What They'll Never Tell You About the Music Business

by Peter M Thall

  But first, let me explain the peculiar view that we in the copyright bar have of that otherwise dry concept called “copyright.” One of the legendary music lawyers in our field, my mentor, Harold Orenstein, would regularly compare copyrights to children. “Nurture them,” he would say. “Feed them. Protect them.” I had no clue as to what he was talking about.

  Over the years, I learned. A copyright that lies fallow is like a child starved. Paul Simon once offered millions of dollars to purchase an entire publishing company where he once worked as a low-level employee before his success with Art Garfunkel. During his brief employment, the company had acquired six of his copyrights (the only significant ones being “Fifty-Ninth Street Bridge Song [Feelin’ Groovy]” and “Red Rubber Ball,” a hit with the 1960s group The Cyrkle).

  After Simon’s success, he tried to buy the music publishing company for the sole reason of getting back his six songs at any cost. He was distressed that his six copyrights were not being exploited, nurtured. I began to understand what Orenstein meant.

  Yet, while likening copyrights to children is a fine sentiment, warranting such noble efforts as that of Mr. Simon in the early 1970s, it appears that songwriters and their “children” today are in jeopardy much more than were they merely experiencing a lack of attention. Indeed, they are watching helplessly as their “children” are being killed off first by peer-to-peer “sharing” and second, most surprisingly and disappointingly by the copyright proprietors themselves, most often music publishing companies in whom the songwriters entrusted their copyrights. But more about that later.

  What does this have to do with Greek tragedy? A lot, I think.

  Remember Medea? She was the sorceress who was betrayed by Jason (of Argonaut fame) and who decided to pay him back by killing their children. Medea decided to “wring their father’s heart” just as he had wrung hers.

  I couldn’t help but consider Medea as a perfect metaphor for the music industry.

  “Go home,” Medea says to her boys, “I cannot bear to see you anymore. I don’t want to hand you over to someone else to be slaughtered by a less loving hand. I who gave you life will kill you.”

  And then, “For this short day, I will forget they are my children—and will mourn them later. The evil done to me has won the day. I understand too well the dreadful act I’m going to commit, but my judgment cannot check my anger, and that incites the greatest evils human beings do.”

  I know this is not the usual reference material of entertainment lawyers, but just as James Joyce, in Ulysses, saw a continuous parallel between ancient myth and modern life, I believe a similar parallel can be drawn between ancient Greek mythology and modern music copyright law.

  ILLEGAL DOWNLOADING

  As I describe earlier in this book, Napster was the well-publicized software created by a then nineteen-year-old, which permited multiple Internet users to access each others’ collections of MP3 files for free. MP3, of course, is the free technology protocol that enables a user to convert a large file contained on ordinary music CDs into files that are compressed to ten to twelve times smaller than the originals. Since they consume considerably less computer storage space than the form in which they were originally configured, they can be transferred faster and have become the preferred modality for moving audio files through the internet and among computers and digital download players. Napster was the mechanism for the deluge of illegal downloads that we have all read about and which has been nothing short of catastrophic for the music industry.

  I think we all will agree that, for years, the music industry allowed illegal downloading to become totally out of control. We gave birth to mass infringements by neglect, by standing on the sidelines while technology advanced well beyond its ability to keep up with legal protections, and by seeking to remedy the situation by a bumbling array of solutions that really are mind boggling, given the perceived sophistication of the industry. The industry did not understand then, and still does not understand, that much of the record buying public today has been brought up using music, but not owning it, and that that’s okay with the youth of the world today. The industry has not yet grasped this reality.

  The examples of how the industry tried to remedy this situation are too numerous to mention, so I will limit myself to only a few:

  First, the music industry tried to keep prices high even though it was becoming more and more obvious that consumers did not want to pay for the entire album when they were captured by the emotional pull of one particular song. Then it blocked, and later encouraged, the creation of compilation albums in order to increase sales volume. But all this did was remove even more album buyers from the food chain. Harold Vogel, the renowned economic analyst who is quite familiar with the music industry, reminds us that the population shift made a difference in demand. Baby boomers who were the primary buyers in the 1960s and ’70s were no longer enthusiastic about standing in the rain and snow to be the first to buy an album and to push it into the top 10 overnight. Technologically, the industry fought invention and did everything they could to block it from the marketplace. More time and money was spent on encryption techniques than on education and adapting to the new paradigms. And then these lawsuits!

  As I just noted, much of the record-buying public today has been brought up using music, but not owning it. My generation bragged about our record collections; we displayed them openly in our homes and in our entertainment centers. But today’s consumer keeps his and her 10,000 songs on a little box and is quite content with that, or they just call up the song on their smartphones when they want to hear it. Needless to say, the industry has not yet grasped this new reality. They see it as a stopgap. But surely it is a replacement for the music business as we know it.

  In all of its inadequate responses, the one consistent characteristic is that the entertainment industry has not, until now, acknowledged that the fault may lie within as well as without. It took an outsider, Steve Jobs, to figure that out.

