Some more thoughts on the RIAA

Posted by: Brian

There have been some comments written in response to the post about Gizmodo’s March boycott of the RIAA, and I would like to add a bit more context to the discussion.

Gizmodo’s boycott of the RIAA has very little to do with DRM…and the RIAA definitely doesn’t exist to help music artists.

The boycott has everything to do with the fact that the RIAA is evil in almost every sense of the word and does not exist to serve the artists in any way. In fact, in most cases, the RIAA blatantly hurts artists from the second they sign their first contract and stifles creativity in the mainstream music industry.

U.S. copyright law had for years been interpreted so that you had the right to make personal copies of legally purchased music under “fair use” rights. Also, falling under fair use was the right of educators to use recordings of music as a teaching tool. For instance, a very popular course at Rider University looks at the social impact of rock ‘n’ roll. Fair use protects the professor from making a CD of various songs he or she feels are relevant for a discussion about, say, the 1960s and playing that for the class.

However, the Digital Millennium Copyright Act of 1998 has put the traditional concept of fair use in jeopardy. A little more than a year ago on my personal blog, I wrote about the RIAA insisting that simply making a copy of a CD you legally purchased should be considered copyright infringement.

Fortunately, some of these “fair use” concepts would be protected under the Fair Use Act of 2007 being proposed by Reps. Rick Boucher and John Doolittle.

The RIAA, as it stands now, is nothing more than a glorified collection agency using tactics that would put some loan sharks to shame.

According to the Electronic Frontier Foundation, the RIAA has filed 18,000 lawsuits and counting against users of peer-to-peer (P2P) file sharing networks. Now, downloading music from P2P systems is illegal…no question about it. With most of these lawsuits, the actual amount of money lost by the record industry would only be a few hundred dollars. But the typical lawsuit is for tens of thousands of dollars and then the RIAA tries to intimidate the defendant into paying a settlement usually in the $6,000 ballpark.

If these were people who were mass producing CDs and distributing them illegally, I would have no problems with the RIAA going after them. But in many cases, these are kids in families that are barely getting by. What joy does the RIAA get in destroying a family? Well, if that’s what it takes to get that extra dime to Eminem, so be it.

You may also want to read this EFF report (PDF) on the RIAA’s legal activities.

Realizing these tactics against ordinary folks are not going to amount to much, the RIAA has begun going after bigger game–the Internet service providers [read here and here]. The RIAA has even gone so far as to propose that the ISPs find illegal music downloaders/sharers themselves and notifying the account holder he or she has been identified as a music “pirate” and they can simply pay a $1,000 settlement on a Web site set up by the RIAA to avoid a lawsuit.

WHAT? That’s not even close to legal! It goes against due process and borders on extortion!

Seeing how badly the RIAA wants this money, I guess it can’t wait to get it in the hands of the artists and songwriters. You know, the people who actually generate the product. Oh, what’s that? I see…it turns out the major record labels have been set up all along to make sure the people who make music make as little money as possible.

Courtney Love (of all people) made the following strong points in a speech to the Digital Hollywood online entertainment conference held in New York City way back in May 2000:

“Today I want to talk about piracy and music. What is piracy? Piracy is the act of stealing an artist’s work without any intention of paying for it. I’m not talking about Napster-type software.

I’m talking about major label recording contracts…

…Since the original million-dollar advance is also recoupable, the band owes $2 million to the record company.

If all of the million records are sold at full price with no discounts or record clubs, the band earns $2 million in royalties, since their 20 percent royalty works out to $2 a record.

Two million dollars in royalties minus $2 million in recoupable expenses equals … zero!

How much does the record company make?

They grossed $11 million…

…Story after story gets told about artists — some of them in their 60s and 70s, some of them authors of huge successful songs that we all enjoy, use and sing — living in total poverty, never having been paid anything. Not even having access to a union or to basic health care. Artists who have generated billions of dollars for an industry die broke and un-cared for.

And they’re not actors or participators. They’re the rightful owners, originators and performers of original compositions.

This is piracy.”

Read the full transcript of Courtney Love’s speech.

