RIAA won a lawsuit against an individual for downloaing music illegally. The question is, have they won a battle and poised to lose the war?
How would you like to pay 200,000 big ones for downloading 20 songs? At roughly $10,000 a song, one would think that you would prefer www.iTunes.com at 99 cents a song?
Think again!
Well, first the story for those of you who haven’t heard. RIAA – Recording Industry Association of America – won a lawsuit against a woman who was, shall we say, active on the P2P network www.Kazaa.com downloading and uploading songs. There were 24 songs in question and she was fined $222,000 in total but could’ve lost as much as $3.6MM but the court got to its senses before that travesty.
RIAA’s strategy is simple. Go after individuals rather than the P2P networks. A) Because the latter are better positioned to defend themselves. B) Individuals will panic; tell their friends who will panic and everybody will stop downloading. C) If you win then everybody will tell their mother, who will tell her neighbor…before you know it this fear would stop the illegal trade in music.
Simple enough, isn’t it?
Unfortunately, this strategy is not working. P2P networks are on the upswing! According to the NPD Group, a research firm, in 2006, there were 15 million US households downloaded illegal music – an 8% jump from the previous year. These results are consistent with the increase in drug use after the launch of the “war on drugs” and the increase in terrorism cases after the launch of the “war on terror.”
RIAA has not scared away people and cannot possibly prosecute 15 million households. If they are spending millions to get $200k verdicts, then they are obviously on the losing end of this bargain. It appears that this whole effort is doing little good for the RIAA – other than keeping their attorneys employed!
However, that is not the end of this story. RIAA is losing big time by ticking off potential customers – if anyone is going through the trouble of downloading songs chances are they want to listen to them! That to me sounds like a potential customer.
These potential customers are not buying the song but they might buy “music” or music related “peripherals. If only RIAA’s membership could figure out a business model to sell to them! (Note that this little thing called the iPod was invented not by any member of the music industry but Apple which caught the wave. How many albums would it take to make the same amount of money?)
The problem is that this requires a fundamental rethink of their business model. Not many people are smart to figure that out. The bigger problem is that it requires gutting their existing business model to make room for the new one. This strategy, also, referred to as “creative destruction,” is what the internet is forcing on many industries and players.
Can the music industry rise up to the challenge?
