Recordable Media a Bigger Threat Than Filesharing?

Matilda the Hun writes "The Register is reporting on the RIAA claims that recordable media is more of a source of piracy than P2P networks. From the article: 'The RIAA's chief executive, Mitch Bainwol, last week said music fans acquire almost twice as many songs from illegally duplicated CDs as from unauthorized downloads, Associated Press reports. According to Bainwol, in turn citing figures from market watcher NPD, 29 per cent of the recorded music obtained by listeners last year came from content copied onto recordable media. Only 16 per cent came from illegal downloads.'"

Comments

RIAA should address the cause

[bigwavejas]

It seems to me like the RIAA is stabbing blindly in the dark. They constantly shift their attention from one medium (for pirating) to another. Instead of focusing on the symptoms they should direct their attention to the cause. I know I'd buy more music (cd, mp3 or ?) if it was reasonably priced. $1 dollar/mp3 and $12.99 or more for a CD?? I'm sure they have some justification for the pricing, but... obviously something's amiss. I'm not advocating pirating music, but I do think until a happy "middle-ground" is found, this problem will not go away.

Re:RIAA should address the cause

[garcia]

It seems to me like the RIAA is stabbing blindly in the dark. They constantly shift their attention from one medium (for pirating) to another.

They aren't stabbing in the dark at all. These have been slow and calculated moves! They have been planning on attacking the P2P networks, getting people to switch to legally downloaded media formats (which basically eliminate distribution costs as the RIAA doesn't even pay for it), and now they want to end recordable media!

According to Bainwol, in turn citing figures from market watcher NPD, 29 per cent of the recorded music obtained by listeners last year came from content copied onto recordable media. Only 16 per cent came from illegal downloads.

So, now that they believe that they have lessened the impact of downloaded music by finally "opening" up to the desire of the market and selling their wares, they have decided to turn their FUD campaign towards recordable media.

Yes, we should all bend over backwards to the wishes, whines, and desires of a small group of "individuals" that are just trying to protect their financial interests, right? Why should we have any fair-use rights? That doesn't help the RIAA's bottom line does it... We need to be re-educated into believing that fair-use doesn't exist. If you want to play your purchased music on your portable player *and* use a CD you have to buy it twice! Once for the MP3 player and once for the CD player.

DO NOT PURCHASE SONGS BACKED BY THE RIAA. It is only increasing their finances which are used to back legislation and smear campaigns to further erode fair-use rights.

Re:RIAA should address the cause

[goldspider]

No middle ground will be realized until both sides of this issue grow the hell up.

The RIAA uses unprecidented strongarm tactics to essentially preserve their outdated business model in law. They charge very high prices for CDs, restrict their usage, and then wonder why their customers aren't happy. Grow up.

On the other hand, you have a multitude of excuses for piracy. The "copyright infringement isn't theft" is my favorite, as it in no way justifies breaking of the law. I also hear that music sucks these days, and it's not worth buying. Yet the same people fill their hard drives with this "crap". That's hypocritical. Grow up.

So where's the middle ground? One side wants too much money, and the other side doesn't want to pay anything. Good luck with that!

Re:RIAA should address the cause

[Overzeetop]

Yes, we should all bend over backwards to the wishes, whines, and desires of a small group...

Actually, I believe the RIAA standard line is that you just bend over.

Re:RIAA should address the cause

[shark72]

"I know I'd buy more music (cd, mp3 or ?) if it was reasonably priced. $1 dollar/mp3 and $12.99 or more for a CD?? I'm sure they have some justification for the pricing, but... obviously something's amiss."

Amazingly enough, at $12.99 per CD, record companies typically net significantly less than 20% at the end of the year. If you were to plot the net margins of all the companies from which you buy goods and services, CDs would be on the far left of the graph. Choosing to pay or not pay for CDs is one thing, but it's not accurate to state that CD prices are "unreasonable" if one also happily buys food at the supermarket, clothing at the mall, PCs (including parts and accessories), and countless other items from industries that typically enjoy net margins well in excess on what the record industry relies on.

