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Comments, Questions, Concerns: RIAA CEO Reflects On Responses To His New York Times Op-Ed

February 23, 2012

I’d like to thank everyone who took the time to write comments in response to my op-ed in the New York Times on February 8th.  I read them all (yes, really) and, not only were there many thoughtful and constructive comments, but the totality provided a diverse array of opinions that were interesting to consider and understand.

I obviously cannot respond to each of the many comments, but a number of common themes seemed to emerge from them, so I thought it might be useful to convey some thoughts in response.

1.    Some comments reflect out-of-date criticisms about the entertainment industry’s transition to digital.

As Larry from California commented, “These companies MUST start to work out how they can continue to be successful in the new and evolving world, rather than trying to make it go back to the way it was.”  We couldn’t agree more and, in fact, we’ve already done just that.

I can’t speak for other industries, but I believe no industry has transformed itself as much as the music industry.  More than 50% of our revenues now come from digital formats.  We have more licensed services (Amazon, iTunes, Muve Music, Pandora, Spotify, YouTube and more) than any other content industry and more ways in which content is offered lawfully to consumers.  Obviously, we have an enormous stake in the success of the Internet – it is our future.

2.    Some comments reflect a misunderstanding of the current marketplace.

As for industry policies in the new digital marketplace, again I can only speak for music.  I was surprised to see comments that suggest that music labels use DRM to constrain customers’ use of music they purchase when record companies abandoned DRM many years ago (as commenter Dave from Wisconsin pointed out) to make it easier for consumers to use their music on the platforms they want, where they want.  More generally, I should note that issues like these are the marketplace at work, as companies try to figure out how to retain the value of their products while at the same time providing consumers what they want.  Music labels have experimented with an extraordinary array of business models to try to find the “sweet spot,” and are still working on it every day.  Regardless, we simply cannot accept that because someone may disagree with the way certain products are offered in the marketplace, it’s okay to steal them instead.

I was surprised at the number of people who are still raising questions about whether piracy is actually causing harm.  Sure, piracy isn’t going to be the only reason for the industry’s decline in sales, but it certainly is the most obvious and significant explanation.  And, as Professor Stan Liebowitz found in a recent paper, virtually every academic study has independently confirmed that piracy has had an adverse effect on the music industry.  Or consider this if you want to discount the precipitous decline in music revenue figures during the last decade:  there are fewer self-identified musicians (according to Bureau of Labor Department statistics) today than 10 years ago.

3.    A lot of comments focused on copyright itself, and the term of protection in particular.

I’m not sure this is the forum or occasion to debate that issue, especially because it misses the point.  As journalist and author Rob Levine put it:

The real problem with copyright is not that it legally lasts 70 years – it’s that it actually lasts 7 minutes. Albums are available illegally online as soon as they’re released – if not before. The protection creators are supposed to enjoy has become largely theoretical.

Of course, there are some who insist on arguing that existing copyright law has become overbearing.  But how can the laws be overbearing when they are utterly incapable of responding to offshore pirate sites that even SOPA/PROTECT IP opponents acknowledge are a problem?  In truth, copyright nowadays offers little real protection, particularly when we have no tools at hand to deal with those who operate beyond the reach of our law.  This was exactly what the legislation was trying to address.

4.    Civic engagement online is wonderful.

To those who made themselves well informed and read neutral summaries of the bills and made sure to understand the perspective and arguments of all sides, kudos.  That is civic engagement at its best, and that the Internet enabled those voices to be heard is one of its greatest attributes.  But realistically, did all of the seven million+ people who reportedly signed the Google petition do that?  I suspect that in this case, many simply placed their faith in others.

And the larger implications of this kind of campaign are already being felt.  As reported in the New York Times recently, the boisterous (and often personal) attacks in the anti-SOPA campaign have caused members of Congress to rethink their involvement in important – and completely unrelated – cybersecurity legislation.  As The Times notes, the bills “do not regulate the Internet” and are merely intended to “help secure the nation’s nuclear plants, water systems and other essential infrastructure from hackers and terrorists.”  This is an important topic that deserves congressional action based on studied and accurate debate.  Fear of acting based on PROTECT IP/SOPA backlash raises serious concerns.


