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Why the RIAA Is Fighting a Losing Battle
Pages: 1, 2

Trying to lure the dog back to its kennel

One thought to aid in their control of online music is the invention of the SDMI (Secure Digital Music Initiative). The key component of the Secure Digital technology is digital watermarking; embedding an electronic identification in music files. In theory, if you don't have a SDMI-compliant playback device, you won't be able to use the CD. If the SDMI format does succeed, that doesn't mean that the RIAA has protected themselves from copyright infringement. Somebody will come out with a way to remove the watermark, rip an SDMI to the MP3 format, post the file on Gnutella, and make it freely available.

Sony is currently selling singles online for a hefty $3.50 a single, and you don't get the jacket to look at. Major label BMG is partnered with six different companies to try to get their music online. If you were to download one of their songs, you would have to also download new software to play it back, and you could possibly have to download a different piece of software for every music single that you choose to download. As absurd as this sounds, they feel that it is the only way to protect themselves from piracy while trying to put themselves into the online music industry before it becomes too late for their attempt to join in.

Why the dog will continue to get out

The majority of those who download music off the Internet do so because it is free, and this trend will not change when SDMI hits the Internet. MP3 has already won the battle over preferred format, even over higher quality formats that were late in throwing their hat in the ring.

You can bet that there will be a format that comes out in the next few years that will gain momentum and eventually share the pie with MP3, but it will be a format that is non-proprietary. Those who download music online usually distrust the music industry, so chances are that the SDMI format will probably fail because there is no grassroots backing from music fans. MP3 did not become popular because it was a corporate format, it became popular within the underground Internet music crowd, much like Linux has bubbled into popularity after being at a grassroots level for years.

What makes MP3 difficult to overthrow is that consumers have been using portable MP3 players to listen to music away from the desktop, and the ability to play MP3s on your home stereo will probably be available by Christmas time. Orignially SDMI was slated to have their standards and specifications by last summer, and be able to sell SDMI-compliant components by last Christmas. This obviously didn't happen, as the specs and standards for SDMI are still being hammered out.

The biggest battle to control the online music community was lost when the RIAA lost its lawsuit against the Diamond Rio portable MP3 player. This ruling paved the way for other companies to jump on the MP3 bandwagon, which means there will soon be more types of electronic goods on the market that have the ability to play MP3s. That is a crushing blow to the RIAA and to SDMI. Now the people behind SDMI have to realize that consumers probably won't want to buy another high-ticket item if they already have a stereo that plays MP3s.

This isn't like changing from cassette to CD, SDMI doesn't offer anything useful or innovative to the consumer. Electronics manufacturers like Sony, who also owns a major record label, are put into a difficult situation. Will they try to keep up with the electronics market and manufacture stereos that will play MP3s, or will they hold off and build SDMI-compliant stereos months later and risk the lost revenue?

Related Articles:

Gnutella and Freenet Represent True Technological Innovation

Napster and MP3: La Revolucion or La Larceny?

Music Industry Turns Heat on Net Music Pirates

Napster: Popular Program Raises Devilish Issues

Why the RIAA Still Stands a Chance

Instead of embracing the MP3 format years ago, the RIAA is now struggling to keep up with it. The courts ruled in the RIAA's favor in their lawsuit against MP3.com, claiming that the My MP3.com service violates industry copyrights and MP3.com's stock plummets. If the RIAA runs MP3.com and Napster out of business, is that going to help their cause? For a short time maybe, but the MP3 die-hards are multiplying everyday, and there are plenty of places to find MP3s on the Web without using either Napster or MP3.com. What is not often mentioned is that the RIAA is crying out that they have lost millions of dollars in revenue due to illegal distribution of their copyrighted material, while this last year was a record breaking year for album sales -- up 8 percent in total dollars and 5 percent in units sold. Does this point to the fact that even though they don't control the environment, the environment is boosting their sales?

You can also bet that the film and television industries are very interested to see how the RIAA fares. Right now an entire filmed program is too large to distribute online, but you can bet on an increased number in broadband connections, which will expose other forms of media to piracy and illegal distribution.

I truly believe that the recording industry will be completely different in 10 years from what it is now, and those involved with the music industry have to adapt and find the niche that will allow them to continue the success that they have had in the past. Unfortunately the war against online piracy was already over before they decided to start one. Once my dog learned that there was a way out of the yard, it doesn't matter how secure I make it -- he'll always figure out how to escape eventually.

Steve McCannell is a writer/producer for the O'Reilly Network and the founder of Lost Dog Found Music.

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