RIAA's Tax Filings Shows Funding, Legal Fees Dwindling

The Recording Industry Association of America, the anti-piracy trade group that represents the interests of many powerful music industry companies, is losing money. Fast.

TorrentFreak obtained a copy of the RIAA’s publicly available 990 Form, showing the filings for the trade organization for the fiscal year of April 2010 to March 2011. While the form cannot provide a completely up-to-date bill of health on the RIAA’s operational funding, the outlook is not positive.


This Week In Piracy


While it may lack the SOPA/PIPA protests from this past January, the second week in August may prove to be an even more monumental period in the history of music piracy.

Arguably the story to break this week was Google’s formal announcement on Friday regarding websites that allegedly enable copyright infringement. “Starting next week, we will begin taking into account a new signal in our rankings: the number of valid copyright removal notices we receive for any given site,” said Amrit Singhal, SVP of Engineering at Google. “Sites with high numbers of removal notices may appear lower in our results. This ranking change should help users find legitimate, quality sources of content more easily ” whether it’s a song previewed on NPR’s music website, a TV show on Hulu or new music streamed from Spotify.”


6 Strikes And You're Out

Ever since Napster first launched in 1999, piracy has been the music industry’s worst nightmare. With drastic drops in sales and revenues over the last decade, record labels are desperate to try and find ways to stop people from downloading music for free on the internet. Last week, the music and film industries announced a deal with five major major Internet Service Providers in hopes of discouraging piracy; wherein users caught illegally downloading copyrighted material will be given a series of six warnings to cease and desist. Repeat offenders could be subject to slower internet speeds or, if they reach the sixth strike, a ban from the company’s internet service. The five ISP’s involved in the deal, AT&T, Cablevision, Comcast, Verizon, and Time Warner Cable, comprise a vast majority of internet users in the U.S.

Even little kids know how to pirate music these days

Record labels hope that this deal will help put a stop to music piracy, but it might be too little too late. The deal mainly focuses on peer-to-peer file sharing programs like BitTorrent, but there are plenty of other ways for people to download free music and evade detection. Tech savvy music pirates will always try and find a new way to cheat the system, and they will always be one step ahead of the Internet Service Providers trying to play catchup. It appears that the war on music piracy might be un-winnable.

Plus, consumers have had the advent of free music for the last ten years. Slowing down someone’s internet connection or banning them from the internet altogether isn’t going to translate into album sales. What the record labels should be doing is jumping on the free streaming bandwagon. Websites like Pandora and Spotify allow users to stream music for free, with the occasional advertisement popping up between songs. These companies then use the ad revenue to pay artists based on the number of streams they receive. Sure, each stream may only produce a cent or less for each artist, but some money is better than no money, right? And with Spotify’s U.S. launch right around the corner, and with an estimated 50 million users expected for its first year alone, there is sure to be a number of high profile companies who want to reach that advertising demographic. And that means more money in the hands of artists. It’s a win-win, artists and labels get paid, and consumers get their music for free. And no one has to get kicked off the internet.




Industrial Revolution: LimeWire/RIAA Settlement – Sound, Fury, Etc.

The popularity of LimeWire, the now-defunct peer-to-peer file-sharing network, predictably drew the ire of the Recording Industry Association of America (RIAA), which went into full-attack mode within the last year. The RIAA first went to federal court and had LimeWire, which they called a massive piracy machine, effectively shut down in that the court ordered them to cease their central operation”an application designed to allow sharing of copyrighted material. The next logical step then was to seek damages. The RIAA has a history of overreaching in their compensation goals, making actual recoupment of damages unlikely and further casting themselves as the greedy, monolithic villain. In this case, they settled with LimeWire for a relatively more reasonable $105 million (a jury could have gone as high as $1.4 billion).

So where does the money go? Who absorbed the actual damages? This is where the RIAA may very well cement their reputation as the Monty Burns of corporate associations. Ostensibly, they have sought this recompense on behalf of artists, whose hard work is being stolen”STOLEN!”from them by nasty pirates¦and children¦ and hospitalized teens…and grandmothers. But there is rampant speculation that artists will see none of the $105 million. While the American Federation of Television and Radio Artists (AFTRA) broadcasted their satisfaction with the settlement, they simultaneously made it clear that they expected the money to go to their musician members. For a few days, the beneficiaries remained undetermined, and rumors surfaced that the RIAA intended to keep the money for their ongoing operations.