And there are other artists who have voiced their displeasure with the RIAA.

Singer-songwriter/engineer/music journalist Steve Albini wrote:

“The band is now 1/4 of the way through its contract, has made the music industry more than 3 millon dollars richer, but is in the hole $14,000 on royalties. The band members have each earned about 1/3 as much as they would working at a 7-11, but they got to ride in a tour bus for a month.

The next album will be about the same, except that the record company will insist they spend more time and money on it. Since the previous one never “recouped,” the band will have no leverage, and will oblige.

The next tour will be about the same, except the merchandising advance will have already been paid, and the band, strangely enough, won’t have earned any royalties from their t-shirts yet. Maybe the t-shirt guys have figured out how to count money like record company guys.”

And singer-songwriter Janis Ian had this to say in an article she wrote for the May 2002 issue of Performing Songwriter magazine:

“One other major point: in the hysteria of the moment, everyone is forgetting the main way an artist becomes successful – exposure. Without exposure, no one comes to shows, no one buys CDs, no one enables you to earn a living doing what you love. Again, from personal experience: in 37 years as a recording artist, I’ve created 25+ albums for major labels, and I’ve never once received a royalty check that didn’t show I owed them money. So I make the bulk of my living from live touring, playing for 80-1500 people a night, doing my own show. I spend hours each week doing press, writing articles, making sure my website tour information is up to date. Why? Because all of that gives me exposure to an audience that might not come otherwise. So when someone writes and tells me they came to my show because they’d downloaded a song and gotten curious, I am thrilled!

Who gets hurt by free downloads? Save a handful of super-successes like Celine Dion, none of us. We only get helped…

And Janis was just getting started…

I have no objection to Greene et al trying to protect the record labels, who are the ones fomenting this hysteria. RIAA is funded by them. NARAS is supported by them. However, I object violently to the pretense that they are in any way doing this for our benefit. If they really wanted to do something for the great majority of artists, who eke out a living against all odds, they could tackle some of the real issues facing us:

  • The normal industry contract is for seven albums, with no end date, which would be considered at best indentured servitude (and at worst slavery) in any other business. In fact, it would be illegal.
  • A label can shelve your project, then extend your contract by one more album because what you turned in was “commercially or artistically unacceptable”. They alone determine that criteria.
  • Singer-songwriters have to accept the “Controlled Composition Clause” (which dictates that they’ll be paid only 75% of the rates set by Congress in publishing royalties) for any major or subsidiary label recording contract, or lose the contract. Simply put, the clause demanded by the labels provides that a) if you write your own songs, you will only be paid 3/4 of what Congress has told the record companies they must pay you, and b) if you co-write, you will use your “best efforts” to ensure that other songwriters accept the 75% rate as well. If they refuse, you must agree to make up the difference out of your share.
  • Congressionally set writer/publisher royalties have risen from their 1960’s high (2 cents per side) to a munificent 8 cents.Many of us began in the 50’s and 60’s; our records are still in release, and we’re still being paid royalty rates of 2% (if anything) on them.If we’re not songwriters, and not hugely successful commercially (as in platinum-plus), we don’t make a dime off our recordings. Recording industry accounting procedures are right up there with films.
  • Worse yet, when records go out-of-print, we don’t get them back! We can’t even take them to another company. Careers have been deliberately killed in this manner, with the record company refusing to release product or allow the artist to take it somewhere else.
  • And because a record label “owns” your voice for the duration of the contract, you can’t go somewhere else and re-record those same songs they turned down.
  • And because of the re-record provision, even after your contract is over, you can’t record those songs for someone else for years, and sometimes decades.
  • Last but not least, America is the only country I am aware of that pays no live performance royalties to songwriters. In Europe, Japan, Australia, when you finish a show, you turn your set list in to the promoter, who files it with the appropriate organization, and then pays a small royalty per song to the writer. It costs the singer nothing, the rates are based on venue size, and it ensures that writers whose songs no longer get airplay, but are still performed widely, can continue receiving the benefit from those songs.

Yeah, it really sounds like the RIAA has the artists’ best interests at heart.

