Is EMI the chink in the RIAA armor?

Does anyone really believe the RIAA when they tell us that 'the sky is falling' from rampant piracy?

Just last year, the recording industry, was trying to strong-arm Apple into raising its base price for it's entire DRM-protected music library. Apple held firm on its 99 cent pricing model and drew much criticism -- not only from the recording industry but also from those who object to Apple's considerably market influence -- even when that influence helps keep consumer prices low.

Sure, there are other legitimate music services offering a variety of pricing models which permit some users to enjoy more aggressive per-song pricing on some titles. Still, Apple's combination of iTunes, premium iPod products and interface options, an extensive library from a broad segment of the recording industry, and a consistent pricing model -- absent ongoing subscription requirements, has provided Apple a winning combination which makes them the clear market leader. (Much to the chagrin of the EU.)

So what happened this year? EMI announced that they will offer their extensive music library DRM-free through the iTunes music service. The catch? A 30-cent premium price for DRM-free music. The hope? That consumers will pay that premium to have DRM-free music. The carrot? This DRM-free music is provided in a higher bit-rate than the DRM-protected alternative.

Will this strategy work? We won't know for awhile yet but one has to wonder why EMI would distribute any of its on-line music DRM-free if the situation were as dire as the RIAA would have us believe.

To be sure, piracy is a legitimate concern for the music industry. But what is the extent of that threat? My guess is that bootlegged CD's (distributed for profit) represent a much larger threat to the music industry's bottom line than the 'casual piracy' taking place on college campuses all over America (dare I say, the world?) Chris Dawson's recent article "Can RIAA really make a case against students/schools?" only reinforces my perception.

The premise of RIAA claims is that piracy costs the recording industry money due to lost music sales but that premise assumes that those participating in the piracy would otherwise purchase the music if they couldn't 'steal' it. I believe this is a false assumption.

Today, 90% of the music industry's music sales is still in the form of CD's. Only 10% is on-line music sales. The assumption is that the decline in CD sales year-over-year is attributable to on-line piracy. Maybe -- but then again, maybe not.

As Chris so aptly points out, ripping CD's is the most common source of 'casual piracy'. In my college days, the mode of piracy was limited to blank cassette tape and LP's but the result was the same. Multiple people shared a single copy of an album. As cash-strapped students, if we couldn't share, we would have had to do without the music. Plain and simple. And today, my peers and I (who were once among those "casual pirates") are consumers who are buying CD's because we value the superior quality of the medium. Did the music industry lose any money off of our piracy? Not a penny! (most of the music I pirated off of LP's in the 1970's has long since been replaced with CD's of the same material.)

This is not to say that students who are targeted by the RIAA should ignore the attention they have drawn. Anyone whose on-line piracy has drawn the attention of the RIAA could find themselves in serious trouble with federal authorities -- should the RIAA decide to prosecute (as ill-advised as that might be).

So what does EMI know that the RIAA (representing that recording industry as a whole) does not know? They know that suing customers (or even potential customers) is bad for business!

Will their strategy work? Maybe not! But if it fails, EMI has cost itself no customers and it has at least endeared itself to a few for the courage to buck the trend and offer DRM-free music.

Ultimately, piracy only becomes a problem for the music industry when a third-party makes money off of that piracy instead of the rightful owner of the material. There is no convincing evidence that those who are being targetted by the RIAA (predominantly, college students) are making any money off of on-line piracy.

So who is? The people making money off of on-line piracy are peer-to-peer service providers. Peer-to-peer services have many legitimate uses but some of those vendors are targetting those who would use their services to pirate music. Others provide free software designed to quietly share music without the user's knowledge. These deceptive practices endanger their users in far more deceptive ways than anything the RIAA is doing.

The actions of the RIAA are heavy-handed and intended to intimidate users but they are direct. These peer-to-peer vendors are preying on the innocent. If the RIAA had the courage of its convictions, they wold be pursuing these vendors -- not students.