RIAA spokesman J.M. Burns

Needless to say, people were pissed.

But the RIAA quickly denied that they ever intended to keep the money and countered that they have no control over how funds would be distributed. Subsequently, Warner Music, EMI and Universal announced their intention to share the settlement with their artists. But the lack of specifics and the continued silence of other plaintiff-labels did little to ameliorate the concerns of the artistic community. AFTRA has pledged to see the funds distributed fairly to their artists, but questions remain, especially in terms of how much of the settlement will remain after legal and other costs incurred by the RIAA are paid.

This here is a joke.

For artists, this will likely signify nothing. There is a chance that small fractions of the settlement will reach certain recording artists, and while Metallica might be psyched, few others share the backward-looking mindset of the RIAA and affiliated labels. In the end, the labels typically blew this case out of proportion, explicitly blaming LimeWire in court for the steady decline in music sales over the past ten years. Yeah, no one believes that. While this is a nice little settlement and is being celebrated as a great victory by the powers-that-be, it is more likely that this is a last gasp”the final effort to contain an uncontainable sea change in the way people obtain and consume music.

Industrial Revolution: First Mate Biden Takes On Pirates

Look, piracy is outright theft. People are out there blatantly stealing from Americans”stealing their ideas and robbing us of America’s creative energies. There’s no reason why we should treat intellectual property any different than tangible property.” “ Joe Biden

Piracy of music and movies is rampant. Technology has made it easier than ever for a person to clone and disseminate materials to which they do not own the rights. This is not in dispute. But attitudes about both sharing and receiving this intellectual property vary drastically.

Older generations tend to accept the notion that getting music or movies for free is stealing. When you’ve spent years paying a premium for such things, suddenly getting it for free just doesn’t feel¦well, legal. Of course, some of those people are more than willing to ignore that nagging feeling, especially once they get a taste of the good stuff (free music, immediately). And then, of course, there’s a younger generation for whom this pang of guilt simply doesn’t exist. It’s not whether they view it as stealing, it’s that they view the marketplace from a completely different perspective. For a generation raised on freely available media, the resulting cognitive development has transformed the question of whether receiving such media is right or wrong into a simple question of what is just. And when you determine your own standards of justice, all you need to do is self-justify your actions. You might not pay for the band’s album, but you’ll go to the show and buy a t-shirt. It all evens out, doesn’t it?

This is not to say they are wrong. They are simply adapting to a world in which there are no obviously correct sets of standards. Of course stealing, as a concept, isn’t right. But it’s just not valid to equate downloading a music file to smashing in a window at Tiffany’s and taking what you can grab, as Vice President Joe Biden tried to do recently in an interview with Variety. Biden’s recently ramped-up rhetoric leaves no room for the kind of compromise required to find a solution to the problem of media piracy. And, most crucially, it makes no distinction between counterfeiting goods and file-sharing.

Wouldn't it be ironic if we got sued for using this chart?

Joe Biden comes off as a pretty amiable guy. While former rival Sarah Palin went to great lengths to sell herself as the gal next door, she was unfortunately up against the genuine article. In the average Joe contest, even Joe the Plumber couldn’t out-genial Joe the Senator. Now Biden has become the public face of the anti-piracy movement in Washington. And he’s perfect for the job. His plain-spoken demeanor makes his easy-to-grasp argument sound natural and compelling: getting something without paying for it is stealing. It can’t hurt that he undoubtedly buys this argument wholesale. And it is easy to imagine it being sold to him by his longtime friends in Hollywood, including that newly-installed bridge from DC to LA, former Senator/shifty character Chris Dodd”the new head of the Motion Picture Association of America.

Biden’s new crusade has resulted in a summit on the matter of piracy, to which only one side appears to have been invited”players in the major media companies. There is no one to make the argument that these players are on a completely different field than their would-be customers. That the VP and the media companies are still clinging to an outdated model is not a new complaint, even to them. In Variety, Biden counters:

“The fact is, media companies have already taken significant steps to adapt their business models to keep up with changes in how we watch movies and listen to music. Content is being offered to consumers in a variety of different ways that make it easy and cost-effective for people to access legal material. Anyone who does not understand this should simply talk with one of my grandkids.”