Oh, and let’s see how the record industry gives money earned by artists that it actually has collected through SoundExchange, the now-“independent” organization originally set up by the RIAA to collect and distribute royalties for artists earned through satellite radio and webcasting. Oh…SoundExchange can’t find a lot of them. But many of these artists are on major record labels…all of whom hold seats on the SoundExchange board. Oh well, I guess they can just keep the money instead of making a couple of freakin’ phone calls.

The RIAA exists only to maximize the profits for the major record labels. It doesn’t care about music, it doesn’t care about the artists, it doesn’t care about songwriters and it certainly doesn’t care about the consumers.

The RIAA only knows strong-arm tactics designed to squeeze the last dollar out of anyone it thinks owes one cent to the major record labels. That’s why it will never come up with a new business model.

And if you are wondering what proposals for a new business model are out there, how about this one proposed by the Electronic Frontier Foundation? Sounds pretty good to me.

If you are a fan of music, you should support Gizmodo’s boycott of the RIAA. In order for the music industry to save itself, the RIAA needs to go away and be replaced by something new…something that is beneficial for the labels, artists, songwriters AND consumers.

The time has come.

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12 thoughts on “Some more thoughts on the RIAA

  1. Okay, now you’ve discussed the artists and the consumers, but what about the record labels? You mention gross income, but not net income. How much does it cost to actually promote a musician? There are public relations, marketing, merchandising, manufacturing, distribution, licensing, insurance, staff, promotion, touring, general operating variable & fixed costs, etc. required to make a recording artist recognizable, bankable, and generate income. Do you think someone like Madonna actually sits at home and updates her “official” Web sites?

    Your discussion still lacks the appropriate facts. No independent recording artist is going to get the same market exposure as an artist contracted under a major record label. The story of Prince underscores the weight and influence of recording labels in general… no longer contracted with Warner Bros. Records, but now Universal Records. Why again is the RIAA “evil”? Not that I disagree, but you haven’t proven your point from a financial perspective.

    -Jason

  2. (Sorry…apparently, there is a word/character limit on the comments so I had to split this up…)

    My argument is that the RIAA, as it exists and operates now, needs to be abolished and replaced with a new entity that doesn’t treat its artists so craptacularly and doesn’t see anybody who uses the Internet as a potential music pirate.

    I’m pretty sure I validated that point with the examples of the RIAA’s sleazeball tactics I cited in my post.

    As far as the promotional power of the major labels is concerned, I don’t see the labels as promoting their artists. They are promoting product. As long as the product sells, the label will spend money to promote the product.

    The problem with the label spending a ton of money on promoting an artist’s product is that the label will recoup those expenses by taking more of the artist’s cut.

    This means unless you are among the small percentage of platinum-selling artists who can actually make a decent amount of money from record sales, you won’t be seeing too much from your label as far as promotional dollars are concerned.

    And, at the point, you will be using YouTube and MySpace to promote yourself just like all the indie-label acts.

    The people maintaining artist Web sites for major record labels are most likely college interns so I’m not sure that’s really a premium service Warner Bros. is offering Madonna.

    And Prince had to go back to a major record label after freeing himself from Warner Bros. and trying to go the independent route with his NPG Music Club because, yes, he is too big to be able to go that route. He is part of the major label machinery and needed the backing of Universal to distribute his new material to the masses…

  3. …And, really, my fight isn’t against the existence of big record labels. There needs to be one or two of those to handle the world’s superstars. The problem is that the RIAA uses the collective power and financial resources of all four major labels to exert its will over artists, songwriters, politicians and consumers.

    One positive step in the demise of the RIAA would be for one of the Big Four to break ranks…and that might be close to happening. The New York Times reported in early February that British music giant EMI is considering “a plan to offer a broad swath of its recordings for sale online without anti-copying software.”

    In late January, the New York Times also reported that there are rumblings in the industry that it is just a matter of time–perhaps a year or two–before all the major labels will decide to eliminate DRM on music downloads.

    Again, though, the DRM fight is just a small part of the overall battle to change the culture of the mainstream music business so that it is fair to everybody involved. (In addition to the EFF business model to which I posted a link, there are more good ideas for a potential business model in Janis Ian’s “Fallout” piece, which you can get to from the link I provided.)

