Sharing the Recording Industry Association

¶ … Sharing

The Recording Industry Association of America (RIAA) has long contended that Internet file-sharing of music has suppressed its revenues. The RIAA claims that sales of compact discs have declined due to the prevalence of file sharing. They have lobbied Washington extensive and pursued legal remedy against individuals engaged in file-sharing. Yet a growing body of evidence shows that their claims are unjustified. Moreover, a significant number of artists have spoken out in favor of file-sharing. The RIAA has long portrayed itself as a representative of artists, but many artists have begun to counter this claim and stand up for their own views. The recording industry, they argue, may or may not lose money on account of file sharing. The artists themselves, however, do not. Both sides have presented their cases to government and to the public. Intellectual property law is a complex subject. Given that file sharing represents a new arena for intellectual property, it is best to view the issue from a consequentialist perspective. That is, the moral value of file sharing is dependent on the outcomes. With respect to those outcomes, we shall see that file sharing does not hurt artists.

Sales of CDs have slumped dramatically over the course of the past decade (Smith, 2007).

By the middle of 2007, CD sales for year had fallen 16% year-over-year, following up on seven years of declines (Hiatt & Serpick, 2007). Overall, album sales had plummeted from 785.1 million albums in 2000 to 588.2 million in 2006, including downloaded albums. Some observers felt that this signaled the end of the recording industry. The decline in album sales was attributed to illegal file sharing, yet the industry has provided no evidence of this. This is an industry that churns out some 32,000 titles per year (Ian, 2002), the vast majority of which receive little to no support. The industry promotes artists that are more flash than substance, and therefore fail to cultivate the loyal fan base that generates the sort of strong catalog-wide sales that older artists generate. Moreover, the industry's answer to new technology is to market songs individually, or worse as ringtones. Thus the industry has lowered consumers' attention spans, which inevitably will result in a decrease in album sales. The RIAA would have you believe that file sharing is the only reason why album sales have been in decline, but there are several other equally viable explanations.

Most of those, however, are the direct result of industry strategies. Thus, the RIAA has made a scapegoat out of the one factor in which they do not have responsibility.

The RIAA has contended that these sales slumps hurt the industry, thereby hurting the artists. The industry has suffered - it shed some 5000 employees between 2000 and 2006 (Hiatt & Serpick, 2007). Many smaller artists have claimed that the industry was bloated and that those job losses have not impacted the artists. Indeed, even some big name artists such as Courtney Love and 50 Cent have claimed that the industry's problems are not their problems. The industry, they contend, is suffering because it has failed to adapt to the new environment. The industry has a long history of resistance to change (Ian, 2002) and the file sharing situation is merely another example of this. Instead of using the new technology to build artists through expanded exposure, the recording industry is "peddling ringtones" rather than records (Michaels, 2007). This failure to innovate as quickly as customers, and the pursuit of ill-conceived strategies represents the reasons for the suffering in the recording industry, not file sharing. Moreover, by losing its focus on building artists, it has not provided them with the one thing that benefits them the most - exposure. File sharing, on the other hand, does provide such exposure.

This exposure helps the artists derive revenue for a multitude of different streams. Indeed, CDs are traditionally a poor source of revenue for many artists. Courtney Love, a million selling artist, showed the math on a typical big-name artist CD release. Her example showed that the artists themselves only earn a modest living from CD sales (Love, 2000). 50 Cent further detailed that artists derive the majority of their income from concerts and merchandise sales. This is in part due to the fact that they have more control over this income than they do the income from CDs. For most artists, CDs are a means to increase exposure, driving revenues from these other streams. There is a growing body of anecdotal evidence that file sharing builds exposure (Ian, 2002).

Essentially, file sharing is replacing much of the function of the recording industry. Artists are able to control their marketing programs online. File sharing, along with social networking websites and other Internet tools, allows artists to control exposure of their music. Previously, the recording industry performed this function in concert with large radio companies such as Clear Channel. This left most artists without significant exposure. File sharing closes the exposure gap between the big name artists and the lesser known ones.

At the outset of the file sharing controversy, the recording industry had purported to speak for artists in its opposition to file sharing. One of the most important side effects of the file sharing controversy has been the split between artists and the industry with regards to the issue.

Artists have stood up to the industry in defense of file sharing, and denounced the notion that record labels speak for the interests of artists. In 2005 a group of artists including Steve Winwood and Chuck D. filed a statement in support of file sharing when the issue was before the Supreme Court (Krim, 2005).

There is little doubt that the recording industry has suffered in the past decade since the emergence of file sharing. However, every industry faces challenges in their operating environment, be they technological, social or otherwise. The success of businesses and industries is entirely dependent on their ability to adapt to changes in their external environment. In this, the recording industry has failed. In business as in life, adaptation is the key to survival. It is possible that some artists have also suffered, but those are the artists who have aligned themselves closely with the industry and utilized the same failing strategies that the industry has been using. Most artists, however, understand that the model of the music business for them relies on exposure to drive concert and merchandise sales. They understand that exposure does not come from album sales alone.