If the Internet is to be the force for good we all want, it is imperative for everyone to treat information and facts responsibly.  And no one has more responsibility than those companies that are the strongest influencers on the net.  I called out Google and Wikipedia in particular because they are among our most respected sources of neutral information.  If they don’t set an example for distinguishing between opinions and facts, how can we expect others to do so?

5.    A number of comments reiterated many of the complaints about the flaws in SOPA and PROTECT IP, as if the legislation were still viable.

Perhaps I wasn’t clear enough in my piece – I wasn’t trying to defend the specific legislation; as we’ve said all along, no legislation is perfect and our basic view was to work with anyone who wanted to construct a meaningful, effective answer to this emerging threat.  The point of my op-ed was that those bills were killed by a campaign largely based on misinformation about what they actually said and did.  So, it was especially disappointing to see the same misimpressions conveyed in a number of the comments.

It’s not worth belaboring the point extensively because I suspect, for many of us, we will simply have to agree to disagree.  But a couple of quick examples:  by the time the blackout occurred on January 18th, most of the controversial provisions had either been removed or completely changed.  For example, the Chairmen of both the Senate and House Committees had already announced that DNS blocking would be taken out in Managers’ Amendments, yet a number of the comments continued to refer to that provision to explain their opposition.  Similarly, the Manager’s Amendment to SOPA in the House addressed many, if not most, of the concerns expressed by tech companies and Internet experts (such as including on page 2 a broad “No duty to monitor” provision covering all parties, not just payment network providers and advertisers), yet many of the criticisms described in the comments were based on earlier versions of the legislation that were off the table.  A number of commenters held Wikipedia up as providing comprehensive information about the legislation, but even Wikipedia missed, or simply chose to ignore, many of these changes (for example, saying on its information page, “SOPA would require Wikipedia to actively monitor every site we link to” despite the “No duty to monitor” provision in the Manager’s Amendment).

And that is what bothered me about what happened: the debate and the process itself came to an abrupt end not because of a fundamental disagreement of principle, but because of incomplete and often completely incorrect information and inaccurate claims.  The debate on these issues is not over, and on certain issues we may never agree.  But my simple hope is that those disagreements will be based on fact, because that will be the first step towards finding sensible solutions.

In the end, neither side has a monopoly on truth and righteousness.  So even though I take others to task for misinformation, I don’t mean to imply in any way that my side shouldn’t also be held responsible for our missteps. 

Skepticism is a healthy and useful thing.  It is good to question.  But that posture should apply universally to all sources of information.  The technology companies that turned their platforms into engines of advocacy did so because it was in their business interests.  I don’t have a problem with them looking out for their economic interests, but technology companies have an obligation to make sure that readers and users get straight facts and understand that this is about business, not idealistic values.  

The fact is, content and tech need each other.  Our futures are intertwined.  And we must find a much better way to communicate with each other, respectfully and constructively.  I will certainly do my part to reach out to those on the other side, and I hope others will too, so that we’ll learn from the mistakes of the past and work together to make the Internet better for everyone.

Thanks again for taking the time to comment and offer your perspective.   

 

Cary Sherman, Chairman & CEO, RIAA


A Little Less Spin On Filesharing

February 17, 2012

A handful of media outlets – including Forbes – recently covered a report by longtime industry critic Mike Masnick whose basic gist went something like this:  while the major labels have complained that illegal file-sharing is damaging their business and a primary reason behind the plummet in music sales over the past decade, other areas of the music industry such as touring, merchandising and other complementary revenue sources have done quite well, implying that we don’t need to do anything about file-sharing.  The paper goes on to explain that because of these bright spots, the future of the music industry should be gauged as an exceedingly positive one for artists that – despite the claims of the major labels – has been booming. 

Who doesn’t love an optimistic view about the future of the music business? We’re as bullish about it as anyone and will never pass up a chance to tout the unprecedented variety of legal music choices today’s fans enjoy. The one problem? The study is highly misleading and doesn’t present an accurate or complete view of what has been really occurring in the United States in recent years. 