    Another positive step is the recent agreement by many independent labels to unite as a “virtual fifth major label.”

    Although each indie label continues to operate as its own entity, the agreement creates a new licensing authority called Merlin. According to an Ars Technica story, “Merlin provides a single point of contact for music stores, which can now negotiate with five major entities and secure rights to nearly all of the world’s popular music.” (con’t.)

  4. …Also, you talked about what the record label’s expenses are for promotion, marketing, insurance, etc. Well, the Steve Albini article I linked to in my post does show what he calls a typical breakdown of revenue and expenses (not all the ones you mentioned, but it gives you an idea).

    Basically, unless you ascend to the rank of superstar, your chances of making money signed to a major record label are very slim.

    I’m not sure it is accurate to say that “no independent artist is going to get the exposure as an artist contracted to a major label.” There are tons of major label artists not getting promotional help of any value from their employers.

    Meanwhile, an independent artist has the blogosphere, MySpace and YouTube to generate a kind of buzz the major labels still haven’t quite mastered.

    Some of the hottest bands in music, as far as publicity is concerned, during the past year or so have been the Arctic Monkeys, Bloc Party, Panic! At the Disco, Arcade Fire and Clap Your Hands Say Yeah. Each one of these bands is signed to an independent label.

    Silversun Pickups is another act on the rise right now and is the house band this week on NBC’s “Last Call with Carson Daly.” Again, Silversun Pickups is on an indie label.

    The major labels are becoming obsolete and it is their own fault for sticking to an antiquated business model. The only explanation for the overzealous legal activities on the part of the RIAA is that it feels the labels are in the opening stages of a final fight for survival.

    We can only hope this is the case and that, soon, a new system and culture results in a sort of “golden age” for the American music industry.

    (Again, sorry for the multiple-part response.)

  5. Well, I suppose I disagree.

    You wrote… “As far as the promotional power of the major labels is concerned, I don’t see the labels as promoting their artists. They are promoting product. As long as the product sells, the label will spend money to promote the product.” This is the reality of the recording industry. Want to see your face on every magazine cover? Want to be in a cola commercial? Want to hang out in the VIP lounge at the hottest clubs? Welcome to the machine, because this is how it works.

    Major record labels are failing because people are pirating music, not because they are failing to market their talent properly. To help resolve the issue of piracy, the RIAA has proposed and enforced DRM policies. A company like Apple, Inc. does not help matters by stating DRM should be eliminated (to resolve their own non-domestic iTunes problems), since the company ultimately benefits from the sale of music either way.

    If musicians want to do it on their own and are happy just to have their music listened to by other people, then I wish them the best of luck. However, if musicians are solely focused on the bling, the mansion, and the top-of-the-line sports car, well then, they can take their chances with the machine.

    As for consumers, they need to support the artists and pay for the music… both major label and independent.

    Major record labels are not going away anytime soon.

    -Jason

  6. Again, I do not support the illegal downloading of music…and I don’t necessarily want to see the major labels go away.

    What I do want to see is change in how the major labels operate and see the RIAA dissolved.

    The RIAA has nothing to do with protecting artists. It is simply the legal/lobbyist arm of the major record labels. The major labels can exist without the RIAA.

    Give this a read: http://digitalmusic.weblogsinc.com/2006/08/07/the-riaa-vs-john-doe-a-laypersons-guide-to-filesharing-lawsui/

    It takes you step by step through the process of a typical lawsuit filed by the RIAA against someone who may or may not have ever illegally downloaded a song from a peer-to-peer filesharing network (since the RIAA doesn’t let actual facts get in the way of branding someone a criminal).

    Since the RIAA uses the “protecting our artists” defense for these lawsuits a lot, I found this excerpt interesting…

    “The RIAA drops a U.S. postal stamp on John Doe and sends him a settlement demand. Two people can enter into just about any contract for any purpose in the United States…and the RIAA asks John to enter into a contract with them.