  Just as Medea was driven by the passion of a betrayed suitor, so the music industry seems to be driven more by passion than by reason. And in so doing, it has become the victim. The spurned woman.

  So it just rolls right along, suing college kids, teenagers, and unsuspecting grandmothers—35,000 lawsuits before the RIAA suspended its campaign. Notwithstanding claims to the contrary, this remedy did not achieve what it was seeking. CD sales in the US continue to fall. The emphasis on suing pirates has been reduced to feeble attempts to penalize lyric and guitar tab sites and their unsuspecting visitors—mostly young musicians. Meanwhile, we are approaching 3 billion downloads from the Apple iTunes store. The company that has most benefited from legitimizing downloads is Apple, the same company that urged consumers to “rip and burn” music using their computers. Their share of every $0.99 download is around $0.23. Do the math. Talk about putting the fox into the hen house! The argument that the fight against piracy is intended to allow record companies to invest in new bands and develop more flexible legal Internet sites seems very weak when one considers that Apple has made billions from its preeminent position in the download business, but that artists and music publishers down the food chain have years to go before they will see any meaningful recovery from the reduction in CD sales.

  None of us will personally recall that when the phonograph record was first produced, music publishers insisted on a head start of several weeks before the release of their songs on records so that they could sell sheet music—the predominant income-earner in the early part of the 20th century. The current century’s version of this is the DRM-marked CDs which at their best require careful and sophisticated readings of the DRM warnings and at their worst result in the debacle resulting from (then-named) SonyBMG’s use of rootkit cloaking technology. Even when the software was not secretly introduced into consumers’ computers, the notice of the software’s inclusion on the CDs resulted in the bizarre situation in which SonyBMG sold product which had so many disclaimers that even though th
e product did not work, SonyBMG took no responsibility. In other words, they sold a product that they knew did not work in a large percentage of cases and yet they refused to take the product back. What were they thinking? This copy protection intrusion into consumers’ personal computers not only did not serve its security function—to impede piracy—but it actually threatened the integrity of hundreds of thousands, if not millions, of computers worldwide. At the close of 2005, SonyBMG settled many lawsuits brought against it for compromising the digital security and privacy of consumers who played the XCP-laced CDs on their home computers. The company also had to recall all of their copy-protected titles and make available uninstall software and security patches for infected computers. Just consider how Sony BMG’s legal fund for fighting the multitude of lawsuits resulting from its invasive XCP software could have been spent more efficiently toward that too often forgotten goal—to increase sales, not just to reduce piracy.

  We know that there is considerable tension between the life of a file sharer on the one hand and the music industry on the other. This is true whether the file sharer is a teenager or a college student or simply a music lover who is tired of being taken advantage of by the creative and commercial paradigms that have defined the music industry for the past fifty or so years—since the advent of the long-playing record.

  Music is like air. It is going to be with us, however, and to whatever extent, the music industry seeks to put it in a protective box. It is a fundamental essence of humanity; only the expression is different. And, of course, it is the expression that the copyright laws seek to protect.

  Professor David Lange of Duke Law School, in a talk given to the Copyright Society of the USA at its annual meeting a few years ago, asserted that “these kids are not pirates; they just love their music; they’re just being kids.” (Tell that to the copyright owners of the works that “these kids” are passing along to the million other kids comprising their “friends and family.” By virtue of the technology offered by Kazaa via Grokster and other peer-to-peer software methodologies, one song on one unsuspecting person’s computer can find its way in seconds across the globe and into unlimited numbers of computers of what we naively refer to as file sharers.) Given the awed reaction of the professionals who attended the meeting, those whose very beings scream EXCLUSIVE RIGHTS, it is a wonder Professor Lange was permitted to leave the conference in one piece.

  But we can learn something from what Professor Lange suggested. Kids perceive that morality is on their side. Why? Partly out of youthful naivete, partly out of ignorance, and partly because of the well-documented perception that songwriters and artists have never been paid a fair share of the money they generate. They perceive the music industry as more likely to be avaricious, manipulative, and oppressive than fair and sympathetic.

  This perception by a large segment of its customer base has resulted in a feeling that, like Jason, it is the music industry which has betrayed them. Yet the music industry feels betrayed as well. After all, did not the music industry invest heart, soul, artistic talent, and oodles of money to produce and distribute the very art that the consumers now feel entitled to take for free?

  Ironically, it is the recording artists themselves who have recurrently publicized the fact that they are not getting what they consider to be a fair share of the income generated by their music. So why should the file sharers deny themselves the opportunity to “take from the rich?” (Regrettably, and very un–Robin Hood-like, these file sharers have forgotten the part about giving to the poor who are often the very songwriters and recording artists whose music they pilfer.)

