RIAA's Cary Sherman: We Really Just Want To Give Consumers What We, Er, They Want

from the help-us-help-you-help-us dept

Last week on his show Keen On, Andrew Keen wrapped up a series of music-industry-themed interviews (which included BitTorrent's Bram Cohen and Techdirt's new friend David Lowery) by talking to RIAA CEO Cary Sherman. The conversation is pretty tame, and Keen mostly just lets Sherman speak his piece, so I wanted to take a closer look at his answers and respond to some of his claims. This is not a complete transcript, but the first part of the interview is embedded below—in the next post I'll look at part two, in which Sherman answers some questions from Keen's viewers.

One thing is clear: Sherman has been following the public reaction to things like his diatribe in the New York Times, and he knows that everyone is sick of hearing him whine about infringement. He actually makes it through one-and-a-half semi-sincere answers before even using the word "piracy"—but after that it's virtually all he talks about. First, though, Keen simply asks him if he thinks the new ecosystem is better or worse for musicians. There are a lot of problems with his response:

It obviously depends on where you sit. For young, emerging artists they have more of an opportunity to get out in front of the public in ways that were never before imaginable. How much money they'll be able to make doing so is a serious question. Established artists are definitely doing worse than they used to be doing, and artists who are signed by labels are not getting the opportunities that they used to get when they were signed by a label: the marketing, the promotion, the exposure and of course sales.

So he apparently admits that the labels have failed at their job, and are now no longer even trying—and that artists will get more exposure going it alone since the labels provide no opportunities. I can't say I disagree. But the catch is the money, which he's sure isn't there:

So there are more income streams, but those income streams are much, much reduced. I think the Future of Music Coalition recently came out with a study showing that most artists are not benefiting substantially from these new revenue streams. And certainly if you look at the raw data from the industry, we're less than half the size that we were in 1999, we have way less than half the employment, fewer artists on the roster and so on and so forth.

Wait, does he mean the highly optimistic FMC study in which they concluded that "overall, digital technologies seem to be having a positive impact on musicians' earning capacity"? It's a shame Keen didn't push back on this point, because for Sherman to present that study as evidence that artists are worse off today is flagrantly dishonest. As for his "raw data", that says a lot about the failures of his corner of the industry (he's only talking about SoundScan sales and major label employment, glossing over the fact that the Big Six became the Big Three in that timespan) and very little about the overall situation for musicians. Next, Keen asks him why he thinks this is happening:

There are always a lot of factors involved in anything like that. There has obviously been a proliferation of new media and therefore competition from other media, but the fact is that more music is being consumed than ever before, just less and less of it is being paid for. I think we're now at a point where about 35% of music acquired is actually being paid for, so the rest is being taken for free.

I have no idea how Sherman arrived at that figure, but I'm a lot more than 35% sure it's bunk. I imagine the percentage of music that gets paid for is much, much lower—and always has been. With radio, television, music played in shops and in public spaces, free shows at bars, music played for friends, music played at parties, guitars strummed around a campfire and everything else in this music-saturated world, only a minuscule fraction of music consumed is actually paid for. Music is not, and never has been, a simple commodity. Sherman continues, paying lip service to all the market factors that have contributed to the decline in recorded music sales, and you can feel the tension building until he finally hits the p-word:

The fact is that piracy has had an enormous, really a devastating impact on the industry, because paying for music has become voluntary. It's a tip jar. If you don't want to pay for it you don't need to because you can always find online any of the music that you want. We're trying to come up with ways to offer the consumers the content that they want in ways that they want it, conveniently, reasonably priced, so that they will get it legitimately and compensate the creators. That is the number one anti-piracy strategy, which is basically offering consumers what they want.

That second part would be great, if the RIAA actually did any of that. Instead, time and time again we see them taking a sue-first, negotiate later strategy with new music services, and pushing legislation like SOPA/PIPA that puts a huge burden on innovators. Sherman then makes some comments about the businesses that profit from infringement, and Keen asks him to elaborate:

Megaupload is a great example. They were basically monetizing all the content that was stored in their lockers that they would distribute to people who would click on links all over the internet to get that content for free. Kim Dotcom was earning millions and the creators were earning nothing at all.