The "but I only pay $0.25 for CD-Rs, so $13 for a CD is an outrage! Bok bok bok!" kids are missing the deadly difference between gross margin and net margin. The $13 you pay for a CD covers all the operating costs (salary, overhead including shrinkage, advertising) of the retailer, as well as the distributor (5% right there, if disty margins are the same in the record industry as they are in the computer peripheral business), and must cover the cost of shipping, returns (an educated guess is that it's about 10% in the record industry), price protections (probably another 10%), co-op advertising (another 5% - 10%), the salary of everybody at the record company and studio who worked on it in some way, royalties for the composers and songwriters, and of course the COGS, which are about 25% of the sell-in price to disti. This is why even at low-overhead indy record labels, a CD must sell about 10K pieces before it breaks even (that number is said to be 100K for the big RIAA companies).

In short, simple bromides like "CD prices should be more reasonably priced" won't cut it. I've no doubt that you and others would like them to be cheaper (I wish lots of things were cheaper) but a sub-20 point net margin is certainly reasonable in our economy.

As for online music sales... Apple has sold 50 million tracks, and the online music industry is growing logarithmically. It may be hard to convince them that their product is not "reasonably priced." The biggest mistake we can make is thinking the enemy is stupid. You can bet that Apple and the record companies have done the requisite surveys and research on elasticity and demand to know that $1.00 is the right price to charge, and that charging $0.90 or $0.80 will not result in higher net revenues. I know I sure wouldn't buy more if they were a dime cheaper -- I don't lose any sleep over a buck a track. I'll take your word for it that you would, but Apple's research appears to indicate that there more consumers like me than you.

Re:RIAA should address the cause

[amliebsch]

Why should music be any different?

It's not, as you pointed out. You can give your friend your book, and you can give your friend your CD. What you can't do is make a copy of the book, or a copy of your CD, and give that to your friend while you keep the original.

Really, it's not that hard to understand.

Re:RIAA should address the cause

[pete6677]

Outlawing (or severely restricting) recordable media is likely going to be a lot harder for the RIAA than it was for them to buy laws against online file trading.

It's easy to convince a bunch of middle aged senators that those evil computer hackers are stealing the labels' music because they typically don't have the greatest understanding of computers. But I'd be surprised to find even one US senator who has never copied an album onto a tape or received a copy from a friend. They will see that recording onto CD is the same thing, and will be a lot more reluctant to try to outlaw an activity that they know people have been doing for a long time.

Since the home tape recorder did not kill the music industry and in fact helped it, legislators will have a much harder time buying the argument that recordable CDs will kill the industry.

Re:RIAA should address the cause

[pla]

No middle ground will be realized until both sides of this issue grow the hell up.

Who wants middle ground?

I buy quite a lot of CDs (20 to 50 per month). The RIAA could consider me one of their best customers (even with over half my purchases going to indie labels), except that I deliberately buy only used discs. Why? The RIAA has basically shot themselves in the foot, in three ways:

Technologically, I loathe DRM; although I have yet to find a disc I can't rip, the mere fact that they would try to prevent me from using music I buy (and spare me the "owned-vs-licenced" semantic BS - to the typical consumer, if I pay cash for a physical product that doesn't have a return date on it, I "own" it) however the hell I want, very much offends me.

Politically, I don't like the bullying tactics of the RIAA, nor do I like their constant attempts to legislate their business model into what amounts to perpetual profit for no further work input. Although I can't hurt them all that much, I certainly won't help pay for their war-on-the-little-guy.

Economically, the most simple, they charge too much for no good reason. Do they have that right? Yes, certainly, they could charge $500 per CD if they so desired. But perception matters quite a lot - Even nonhuman primates will petulantly turn their noses at a known bad deal ("tolerable" vs "preferred" food as reward for doing something, when they've seen someone else get the preferred reward for the same task). Tapes cost around ten times as much to manufacture as CDs, yet cost half as much? Keep your lettuce, and stack your damned colored blocks by yourself!


So, who wants a middle ground? I say, Screw the RIAA. Let 'em go under. The artists will still create, they just won't have so many mob-affiliated middlemen taking a cut of the till. And thanks to the internet, the artists can actually do just that, in a manner far more effective than the old standby of offering tapes/CDs for sale at their concerts.



and the other side doesn't want to pay anything

No, one side wants too much control, and the other side wants the same "fair use" rights they've had all along. I consider the "money" part of this issue the least important.

Re:RIAA should address the cause

[steve_bryan]

What you can't do is make a copy of the book, or a copy of your CD, and give that to your friend while you keep the original.

Really, it's not that hard to understand.

