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The song remains the same

Sunday, September 14, 2003

The music industry's lawsuits against music downloaders are the thrashings of a dinosaur in the tar pit. Anybody who doubts this should read the words of Jack Valenti from 1982, when he warned that the VCR was about to destroy the movie business.

Valenti, president of the Motion Picture Association of America, sketched a tableau in which the minority of wealthy Americans able to afford thousand-dollar VCRs would stockpile films from television, run the studios out of business and make first-release movies a relic of a renaissance long gone.

"I say to you that the VCR is to the American film producer and the American public as the Boston Strangler is to the woman home alone," Valenti told Congress. During testimony he also let slip that his own family was recording movies from television. By now it is common knowledge that the largest aftermarket -- often the one that makes a difference between debt and profitability -- for American films is video sale or rental. Independent filmmakers thrive on the chance to get their art onto screens in living rooms in towns where they couldn't get their flicks into theaters. My last VCR cost $60.

The movie business evolved. The music industry must, too.

Chief among the targets of Valenti's hallucinatory wailing was Sony, inventor of the dreaded VCR.

It is funny how things work out. Last week the Recording Industry Association of America began suing everyone from big-time file sharers to Brianna LaHara, age 12, for using such music-sharing sites as Kazaa and Grokster. Among the member companies footing the bill for the attack was Sony Music. Its other tentacle, Sony Electronics, is a major manufacturer of the CD burners that music downloaders use.

"They're covering their bases," said Jason Schultz, a lawyer with the Electronic Frontier Foundation, a lobbying group for Internet firms.

They need to. It is hard to find credible figures on the number of people using the Internet to bypass record stores. The EEF puts it at 60 million. Industry people have a lesser number. But everyone seems to agree that sales of CDs have fallen by 31 percent and it is not difficult to connect that loss to the Internet.

"This is part of an ongoing strategy to help revive sales in the stores and online," said Amy Weiss, an RIAA spokeswoman. At the same time, she added, "It's hard to compete with free."

Hence, last week's spate of lawsuits brought the music industry some of the most favorable headlines since Mussolini visited Ethiopia.

That 31 percent reduction in sales RIAA wants to turn around would, in other economic models, result in a concurrent reduction in price. It's called supply and demand. But instead of choosing to compete with the Internet firms, or even to jump heavily into their venues and offer up downloadable or even sharable music without the packaging, the music industry seems to think the way out of this mess is to terrify the same people it courts as customers.

Brianna LaHara, for instance, settled out of court for $2,000 that her family, which lives in public housing, couldn't easily spare.

"When you fish with a net, you sometimes are going to catch a few dolphin," Weiss helpfully explained to me. "But we also realize that this cybershoplifting needs to stop."

That term -- cybershoplifting -- is fairly apt, if only because it points to an interesting aspect to this mess: the human nature factor.

They are not dealing with the kind of organized crime piracy that turned "Saturday Night Fever" into the most counterfeited album of its time. They are dealing with the desire to enjoy a pleasure in a way that minimizes effort and expense and finds a tenable balance between the two.

This same sort of problem emerged in the 1930s when radio stations began to air records. The first worry of the music industry was that no one would purchase records if they could hear songs over the radio. Sensibly, they set up organizations such as Broadcast Music International to collect license fees from radio stations. The radio, in turn, became such a vehicle for artist promotion that, 20 years later, record promoters were offering bribes to disc jockeys to play their product over the air. It was called the Payola Scandal and if it proved anything, beyond the mendacity of recording industry executives, it was that the market eventually embraces what it fears.

Indeed, even the movie companies that tried to "do something" about the VCR -- nearly killing a market that now brings them more wealth than box office sales -- had to overcome a cartel called the Motion Picture Patents Company. Organized in 1909, the cartel tried to push independent filmmakers out of business by refusing to license the use of Thomas Edison's motion picture camera and film, even going so far as to confiscate equipment and shut down theaters.

But the market demand for movies proved so great that even a strong-arm monopoly couldn't end the proliferation. It's a lesson about how new technology, combined with human nature, overcomes the urge to legislate the past into the future.

Nothing underscores the inevitability of file-sharing than the current setup of the record industry -- an enterprise that is at once morally untenable and economically irrational.

Artists and songwriters earn pittances from the sales of their work. Even a 15 percent share of the proceeds can produce nothing for a band that fails to snare a gold record, with hefty advances often eaten away by contract stipulations that require the band to pay its production and promotional costs. At the same time, the industry floods the market with overpriced CDs -- retailing for $15 to $20 but costing less to manufacture than the traditional vinyl record album. Arlo Guthrie, after being cut loose by Warner Brothers in 1983 (these same geniuses dumped Van Morrison) discovered that it was just as easy and more profitable to direct market his work, usually selling at concerts.

It is hard to doubt that the same artists the RIAA wails about being injured by music downloading and file-sharing would find themselves better paid once music is marketed primarily through the Internet. With the Internet's ability to cut out the middlemen, it is little wonder the big labels are willing to sue 12-year-olds.

Industry captains should consider the words of the British musician Billy Bragg: "Capitalism is killing music." But, freed of cartels like the RIAA, it might yet save it, too.

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