While it's possible, even likely, that Megaupload broke the law and some of the charges against them will stick, the assertion that creators were "earning nothing" is not quite true. Creators who embraced Megaupload were benefitting from it and were indeed earning money through its bounty payments for popular uploads. That's why we saw both well-established artists like Busta Rhymes and indie artists like Dan Bull take Megaupload's side after it was shut down.

Keen then asks if there are any legal businesses profiting by monetizing the content of artists, which elicits a bizarre answer from Sherman:

There's no question that all the companies that are providing access to music are benefiting in some way, legal companies, and that's entirely appropriate. ISPs have done very well by the availability of music online, because it has created greater demand for broadband access, and as a result they have now penetrated to the 66-67% level of US households, because they want access to the content that the entertainment industry offers. But that's perfectly fine.

Well, I suppose it's good to know that Sherman approves of broadband. As far as I know, the RIAA has never pushed the kind of "piracy tax" on ISPs that some organizations around the world have proposed. I guess they don't plan to start now. Of course, his answer also exposes the hubris of the legacy entertainment industry: he thinks their content is the only content anyone wants, and that they alone are responsible for broadband adoption.

Eventually Sherman can't stall any longer and starts to talk about enforcement, which, it quickly becomes clear, is all he really cares about. He actually defends their past strategy of suing file-sharers, saying that it was successful in spreading awareness and curtailing the growth of peer-to-peer networks, but then quickly reverses and says that since P2P is growing once again, it necessitated the five- six-strike plan they recently negotiated with ISPs (and the government). It's amusing to watch Sherman try to describe a consumer-punishment plan in a way that sounds "consumer-friendly":

So we did a deal with ISPs under which ISPs would send notices that we send to the ISP that a user on their network is infringing, they will send a copyright alert to the user and there will be educational materials associated with it, FAQs, all the information about how we got the information, whether they should check whether they have a wireless router that's unsecured, all that sort of stuff. And after awhile if they continue to persist in this behavior, over four and five and six notices, there might be some mitigation measures imposed like throttling bandwidth or something like that, up to the individual ISP. But the idea is to, in a very consumer friendly way, educate the public about what copyright is all about, the consequences of violating copyright, and the long term importance of preserving the content that people want.

Thankfully, Keen pushes back a bit on this point and notes that most people don't consider the RIAA to be very consumer-friendly at all, especially not after they tried to push SOPA on everyone. He asks Sherman if he thinks they can convince people otherwise. It's the last question, and I'll leave you with Sherman's answer in full, because it's a doozie. He immediately jumps to the unrelated topic of counterfeiting, incorrectly calls boots and batteries "copyrighted products", and then, having said absolutely nothing about how SOPA would help musicians, claims that's who we needed it for. For some reason, he chooses to end the interview with the random assertion that aspiring musicians are giving up and becoming lawyers (which is funny because the first person who comes to mind is Bill Patry—no friend of the RIAA's cause). With that in mind, enjoy:

For one thing, just because we don't want to get back into SOPA, but SOPA was not just about copyrighted music or movies, it was about counterfeit products too. It was designed to protect American consumers from counterfeit products like pharmaceuticals, which are actually being sold to American consumers from fraudulent websites on the internet. There are every kind of copyrighted product, from boots to Rosetta Stone language materials to things that could actually endanger your lives like batteries that could blow up and so on. So this really was designed to protect consumers against counterfeit websites that were operating from overseas and selling into the US market. Did we lose some consumer trust? Absolutely. What happened with SOPA has created a lot of skepticism on the part of the online community that were interested in consumer welfare, but it all depends on how you look at consumer welfare. We think that consumer welfare is not getting a product for free, but getting the best possible product you can. And if our artists make music that people want, it's a win-win for everyone, and we think that the long-term consumer interest is in creating an ecosystem in which there is compensation for creators so that they can be paid for their craft to go on making music. I don't know how many would-be musicians have gone to law school instead because they've seen that their opportunities in the music industry have been disappearing with every new illegal downloading technology. But it's our job to somehow create an ecosystem that makes consumers happy, makes creators happy and works for everybody.

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Filed Under: andrew keen, cary sherman, copyright, music industry

Companies: riaa