Want proof? Instead of looking at actual sales data that is widely available, the paper looks at a global sales metric that includes a much wider range of industries outside of music.  Moreover, we see real world examples that consistently show the importance of the “traditional” metrics for working artists.  For example, although the industry has embraced the concept of broadening revenue platforms, recent work by the Future of Music Coalition show that few artists are benefitting significantly from these complementary revenue sources. 

As for touring, the paper does accurately state that over a period, revenues from touring did increase. But it oddly omitted the important fact that concert revenues have actually declined since 2009.  In fact, in 2010, North American concert ticket sales dropped 15%, according to Pollstar. And in 2011, despite U2 setting a record for the highest grossing tour in history, North American concert sales contracted another 4%.

Finally, the original paper by Mr. Masnick included factual errors about SoundScan data. The increase in the number of new album releases only reflects the ease with which sales even in very low numbers can be tracked today (only a single copy needs to be sold to be counted).  For example, of the approximately 75,000 new albums released in 2010, about 60,000 sold less than 100 copies each, and a mere 1200 of them (less than 2% of the total) accounted for 87% of all new release sales.  

Regardless of the metrics you choose, the trends in the United States have been clear, with a market less than half as large as it was 10 years ago and 60% fewer employees in the music business.  Virtually every neutral academic study (overview here) has concluded that there is real harm to the music community when people download music illegally.   Further, while the paper talks about what a boon this has all been to musicians, it doesn’t seem to explain why there are so many fewer of them today.

We welcome bullish predictions about the future of the music business. We wholeheartedly agree that it’s a wonderful development that music is, now more than ever, such a central and constant component in people’s lives. But it’s also important to start with accurate reflections of today’s marketplace for the sake of all those in the industry who work hard every day to make these predictions a reality.

Joshua P. Friedlander
Vice President, Strategic Data Analysis, RIAA


The Pirate Bay: Exhibit A For Why Foreign Rogue Websites Must Be Effectively Addressed

February 16, 2012

On the heels of the Swedish Supreme Court’s confirmation of the convictions of The Pirate Bay operators that ordered each of them to serve jail time and pay serious fines for facilitating massive copyright theft, the illegal file-sharing site quickly moved to change its domain from a U.S.-registered .org to the Swedish .se (see here and here for screenshots). Why? According to file-sharing blog Torrentfreak:


A Pirate Bay insider informed TorrentFreak that this move was made to prevent the US authorities from seizing the domain, which is a serious risk now the court case has completed.
… And with MegaUpload also out of the way, the largest torrent site on the Internet is now a prime target for a domain seizure.


The people running The Pirate Bay are aware of this risk and quickly redirected the site to a Swedish .se domain, outside the reach of US authorities. A Pirate Bay insider confirmed this morning that this was done “just in case ICE has been waiting for the court case to be over.”

Talk about Exhibit A for addressing rogue websites in a meaningful manner.  A blatantly illegal file-sharing site, proud that it’s an online bazaar of every conceivable U.S. copyrighted work, found criminally responsible by its own country’s legal system and who has been ordered by courts in at least seven European countries to be blocked by ISPs, has publicly acknowledged changing its domain name to escape U.S. laws.  It is motivated by its brazen philosophy of thumbing its nose at the basic rights of America’s creators.  It is, in a phrase, one of the worst of the worst. 

It is one of the most clear and obvious examples of why meaningful tools are needed to target foreign rogue sites that steal American jobs.  Responsible leaders in the tech community should come to the table with constructive ideas and work with us and others to address this blatant theft before more damage is done to our economy and the creative community.  As the Washington Post recently editorialized (Megaupload shows copyright protection is needed, 1/22):


Some opponents will fight any regulation of the Internet. This should not be acceptable. A free and viable Internet is essential to nurturing and sustaining the kinds of revolutionary innovations that have touched every aspect of modern life. But freedom and lawlessness are not synonymous. The Constitution does not protect the right to steal, and that is true whether it is in a bricks-and-mortar store or online.

 

Mitch Glazier
Senior Executive Vice President, RIAA


Whitney Soars In Our Hearts

February 13, 2012

There is no doubt Whitney Houston was, is and always shall be a simply monumental artist.  As a pop female solo recording artist, she has the RIAA’s highest certified album of all time, with “The Bodyguard” at 17 million units sold.  Until the launch of the RIAA’s digital certification program in 2004, she reigned as the QUEEN of singles, having sold more than any other female solo artist in history, with 16.5 million units sold.