I don't agree that your proposition is so easy to agree with and understand. CD's are inherently fragile so I have learned through repeated experience that using the original disc is foolhardy. It will fail and the only remedy available is to purchase another one.

So if I were to lend a CD to a friend I would certainly only do so with a copy of the original. As long as the replacement cost for failed media remains about $15 - $20 there is no way I would willingly agree to taking that risk.

Of course in real life I have lent out books and CDs never to see them again. That is part of the charm of the whole social process. But if I were to analyze and act rationally I would only lend copies of CD's. I'm less concerned about books because that media is not subject to the same catastrophic failure as aluminized plastic.

Re:RIAA should address the cause

[chefmonkey]

Admittedly the data points are becoming harder to locate, but I'm going to assert "complete and utter bullshit," based on the relative costs of CDs and Cassettes (which are much more expensive to manufacture, by the way).

Here's one datapoint for you; you can find others. (For example, "The Very Best of Kenny Rogers" on Amazon: $5.95 on tape versus $9.95 on CD). Based on what I've seen, margins on CDs must top 50% -- unless record companies take a significant loss on cassettes.

Re:RIAA should address the cause

[ShieldW0lf]

The RIAA and the MPAA collectively make a lot of money, but that's just a drop in the bucket. The amount of money they make amounts to something like 2% of the GDP. Think about that. 2% of all the money out there comes from RIAA/MPAA earnings.

Now add in the theft that comes from p2p file sharing. Even the most conservative estimates place the value of the media being stolen by these pirates at something in the order of 800% of that being sold. That's 16% of our GDP being stolen by these pirates each year.

Now we need to add in all the theft that goes on with copying cds. We've just recently discovered that it's an order of magnitude worse than the p2p file sharing... I'm talking 8000% of the value of that actually sold. That's 160% of our GDP being stolen and never making it into the economy!

Now lets do the math. 2% that's actually being sold, plus the 16% being stolen on p2p networks, plus the 160% being stolen by cd pirates, plus the other 98% (drugs and cars and oil and stuff. That works out to 276%!!!

This means that if we can put a stop to all this piracy, our GDP will damn near triple! That will trickle down and we'll all be rich!

It's all on account of those bastard pirates that we're all always broke! Dob them in!

Re:RIAA should address the cause

[shark72]

"I am not arguing that piracy is ok. But compared to actually stealing something? It's not the same thing. It's even worse when you call it 'piracy', because piracy is a much worse crime still."

Copyright infringement and piracy are synonymous. I think you may be confused by the fact that piracy has multiple meanings, as do the word "bark" and "desert". The meaning to which we are referring is (per "dict piracy" in your Firefox address bar):

The unauthorized use or reproduction of copyrighted or patented material: software piracy.

e.g. we're not talking about running a pirate radio station or taking things from boats. I infer from the .cx in your domain that you're not a native English speaker, so the confusion is understandable.

An interesting bit of trivia is that the use of the word "piracy" to describe unauthorized copying goes back some four hundred years; if that's not older than the word "copyright," then it's at least older than copyright law as we know it.

I hope this helps.

sneakernet

[BWJones]

When you are talking about significantly large amounts of data (hundreds of GBs to TBs) it is actually faster and cheaper to put it on a hard drive and FedEx or (insert your favorite delivery company here) and ship it. Bandwidth is not free (even for those in Universities where a portion of our indirect costs go to pay for bandwidth) and when you factor in time required to transmit GB to TB of info, it is much more efficient to use "sneakernet" or "shipnet".

This of course is leading many folks who deal with large databases to look at options such as moving the application to the data rather than pull data through the network. What does this mean for the media companies? It may eventually have an effect rendering the methodology much like that of the current TV/radio paradigm in that large repositories of media will be constantly available waiting for an application to travel to the database to query and assemble your media request.

Re:sneakernet

[justforaday]

How do I set up my file handlers to deal with this sneakernet thing?

Hide your mix tapes!!!!

[gbulmash]

This is why every audio tape had a hidden copying tax, a small royalty, legislated into the price, which had to be remitted by the manufacturers of the tapes to ASCAP to be redistributed to artists. I'm not entirely sure, but I think there is a similar sum legislated into the price of video tapes.

ASCAP was lobbying for a similar tax in the '90s on Digital Audio Tape (DAT). Propably the argument against adding it for burnable CD/DVD media is because it's so often used for data... thus the numbers... to justify their position.

