The RIAA's Mitch Bainwol is back on Capitol Hill, and this time, he's not touting how online piracy has been contained. Actually, quite the contrary. If there was a music industry equivalent of an SOS, today's testimony would be it. Authorized downloads are way down, revenue has plummeted, and file-sharing networks seem impervious to just about anything thrown at it.
In general, file-sharers typically render a high degree of skepticism whenever the music industry describes the piracy situation in statistical detail. However, Mr. Bainwol's description today is within the realm of acceptability. Consider the following numbers testified
today by Mr. Bainwol:
• During the past two years, music acquisition has jumped 15%. During the
same two year period, the share of legal acquisition of music has plummeted from 56% to 42% - now less than half of the music is acquired legally.
• In 1999, the recorded music industry had $14.6 billion in revenues – all from physical sales. By 2007, revenues had dropped to $10.4 billion, of which only $8 billion was from physical sales and $2.4 billion of this was from digital sales.
• In 2000, the ten top-selling albums in the United States sold a total of 60 million units. Last year, they totaled just 25 million, less than half of the 2000 sales.
• At any given moment, over 10 million users are online offering well over 1 billion files for copying through various peer-to-peer (p2p) networks or other online sources.
• As many as half of the staff songwriter jobs in Nashville have
disappeared. Thousands of other artists, songwriters, musicians, and
music retailers have been forced out of the business.
Generally speaking, the above testimony from Mr. Bainwol gives a relative sampling of the current state of the music industry. It's no secret that the music industry reached its peak prior to Napster, however the reasoning behind the music industry's decline is where many people diverge. The representatives of the music industry place much of the blame on piracy, while consumers tend to believe the music industry simply missed the boat on the digital revolution.
Believing there's something left to salvage from the carcass of the music industry, Mr. Bainwol testified that ISPs need to take a greater role in preventing music piracy. The RIAA stopped short of requesting government legislation, and instead opted to allow for the marketplace to take its course. In other words, the RIAA is hoping that your local ISP, such as Comcast or AT&T, will take a proactive role in blocking, thwarting, limiting, or deterring unauthorized traffic. If that effort fails, the RIAA has thrown its support behind the controversial "Internet Freedom Preservation Act of 2008
Considering the backlash that Comcast has suffered, waiting for the marketplace to sort out ISP action will be lengthy at best. Verizon has already shunned the idea of blocking P2P traffic, and AT&T is still twiddling its thumbs. No one wants be the next Comcast.
What about this Internet Freedom Act you ask? Well the nifty thing about this bill is that it preserves the rights of the consumer - as long your online activities are considered "lawful". The music industry supported bill would essentially define what rights consumers have and can expect, and negates the DMCA's safe harbor provision.
"...to maintain the freedom to use for lawful purposes broadband telecommunications networks, including the Internet, without unreasonable interference from or discrimination by network operators, as has been the policy and history of the Internet and the basis of user expectations since its inception;"
Currently, for all its faults, the DMCA has preserved the ISP's right to have a lassie-fare relationship with its consumers. Because the ISP is an Internet provider and not law enforcement, the DMCA guarantees the ISP the right not to interfere with traffic. Now, if something "unlawful" were to occur on a network, this bill could potentially entitle copy right holders to hold consumers and/or ISPs accountable.
Are file-sharers concerned? Hardly. The music industry is shifting away from the physical world and towards the digital at a blistering pace. Like any massive transition, there will be period of decline and loss, followed by an eventual recovery. Whether the RIAA wants to be part of the new order is entirely up to them.