  As was inevitable in international commerce, copyright owners and those who depend on copyright sanctity looked to the courts to enforce what they considered to be their divinely given rights. In America, a long line of lawsuits culminated in the federal appeals court decision in the defining case A & M Records et al. v. Napster, Inc. (114 F. Supp 2nd 896 [ND Cal 2000], affirmed in part, reversed in part 239 F3rd 1004 [CA 9 2001] Decided February 2001) in which the court held that the Napster model, which I referred to earlier, necessarily harms the copyright holders. These file sharers were dealt an even harder blow in the recently decided Grokster case (Metro-Goldwyn-Mayer Studios Inc., et al. v. Grokster, Ltd: Case #04-480, Decided June 27, 2005). At issue was whether peer-to-peer file-sharing services could escape liability if their networks were used for illegal purposes, even though they did not control their networks, as did the Napster model, but merely facilitated their creation. The US Supreme Court had struck another victory for copyright interests. In a unanimous decision, Justice Souter wrote, “We hold that one who distributes a device with the object of promoting its use to infringe copyright is liable for the resulting acts of infringement by third parties.” Once again, the legal system enforced its view that what some call borrowing was really no different than stealing,

  So finally we saw that reason, according at least to those who value the federal courts’ decisions, thwarted the passion of the file sharers. Maybe we have learned something since Medea rode off on her winged chariot at the end of her story. But has reason trumped passion? Is our story ended as well? I don’t think so. Unlike a Beethoven symphony, the last movement is not the resolution the copyright industry sought. Indeed, the last movement has yet to be written.

  What, then, have we achieved?

  Right or wrong, moral or immoral, supported by the court system or not, there is still something wrong about putting your most passionate, avid customers in the dock. I have always felt that suing college students is a losing proposition—not because it is the wrong thing to do, but because it is self-defeating.

  Suing four college students who are transferring a million files each is not effective if they are replaced by four million college students transferring one file apiece. And believe me, none of “these kids” are transferring only one file apiece. In my opinion, these lawsuits are like parents saying no to their teenage children. We all know what the response is likely to be. Add a layer of moral justification because their heroes are also getting taken advantage of, and you have an almost insurmountable scenario.

  Now, of course, there is a certain logic to what the copyright interests are trying to do, just as there is a certain logic to what Medea did.

  According to the RIAA, the lawsuits themselves constitute a form of education of the public, and the RIAA is actually quite encouraged by the willingness of their numerous defendants’ acknowledgments of mea culpa. Unfortunately, as I noted earlier, the numbers of the converted are miniscule when compared to the actual damage being done on a worldwide basis. Furthermore, there is some considerable question as to whether the suits have any enduring value. There are also significant variations in analysis of the impact of illegal downloading on the one hand, and the effects of legal downloading options on the other. For example, according to the Harry Fox Agency, Inc., analysts significantly underestimated the appeal of subscription alternatives. They found that even legal downloading decreases the sale of physical CDs, while not particularly affecting piracy. The lawsuits by the RIAA have similarly had an impact far less than that which they had hoped for. The Fox Agency found that only 15% of illegal downloaders would have paid $0.99 anyway, so neutralizing and converting the illegal downloaders will not necessarily have the impact of creating legal customers.

  Indeed, every time a well-founded action is commenced, the public is reminded of some of those lawsuits whose rationale and result were, in a word, absurd.

  Take, for example the forty-one-year-old disabled single mother living in Oregon who countersued the RIAA for fraud, invasion of privacy, abuse of process, electronic trespass, violation of the Computer Fraud and Abuse Act, negligent misrepresentation, and the Oregon RICO Act alleging racketeering by the music industry. Her personal home computer had been secretly entered by the record companies’ agents, MediaSentry. The fact that she had been up at 4:24 a.m. downloading “gangster rap” music failed to make the newspaper r
elease.

  In another case, the RIAA sued the mother of a thirteen-year-old when her daughter shared music over a file-sharing network. The suit was dismissed on a technicality. In order for the RIAA to sue the child, the court had to appoint a guardian to represent her. The mother was able to step out of the case, but not before having incurred substantial legal fees. The RIAA’s position was that the mother was indirectly liable because she had purchased the computer, even though she had no clue as to how to use it. They failed—this time.

  Many feel that the majority of those sued are innocent of copyright infringement, but the threats of legal costs, criminal prosecution, ruination of their credit, publication of their names, and eventually losing the case has resulted in thousands of settlements.

  And so, we must ask again, “Is the desire for free music dictated by passion or by reason?” I would suggest that the weight of the evidence would appear to run toward the former and not the latter. But appearances are deceiving, for cannot passionate action actually be reasonable action?

  What Medea has done is intelligible in the sense that what she did is what you do when you are ruled by passion. No, she is not behaving wisely, because she is driven by passion and anger—just as the illegal downloaders are driven by passion and anger. Interestingly, greed, something the music industry often points to as the underlying motivation for illegal downloads, is not really a factor at all. So, you see, Medea is beginning to seem a lot more sane.

  So, what happens when reason is trumped by passion? Most philosophers—students of human conduct after all—believe that in such event, the most horrible consequences ensue. If to be driven by passion is to have passion rule reason, then is what the music industry has been doing to enforce its rights irrational? Is this kind of behavior actually beyond reason and not merely the manifestation of it? Is the end worth the means? Does the mission dictate the process?