With THAT VOICE, Whitney made YOU feel what she felt, what she sang.  When she wanted to “Dance with Somebody,” we did.  When her voice reflected her feeling like a “Million Dollar Bill,” WE did.  That voice.  You could get lost in it, listen to it endlessly, never grow tired of it – or ever crack the code of what made it so completely singular.  Songs like “You Give Good Love,” “Where Do Broken Hearts Go,” “Saving All My Love” or “Didn’t We Almost Have it All” could be studied, imitated, emulated – but never, ever matched.  Every song on the “My Love is Your Love” album got you moving and feeling something – whether it was hurt, vulnerability, sass, fun, loyalty or ultimately triumph.

But . . . it was when Whitney SOARED that we soared.  Grounded in Earth but reaching to the sky, her “National Anthem” summoned our pride.  Her 1988 Summer Olympics song “One Moment in Time” made us wish for our own someday.  But, we were glad it was hers, that so many were hers.  And they always will be.

Joel Flatow

GM, West Coast Operations

Sr VP, Artist & Industry Relations

RIAA


Something For Everyone At this Year's Grammy's

February 10, 2012

The Beach Boys! Paul McCartney! The return of Adele! The Band Perry! Rihanna! From classics lovers to country fans to hip hop fans, there’s something for everyone at this year’s 54th Annual Grammy Awards telecast (Sun, 8/7c, CBS) hosted by LL Cool J. This year’s Grammys will no doubt impress, with first-time performances by stars such as Jason Aldean, Foster the People, The Band Perry, The Civil Wars, David Guetta, Blake Shelton and Nicki Minaj. The telecast will also feature a special reunion performance by classic favorite The Beach Boys, who have not performed together live in more than two decades, along with current Grammy nominees Foster the People and Maroon 5.

 

Lots of fans are waiting in eager anticipation for the return of multi-Platinum soul singer Adele who took a break from performing to treat a vocal cord hemorrhage last year. And with her phenomenal track record, who wouldn’t be excited? Adele took the coveted crown for her sophomore album "21" as 2011’s highest certified album according to our annual Gold & Platinum tally, selling more than 5 million copies. Her hit tracks “Rolling In the Deep” was the most downloaded single of the year with more than 5 million copies sold, and “Someone Like You” raked in at triple Platinum with more than 3 million tracks sold.

And what better timing for the Grammys telecast than fresh off a high profile music-studded week which kicked off with Madonna’s highly acclaimed Super Bowl halftime show. The 12-minute stunner set that featured Material Girl classics such as “Vogue,” “Like A Prayer,” “Music,” and new single “Give Me All Your Luvin” garnered a record-setting 114 million viewers according to Nielsen, making it the most watched Super Bowl halftime show ever. A fun little tidbit on music’s draw? More people tuned in to the halftime show than the game itself!

A lot of these music lovers stuck around immediately after the Super Bowl to watch the return of fan favorite “The Voice” featuring popular artists Adam Levine, Christina Aguilera, Cee Lo Green and Blake Shelton as music mentors competing against each other to field the best “team.” The hit show averaged 17.7 million viewers and a 29 percent ratings jump from its 2010 series debut.

And then along came “Smash.” The new Broadway-themed song and dance series captured audiences during its premiere Monday night, with 11.5 million viewers overall. That makes it the third-highest rated demo debut for a drama this television season, according to Nielsen. Not to mention one of its stars, Katharine McPhee, first honed her skills on another hit musical show – a little program called “American Idol.”

So what does all this mean? The passionate connection people have with music is a force beyond all measure, and its enduring appeal continues to play a prominent role in shaping popular culture. It’s personal. People want to be moved. And with a few notable exceptions, we know that American music is what moves the world. So when we talk about the importance of safeguarding this national treasure, we hope you’ll agree it’s worth protecting.

Now sit back and enjoy the show.