Always lovable.

Obviously the media companies are aware they have a huge problem and have made attempts to keep up with the changing landscape. Unfortunately, they are always several paces behind both the consumer demand and the technology. And while they might have a new media department or brain-trust to make their shareholders feel better, the bulk of their energies and funds are spent on defending their property. The significant steps they’ve taken have only been because their hands have been forced. The ubiquity of Apple and iTunes (and others that have followed) has demanded that they play along to an extent, or risk losing the last major outlet they have for legal music sales. It’s worth noting that no representatives from Apple or other cutting-edge media companies were included in Biden’s summit.

Had the conglomerates recognized the futility of their position earlier and made compromises that would, in the long-term, strengthen that position, they would still be the present and future powerhouses in entertainment. Instead, they raged and struggled. Taught by decades of experience that they could bully their way through any challenge to their modes of operation, they realized too late that this fight was not simply them against a few Napsters. It was instead them against the free market and the inevitable advancement of technology, in addition to a new generation who have never known anything but this state of flux.

Biden at least has the insight that this is the challenge. In his interview, he says, Kids are taught that it is not right to steal a lollipop from the corner store. They also need to understand that it is equally wrong to knowingly steal a movie or a song from the Internet. And he’s not totally incorrect, either. In fact, it’s admirable that the Vice President is arguing for artists’ rights. But his approach leaves no room for a new solution. Any summit on the matter has to include all perspectives. That’s what a summit is. The approach that the other side needs to be taught a lesson is wildly misguided. As a result, Biden and his media friends will lose this battle, sooner or later. Perhaps he can take some comfort in his GRAMMY.

Scavenger Hunts Killed the Bonus Track Star

If you’re an ingenious indie band, your wallet doesn’t have to be stuffed with Golden Tickets to play Willy Wonka. Hidden and/or free stuff can be a smart and inexpensive way to get a message out and bond with fans, who dig exclusive insider content, merchandise or info as a reward for loyalty.

These kinds of engagement programs can be traced back to the surprise bonus track. The most legendary? Train in Vain, that unaccounted for secret number that closed The Clash’s legendary 1979 LP London Calling. With nary a mention on the record’s jacket or label, punk fans started looking for hidden messages in music a la Paul is Dead: The Sequel. Flash forward a few years and the mystery bonus track is so common it appears to be a required CD marketing gimmick.

Available now through DJShadow.com

Scavenger hunts are the new surprise hidden bonus track.  They range from extravagant international searches to one-zip-code contests. The latest? DJ Shadow. This month, NME reports he’s stashed two new vinyl tracks, “Def Surrounds Us” and “I’ve Been Trying” in random shops across Europe and the US while on tour. He’s dubbed the give-a-ways “shop-placing” as opposed to shoplifting, and it serves as a kind of anti- downloading statement. DJ Shadow seems to have cribbed the idea from guerrilla artist Banksy, who snuck into 48 music stores and switched 500 copies of Paris Hilton’s CD with his own remixes in 2006.

With Facebook and Twitter, artists often have thousands, hundreds of thousands or millions in some cases of fans looking for communication, sneak peeks and direction from their favorite artists. When done right, these fan armies can be an extremely effective online street team and can pass messages to exponential numbers of people, suggested Sam Ewen, CEO of New York-based experiential marketing agency Interference Inc. (Vespa and HBO are clients.) The price is nice, too.

Eminem uses Twitter  to give out tickets to his concerts. (Ok… First 20 of you to Undftd. in Silverlake get a pair of passes to tonight’s Activision gig at Staples Center. I’ll be there. Go!”  or First 50 fans in NYC that want to come TOMORROW night for my performance on LETTERMAN email: [redacted] Must be 25 yrs w/ID.) Not only does this tactic cause a frenzy with his million-plus followers, it gets media play and proves that brand EMINEM is a creative powerhouse.

By Becky Ebenkamp

Becky Ebenkamp is a pop cultural anthropologist and former West Coast Bureau Chief for Adweek Media. Becky has a radio show called “Bubblegum & Other Delights” that airs 7 to 9 PM PST every other Tuesday on www.killradio.org