The RIAA mindset

[LordKazan]

"Anything we don't have total control over is a threat to our business model" - RIAA

hmmm ...

[Anonymous Coward]

I download the media through filesharing then burn to recordable media. That makes me public enemy #1

In other news...

[harrkev]

In other news, the RIAA has concluded that people are the biggest threat to the recording industry. They are proposing legistlation that will allow all people to be shot.

Oh sure

[Approaching.sanity]

Blame the media.

In other news...

[johndierks]

RIAA is reported to be lobbying heavily against the speaker industry. "According to our studies, 100% of illegally obtained music is enjoyed through speakers." said RIAA spokesman, Steven Jones. "We implore congress to move quickly to protect artists from the criminals wandering the streets, listening to illegal music through speakers."

RIAA has it all wrong!

[confusion]

100% of piracy is a result of people/companies releaseing copywrited works.

Whether it's recordable media, p2p, thumb drives, magic crystals, or something else, the cat is out of the bag, and there's no going back. Time after time after time efforts to counter the problem are thwarted very quickly. Honest people are going to be honest, (but with the try before you buy advantage) and bad people are going to be bad.

This reminds me of the story of Sisyphus. It's time to stop pushing the rock up the hill and start looking for new business models!

Jerry
http://www.cyvin.org/

This Is Why They Don't Sue Philips

[Master of Transhuman]

Because Phillips makes CD recording equipment for consumers which allow you to pop a CD in your player and record it on another drive in the same device.

And they don't sue Philips for contributing to "piracy" because Philips as a company is bigger than the entire US music industry.

From the Philips Web Site:

Royal Philips Electronics of the Netherlands is one of the world's biggest electronics companies, as well as the largest in Europe, with 159,709 employees in over 60 countries and sales in 2004 of Eur 30.3 billion.

Whereas GLOBAL music sales were worth $32 billion USD in 2003.

Same reason they don't sue Sony for making the same sort of consumer devices.

Why the massively larger tech industry feels compelled to bow down before these morons is beyond me. Tell them to take a fucking hike.

The Mob certainly is telling them that.

WTF--I pay them royalties, how is this "piracy?"

[dpbsmith]

Hey, WTF?

Whenever I buy an "Audio CD-R" or "Music CD-R" the price includes a royalty payment. The royalty payment is set at 2% of the manufacturer's revenue (not profit, revenue) and deposited with the U. S. Copyright Office, which in turn pays it into other funds in a complicated way.

According to the RIAA's own frickin' website, two thirds of it goes into a "Sound Recordings Fund" administered by an entity called the AARC which distributes it to artists, and the rest gets distributed to copyright holders.

So how the *&$%&! is this piracy? What's their beef, anyway? They're not getting enough? It should all go to the RIAA instead of some it going to artists? Nothing should ever be copied by anyone, no way, no how?

I mean, just what is their problem?

Re:CD-R tax

[calibanDNS]

And what about us poor schmucks who buy blank CDs for purposes other than music piracy? I don't want my CD-R purchases taxed more just because the RIAA is too stubborn to overhaul its business model.

There is only one child in this argument

[Anonymous Coward]

Except, of course, the 12 year old the RIAA sued.

"Piracy" increases sales! Roger McGuinn(sp? The old "Byrds" band from the 60s) said outright that "piracy" via the old, dead Napster revitalized his career. The labels had writen him off.

This is the REAL reason they want to kill P2P, not "piracy." P2P DOES affect the labels bottom line.

Now, this sounds like a contradiction, but it isn't. The majors have radio sewn up (see "payola"). The radio plays what the RIAA labels tell it to.

But there's a new kid - P2P. If I download Metallica, I'm likely to buy Matallica. However, if I download someone not on the radio, they don't get that Metallica sale because I already spent the fifteen bucks on two indie CDs.

It's not about lost sales to "thieves," it's about lost sales to the competetion.

P2P is to the RIAA what FOSS is to Microsoft: a possible monopoly breaker. You can see why they hate it.

Re:Theft Arguement

[Dunbal]

Sorry, but copyright infringement is NOT theft.

      Of course it's not theft. The penalties for copyright infringement are much steeper!

Middle ground

[Andy Gardner]

So where's the middle ground? One side wants too much money, and the other side doesn't want to pay anything.

Lower prices?

"The latest 50 Cent album for $3 to $5"?

[DrCode]

Sounds like a great business!