How Bad a Year?

Music biz recovery means suing and firing more people

Exactly how bad a year did the music industry have in 2003? It depends who's asking. According to Nielsen Soundscan, American labels sold 687 million units (including 19.2 million paid downloads) last year—a drop of less than 1 percent from 2002. A widely cited survey from the Pew Internet & American Life Project suggests that file sharing has plummeted since the Recording Industry Association of America started threatening traders with lawsuits. The percentage of Internet users who download music, it claims, fell from 29 percent to 14 percent between May and December.

Of course, it may be more correct to say that half as many Internet users are willing to tell a pollster that they download music—these days, the first rule of File Club is you do not talk about File Club. And a study by the NPD Group (which monitors actual computer usage), released a couple of weeks after Pew's, indicates that peer-to-peer file sharing went up 14 percent between September and November, after dropping for six months.

The U.S. Court of Appeals ruled December 19 that the RIAA can't use the Digital Millennium Copyright Act to subpoena Internet service providers for their customers' identities without a lawsuit. Even Senator John Sununu, Republican of New Hampshire, declared at the Consumer Electronics Show in Las Vegas that that's "not what the DMCA was intended to do. . . . We can't be writing legislation that gives holders of certain types of intellectual property special rights." In response, the RIAA has gone back to getting information the old-fashioned way: by filing suits, on January 21 against 532 allegedly file-sharing "John Does," now identified only by IP address. Presumably, some of them won't turn out to be 12-year-old girls, 83-year-old nuns, or senators trading bootleg remixes of Howard Dean's post-Iowa yelp.

More PR disasters, after all, could impede the RIAA's attempts to look like an actual arm of the law. The organization was recently granted permission to put the FBI's logo on CD packages, to remind consumers once again that it considers them all potential criminals. LA Weekly reported a few weeks ago that the RIAA's anti-piracy unit (now headed by former ATF director Bradley Buckles) has been hiring ex-cops to wear "raid" vests stenciled "RIAA," confront street vendors selling bootleg CDs, and fill out incident reports saying that they "voluntarily" forfeited their wares. (The unit's Western regional coordinator, John Langley, told the Weekly why they photograph the people they bust: "A large percentage [of the vendors] are of a Hispanic nature. Today he's Jose Rodriguez, tomorrow he's Raul something or other, and tomorrow after that he's something else. These people change their identity all the time.")

The RIAA is also trumpeting its $200,000 settlement of infringement claims against Nashville's United Record Pressing, one of the few vinyl plants still operating in America. (If you bought an indie-label seven-inch single in the '90s, it was very likely pressed there.) It seems that they were hired to press some records that turned out to include unlicensed content ("more than 170 unauthorized sound recordings"). Everything that customers send to United is now "audio tested," and no samples of any kind are permitted. Fair use? The public domain? Out of the question.

Individual record labels are facing turbulence too. Warner Music Group, soon to be taken over by Edgar Bronfman (whose investment group is buying it from Time Warner), is bracing for massive layoffs, rumored to be up to half of its staff. Antonio "L.A." Reid got the boot as president of Arista the same week that the label had the top three songs in the country with "Hey Ya!," "The Way You Move," and "Milkshake." And the Beastie Boys' defunct Grand Royal label failed to sell its assets in a bankruptcy auction last week—nobody offered more than $65,000.

Even so, Pepsi's giving away 100 million song downloads (five times the total number sold last year) on Apple's iTunes in February and March. Coca-Cola has riposted by launching its own music site, in the U.K. rather than the U.S., and selling songs in Windows Media rather than iTunes' AAC format—the website doesn't even work on Macs yet. It's also saddled with the worst name ever: mycokemusic.com. (Mirror and razor not included.) Evidently, the only pop business that's got money to throw around right now is the carbonated kind.

 
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