. Why is Zach fighting so HARD?

Well, for a while there, Vivendi had an online play, with Vizzavi, the European wireless network. But that's off the burner now. So, like Disney, maybe Zach's fighting because he's got no distribution. OTHERS will profit from online distribution, ISPs, and Vivendi has no ISPs.

Still, it seems to come down to a DICK thing. Doug, Zach and Jimmy and Lyor have a good thing going. They just want to KEEP it going. And like schoolyard bullies, they want to threaten anyone who wants to upset the apple cart. But, the question is, IS THIS GOOD FOR VIVENDI??? That's the brain trust's ultimate responsibility, to do good for the parent company, more importantly, its SHAREHOLDERS! By not charging file-traders, as Verizon offered, by spending millions establishing a bogus alternative site...ARE THEY JUST WASTING THE SHAREHOLDERS' MONEY?

Bottom line. Don't believe that there's unwavering support for this anti-piracy campaign amongst the other four major companies. They don't want to fuck with Universal. For fear the behemoth will extract its pound of flesh. But, if Universal were out of the way, things would come down differently, make no mistake.

THE AD CAMPAIGN

Those full page ads in the "New York Times", the L.A. "Times"...were they there to speak to file traders?

OF COURSE NOT!!

Because most file traders don't read the daily newspaper. And, if you DID want to reach them, you'd place the ad in the arts and entertainment section, right?

No, those ads were placed to speak to WASHINGTON, D.C.

There were hearings in Congress the day those ads appeared.

The RIAA plans to bring file-trading to a halt through LEGISLATION!

Yes, this is the same RIAA that snuck the work for hire language in a bill and then said it was a mistake. A "mistake" that it took an incredible amount of effort to undo.

One can argue all day long how good a musical act is. One CAN'T fight the law. We've learned this with radio. Fighting the consolidation that resulted in the behemoth Clear Channel? A waste of time. That ship has sailed. That legislation was passed.

While the public was asleep, the RIAA saw to it that the Digital Millennium Copyright Act was passed. It's the DMCA that the RIAA is using in the Verizon suit. Now, they want further legislation. To go into people's computers. To become law enforcing vigilantes without badges. It's kind of like the administration's TIPS program. The RIAA plans on being the new cop. Kinda like Soviet Russia. And, like the old Soviet Union, some of the crimes they've dreamed up are THOUGHT crimes. Or close to them. You can't write software to circumvent copyright or your ass goes into the gulag, er, jail, not for one or two years, but for a significant portion of your life. All in the name of protecting not safety, or health...but copyrights.

As for the eventual TV anti-piracy ad campaign. It'll be like the campaign against dope. Your brain on file-trading. And just about as effective.

THE VERIZON CASE

What is the RIAA's end game?

To eliminate all file-trading. To control online distribution. To sell secure downloads at a reasonable price. Secure as in you can only make limited copies, if any at all. Maybe you can burn a file to a CD. Lose that CD, you're shit out of luck. Even though, with today's technology, you can make backup copies of all computer files. Isn't that Computer 101? Backup your files? Burn them to CD?

Oh, the LABELS want to be able to burn to CD. That's the dirty little secret of the business. The LABELS use all these new technologies. They burn CDs like crazy. For work purposes. For PROMOTIONAL purposes. It's EASIER! And, they download from the Net too. It saves time. And hell, you can learn about the marketplace quickly! The thought that the CONSUMER might like these same benefits...seems not to matter to the labels. (Also, let's not forget that the labels INTENTIONALLY put their music on file-trading services to create hits. Talk about calling the kettle black...)

The labels want the consumer locked into buying a complete album, at the equivalent of fifteen to twenty dollars a CD. It's THIS that file-trading is a REACTION to. Instead of taking note of this informal poll, the labels want to QUASH the activity generating the report.

But the labels haven't made much progress. Because so far, the public hasn't been impaired in its file-trading ability. Napster closed down, KaZaA popped up. Shut KaZaA down...another would pop up. Unless, the RIAA can scare people to the degree that they're AFRAID to trade. By locking up some traders for YEARS!