Cara Duckworth Weiblinger
VP, Communications


The Internet Blackout's Grey Area

February 08, 2012

Late last month Google, Wikipedia, Reddit and other tech titans spearheaded an Internet site “blackout” contesting the PROTECT IP and Stop Online Piracy Acts pending in the U.S. Senate and House of Representatives.  Through their popular websites, the companies drew enormous attention to their legislative opposition to the bills. 

While the tactic arguably succeeded in the short run, its wisdom – and the precedent it may have set –  was questioned by numerous commentators, newspaper editorial boards and business executives.  Below is a sampling of excerpts.

 

As the RIAA’s Chairman and CEO Cary Sherman said today in a guest column in the New York TimesIt has become clear that, at this point, neither SOPA, PIPA, nor OPEN are viable answers... We all share the goal of a safe and legal Internet. We need reason, not rhetoric, in discussing how to achieve it. 


Editorial note: We have not included pieces below from the bills’ supporters (if you want those see here, here and here).  This, rather, is a compilation of voices other than our own, that we think raise an important point.

NY Times columnist Bill Keller: Steal This Column
February 5, 2012

…I was startled to see that Wikipedia’s founder and philosopher, Jimmy Wales, who generally stays out of the political limelight, had assumed a higher profile as a combatant for the tech industry. He supplied an aura of credibility to a libertarian alliance that ranged from the money-farming Megatrons of Google to the hacker anarchists of Anonymous…

The partisans of an unfettered Internet saw their moment, and seized it. They unleashed a wave of protest that included much waving of the First Amendment and an attention-grabbing blackout of Wikipedia, the company’s most conspicuous foray into protest politics.

Financial Times columnist John Gapper: Halt the Silicon Valley histrionics
January 18, 2012

The blackouts were a dramatic gesture but curbing piracy does not “destroy the internet as we know it”. It would be wiser for Silicon Valley to cut the histrionics and help to fashion a decent law.

NY Times columnist David Pogue: Put Down the Pitchforks on SOPA
January 19, 2012

But it was a sloppy success; the scare language used by some of the Web sites was just as flawed as the Congressional language that they opposed.

WSJ Editorial: Brake the Internet Pirates
January 17, 2012

How’s that for irony: Companies supposedly devoted to the free flow of information are gagging themselves, and the only practical effect will be to enable fraudsters. They've taken no comparable action against, say, Chinese repression…

The House bill known as the Stop Online Piracy Act, or SOPA, and its Senate counterpart are far more modest than this cyber tantrum suggests.

AP: Wikipedia editors question site’s planned blackout
January 17, 2012

But some editors are so uneasy with the move that they have blacked out their own user profile pages or resigned their administrative rights on the site to protest. Some likened the site's decision to fighting censorship with censorship.

NY Times Op-Ed: The False Ideals of the Web
January 18, 2012

Popular sites like Wikipedia staged a blackout on Wednesday to protest the bills. Google put a black banner over its name. Nothing quite like that has ever happened before. This is extraordinary, because it shows that belief in the priority of fighting SOPA is so absolute as to trump the stated nonpartisan missions of these sites…

But our opposition has become so extreme that we are doing more harm than good to our own cause. Those rare tech companies that have come out in support of SOPA are not merely criticized but barred from industry events and subject to boycotts. We, the keepers of the flame of free speech, are banishing people for their speech. The result is a chilling atmosphere, with people afraid to speak their minds.

New York Daily News Editorial: Sink the pirates
January 20, 2012

Wikipedia, Google and other websites went up in arms over fears, to name just two, that the legislation could start the U.S. toward Internet censorship or expose upstanding businesses to liabilities.  Much of the criticism was hypothetical, imagining a Justice Department that would go after every college kid who downloaded a song, every website that posted it and everyone who tweeted a link to a video.

LA Times Editorial: Web freedom vs. Web piracy
January 20, 2012

 

But if tech companies convince lawmakers and millions of Web users that any solution is worse than the problem, then it will simply be a victory for a powerful new form of advocacy by the companies best able to plant their message in the echo chamber of the Net.


The Detroit News Editorial: Congress should log off piracy bills
January 24, 2012

The tech industry could do more to offer solutions — rather than just scream censorship.