    The contract states that the RIAA won’t sue John, which is pretty attractive when you’re John Doe facing all the legal might the multi-billion dollar recording industry can muster. We don’t hold people at gun point (or hit them with bags of oranges in the middle of the night), we hold them at the point of a lawsuit.

    The contract, that same one that says that the RIAA won’t sue John if he signs it, says John agrees that the RIAA is right when it says he owes them $3,750. It also says that the RIAA doesn’t plan to negotiate with John, and contains several one-sided provisions that place restrictions on John and what he can do if he wants to keep from being sued while not placing any restrictions on the RIAA and what it can do. The contract also says that John agrees that peer to peer file sharing is copyright infringement (which isn’t actually true.. sharing copyrighted files is copyright infringement, but there are other uses for peer to peer filesharing that aren’t infringing).

    The settlement contract also doesn’t keep John from being sued by other interested parties. Remember when we told you that if you were sued for sharing Puff Daddy that Sean Combs wasn’t the Plaintiff? Well, when you sign the settlement, you agree that you did what the RIAA says you did. If the artist wants to sue you next, they still can. The RIAA settlement makes it clear that they aren’t protecting (indemnifying) you against other lawsuits.”

    So if the RIAA says these lawsuits are about protecting the artists, why isn’t the RIAA seeking damages for the artists in these lawsuits? And if the RIAA is just suing for its cut of the lost record sales, why are the damages sought so high?

    Because the RIAA is suing for the full cut (as well as a bloated figure of $750 per song, which is ridiculous in most cases), but keeping it all for the labels. It knows that most artists don’t really have the resources to spend on lawsuits to get it back from the RIAA or from the people…so the RIAA figures why not exploit the weakness of the artists and the people and screw over everyone?

  7. Oh, here a couple more good passages from the article I wrote about in my previous comment:

    http://digitalmusic.weblogsinc.com/2006/08/07/the-riaa-vs-john-doe-a-laypersons-guide-to-filesharing-lawsui/

    “Songs on iTunes are 99 cents, and 65-70 cents of that goes to the record company according to most estimates. At $750 per song, you’re on the hook to the RIAA for over 1000 times the value of their alleged loss. The RIAA is claiming, without any evidence, that you kept over 1000 people from buying legal copies of the song by giving them a free copy.

    The huge dollar figure the RIAA claims you’ve cost them has come under quite a bit of attack. A current case in Brooklyn, NY may ask the court to rule that $750 per song in damages is unconstitutional.”

    …and…

    “What happens to the $3750 (or the $750 per song) when you pay the RIAA? The artist you allegedly ripped off doesn’t see a dime of compensation. The proceeds from the RIAA lawsuits are rolled back into the legal fund the RIAA uses to pay its legal costs. So, in essence, every person who settles for the $3750 only feeds the machine, so it can be unleashed on another person.”

    Yeah, that’s really helping the artists. Thanks, RIAA! What would they do without you…besides…you know…actually make money from sales of their own CDs.

  8. It’s called a “scare tactic.” Because the pirating of music is so prevalent, there really is no way to police it. Once again, without the RIAA, an individual musician is going to find it rather difficult to take personal legal action again every theft of his/her music.

    Regarding an appropriate monetary reward for royalties lost by pirating, I’d have to review a case. Nevertheless, it would make sense that the amount sought for illegal pirating by the RIAA is NOT solely for the benefit of the recording artist. It is most likely money that will help fund the detection of other pirated music, pay attorney fees & court costs, provide ongoing technology recommendations & improvements to deter future pirating, etc.

    Yes, looking at the big picture, the RIAA appears to be helping record labels and recording artists. As for the consumer, it only takes a few thousand people to ruin it for everyone else.

    -Jason

  9. Well, as the article states…this is nothing new. Payola actually played a role in the downfall of Alan Freed, who was influential in bringing rock ‘n’ roll to mainstream radio in the 50s and was the subject of the very good 1978 film “American Hot Wax.”