But, I think the RIAA's gone too far now. They're about to wake up a sleeping giant. Just like people protested war against Iraq across America today, just like the public will start to freak when soldiers come home in body bags, the public will revolt. The REAL battle is JUST BEGINNING!

But why is the RIAA doing this? As we've seen above, statistically, file-trading is not a true nemesis. And, most people believe a site proffering a comprehensive cache of unrestricted MP3s will GROW the business. Why not experiment with new models, now, when there's so little at stake?

If, per chance, the RIAA wins the Verizon case, it will backfire upon them. Because THEN the public will get ANGRY! And demand legislation of its own. You see the judge in the case said the DMCA provision in question is vague. People will lobby for clarity. Americans love their privacy, like their right to bear arms. You think citizens are going to allow the RIAA to hack their computers? Send them to jail? No way!

CONCLUSION

You know the RIAA is swimming upstream when today's "Los Angeles Times" [October 6, 2002] reports that Howard Berman's DAUGHTER downloads and he hasn't convinced her she shouldn't. Howard's their SAVIOR! The key to legislative change in their favor.

But do the labels take this as a warning sign? No. They continue to fight. I'm old enough to know that the public doesn't always win. But, I'd bet against the RIAA here. Because the organization is pushing too far. It wants to take away rights and uses people already have/employ. And people don't like to give up their rights/activities they've become inured to.

Contrary to conventional major label wisdom, the public doesn't want to steal. People know what's right and wrong. People will use legitimate services if they're BETTER than the free ones. And, they'll tolerate action against the free sites if there's a reasonable legal alternative.

Universal is involved in a high stakes poker game, placing the complete RECORD INDUSTRY'S GOOD WILL on the line. Why is no one at another label standing up to them? Where is the nerd in student council standing up to the jock? Not worried about being friends with the most powerful bully on the block, but doing the right thing?

Instead of maneuvering to work the new model to its advantage, the RIAA is waking up the American public, which when made aware of its heinous dealings will make them pay. Yup, make no mistake, enough publicity and the momentum could shift. Congress could abandon the labels. For, although the major labels have money, which one needs to campaign, it all comes down to votes. And if the public is made aware that their representative disallowed their access to cheap, usable online music because they were beholden to fat cat music industry-types, they're FUCKED! That's the lesson of the past year. If you're smart, you want to keep business OUT of the newspaper. Do your work QUIETLY. For fear your BUSINESS PRACTICES will COME BACK TO HAUNT YOU!!!

I mean we don't want the press and Congress to turn its eye on the record business. TOO MANY skeletons are in the closet. But, that's what Zach and his boys are doing here. Playing a game of chicken with the record business' life. And, if your life is at stake, don't you care WHO'S IN CHARGE? When are the other labels gonna WAKE UP? And realize that the policy being pursued is COMPLETELY WRONG! They don't need David Benjamin concocting publi c threats, they need a Bill Clinton convincing people to continue to sleep, that they're on their side. Elections may only come every four years, but the record business is doing its best to insure it will be voted out of office. We DO live in a democracy. As much as corporations affect modern life, control ULTIMATELY rests in the public's hands. And, the music business is just not large enough for the government to protect it at all costs. This is not oil. No, the record business, selling its expletive-ridden music, with all its dirty laundry, it can be hung out to dry.

The public is NOT asking for a revolution wherein they take everything and the labels go out of business. Only a paranoid Nixonian could think so. The labels rely on the public like a politician relies on his constituents. You'd think the labels would try to make peace, establish trust. But, oh yeah, the labels have the PRINCIPAL, the LAW, on their side. Well, if only these nerds REMEMBERED their high school days. The principal, school rules, couldn't protect you from evil. Couldn't protect you from being beaten up by the jocks, the hoods, whomever had it in for you. No, the key was to be cunning, to make peace. To try to live another day. To college, which the hoods didn't attend. To a day of delivery on demand wherein everything we're discussing here...essentially becomes irrelevant.