The Dallas Morning News Op-Ed: The Truth Behind Google’s Copyright-Bills Hysteria
January 26, 2012

The tech industry has demonstrated great political clout through the mobilization of its users and fan base; and the industry lobby, led by Google, will say and do pretty much anything to advance its commercial interests.

The Nation: Kill the Internet—and Other Anti-SOPA Myths
January 24, 2012  

SOPA and PIPA bashers were also a little loose with the word “censorship”. To me, that word should be reserved for government power that restricts ideas—like the US government locking up Eugene Debs for opposing World War I, or prosecuting City Lights Books for selling Howl. This kind of repression is common now in China, where most computers and cell phones are made by oppressed labor. Real censorship is dreadful enough that there ought to be a different word for laws that would try to prevent websites from illegally posting the latest Mission Impossible movies or making ancillary income from the eyeballs such transactions attract.

Yale Daily News Op-Ed: SOPA is no apocalypse
January 20, 2012

Finally, what’s truly disappointing about the debacle that will likely end in SOPA’s death is that the bill’s critics have, in the name of promoting a free Internet, exploited the power that comes with that free Internet in the very worst way possible.

The Herald Scotland columnist Iain MacWhirter: Wiki boss has picked the wrong fight for democracy
January 19, 2012

But in taking itself down yesterday in protest, Wikipedia was engaged in its own form of powerplay. Clearly on this one issue, Wikipedia is taking sides, and is denying access to information in an attempt to strong arm a democratically elected legislature…

And I am really rather worried that Mr Wales has chosen to use his own muscle in trying to challenge laws which are, whatever you think of them, the product of a democratic process…

Maybe it's time to say that Wikipedia has got too big for its own good. Mr Wales's website may be on the side of the angels, but after yesterday's blackout it has lost its innocence.


Forbes: Quote of the Day: Twitter’s CEO Calls SOPA Blackout ‘Foolish’
January 16, 2012

“That’s just silly. Closing a global business in reaction to single-issue national politics is foolish.”

– Twitter CEO Dick Costolo, reacting to news that sites like Wikipedia, Reddit and Boing Boing plan to “go dark” on January 18 to demonstrate their opposition to the Stop Online Privacy Act. Less goofing off for you at work on Wednesday!


Recognizing Madonna's Super Bowl Show

February 02, 2012

This Sunday the New York Giants will face the New England Patriots at the Super Bowl XLVI for a chance to win one of the greatest American sports honors: the Vince Lombardi Trophy.  Also on Sunday, the one, the only Madonna will undertake one of the music business’ top annual honors: headlining the Super Bowl’s world-famous halftime show. 

In honor of Madonna’s much anticipated weekend performance, as well her new music video debuting on FOX’s American Idol this week, and all other wonderful things happening in Madge’s world, the RIAA’s historic Gold & Platinum program takes this opportunity to salute her significant career G&P accomplishments:

With total G&P tallies reaching 64 million total certified units, Madonna is the 16th most certified artist in RIAA G&P history and the second highest certified female solo artist behind Barbara Streisand. 

Since first certifying her debut album “Madonna” Gold in 1983, America’s Material Girl has gone on to earn two RIAA Diamond Awards denoting more than 10 million copies sold of “Like a Virgin” (Sire, 1984) and “Immaculate Collection” (Sire, 1990).

Amongst her numerous additional honors, Madonna has earned 19 separate Gold album awards, 17 Platinum album certifications and 12 multi-Platinum certs.  Additionally, her 2008 single “4 Minutes to Save the World” (Warner Bros.) has sold more than two million downloads to earn a 2x multi-Platinum plaque, while her 2005 jam “Hung Up” (Reprise) has sold more than one million downloads to go Platinum. 

And while we of course anticipate many more G&P certs from Madonna in the future, those awards may come sooner than later, judging from the fortune of past halftime performers.  As we noted on our blog last year, The Black Eyed Peas 2011 halftime performance boosted their music sales 25 percent week-over-week following the Super Bowl, while songs played at the big game, or in its commercials, bumped the album sales of Eminem, Kenny G, Guns 'n' Roses, Elton John, Boz Scaggs and Usher up an approximate 20 percent, according to SoundScan figures reported in Variety

Best of luck this weekend to Madonna, the New York Giants and the New England Patriots!