    But even though the labels can exist without the RIAA, I’m not sure how you can idealistically separate the RIAA from the major labels. The RIAA exists solely to do whatever the major labels want it to do. In fact, the only reason I can think of why the RIAA doesn’t involve itself in payola is because it involves different RIAA labels competing against each other…also, the radio industry is probably more to blame for payola than the record labels so there is definitely enough corruption to go around for everyone in the music industry, it seems. 😉

    I have actually been reading about the group we should all be supporting in the fight against online music piracy – the Recording Artists’ Coalition, or RAC.

    http://www.recordingartistscoalition.com

    What I like about this group is that it is made up of recording artists seeking to protect themselves from illegal music downloading and activities conducted by the record labels. However, the RAC’s fight against peer-to-peer file sharing networks and music piracy seems to be taking place through legislative means. I find this much more preferable than the RIAA’s “sue-everyone-even-if-they-didn’t-do-anything-illegal-and-let’s-just try-to-squeeze-some-money-out-of-them” approach.

    The RAC, by the way, came about when Congressional staff attorney Stanley M. Glazier — without anyone’s knowledge — took it upon himself to insert language into the final version of the “technical corrections” section of a piece of 1999 copyright legislation. This language classified many music recordings as “works made for hire,” which transferred copyright interests from the artists to the record labels (this was mentioned in the Courtney Love speech and, I believe, the Janis Ian piece I linked to in my original post).

    Soon after Glazier did this, the RIAA hired him as senior vice president of government relations and legislative counsel. Hmm…what a coincidence?!

    The Recording Artists’ Coalition then came together and successfully fought to repeal the change in the legislation.

    There is a lot of good stuff on the RAC’s “Recording Industry Practices” page [see http://www.recordingartistscoalition.com/industrypractices.php ]:

    “Much like the public generally dislikes politicians, but love their individual representatives, Artists have respect for their record company handlers, but distrust the companies themselves and the system they operate under. They see themselves as victims of an indentured servitude system designed to keep them perpetually indebted to the companies who also own the product of their labor. Some artists expressed gratitude for the initial investments made by the record companies in their talent, but feel cheated by their meager share of the proceeds when the gamble pays off. One artist’s representative went so far as to accuse the record companies of running a continuing criminal enterprise.”

    Again, my argument isn’t for the destruction of major record labels. It is just for the abolition of the RIAA and the creation of a new culture within the industry that fosters innovation and creativity, which the current climate certainly does not. But there is an obvious problem with the mainstream music industry and a major disconnect among everyone involved–record companies, artists and consumers. If the industry continues to go on like this, it is just going to get worse.

    If there needs to be a group to protect the interests of the music industry, it should be some kind of merged RIAA-RAC consortium. The labels and the artists need each other…feeding and fighting each other at the same time does not seem to be an ideal way of doing business.

  10. Well, the RIAA strikes again. This time its lobbying efforts have convinced the Copyright Royalty Board to jack up the royalties paid by webcasters to the point where it basically will not be economically feasible for webcasters to exist.

    Gizmodo: Yet Another Reason to Boycott the RIAA

    And here is great analysis from the Radio and Internet Newsletter (RAIN).

    …and this is from recent Technology and the Arts guest Tim Westergren of Pandora:

    RIAA’s new royalty rates will kill online radio!!

    The Copyright Royalty Board (CRB) has recently released a revised fee schedule for internet radio. Left unchanged, these rates will end internet radio, period. The RIAA has effectively convinced this federal committee to establish rates that make online radio a non-viable business.

    It’s an utterly ridiculous ruling that renders any form of internet radio non-economic. We are continuing in the belief that sanity will return as everyone involved, including the 50 million avid online radio listeners, realize just how outrageous this is…”

    Read Tim’s full post on this issue.

    Thanks, RIAA, for once again using your lobbying might to stifle innovation and creativity in the very industry for which you are supposed to be working.

    Tim is absolutely right…this is just ridiculous.

    The RIAA realizes it is only a matter of time before it is irrelevant and, as Gizmodo wrote, it is just going to do as much damage as possible before going down in flames.

    This will definitely be a major topic on this blog and future podcasts, but I wanted to give our latest installment some time at the top of the site.

    Unfortunately, it doesn’t look like this battle is going away any time soon, so I’m sure it will still be there in a couple of days…sigh.

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