It's Time For The Record Industry To Face The Music
By Steve Smith -- TWICE, 3/11/2002
During the same week in late February when CE, PC and entertainment execs were testifying in Washington, D.C., on digital copy protection (see p. 1), the Grammy Awards were being held in Hollywood.
In the days leading up to the Grammys, in a stroke of PR acumen, the Recording Industry Association of America (RIAA) issued a press release blaming its falling industry sales on everyone but themselves. (See p. 38.)
The New York Times reported this sad tale with three stories about the industry's falling fortunes. In the Sunday, Feb. 24 edition of the paper, reporter Neil Strauss said that while everyone will smile at the Grammys, major music labels are at war with its artists, consumers and the consumer electronics and PC industries as sales drop. The next day in the Times' Business Day section, Bernard Weintraub reviewed some of the gripes. I'll boil down three of several points.
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Recording artists now realize that the music industry's accounting practices are worse than Enron's;
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Recording artists are battling with the record labels over a California law that keeps the artists in long term contracts with music companies;
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And of course, the most popular, that Napster and free Internet downloads, as well as MP3 players and CD burners made by the consumer electronics and computer industries are destroying the industry.
In a prepared statement on lower sales RIAA president Hilary Rosen gave lip service to the recession, the terrorist attacks, and the demise of cassette sales, but stressed the main reasons for lower music sales are "online piracy and CD burning."
Time out. Before the RIAA and the music business goes on the attack, it should take its head out of the sand. Again. The industry should take care of the problems in its own house before blaming its demise on new technology, its artists and its consumers. It bears repeating that since the invention of the phonograph, the industry has benefited every time. Here are a few suggestions on what they can do to straighten out their industry:
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You can't call your customers thieves. You can't get your customers angry at your industry. That's not good in any business. Consumers can and will record their favorite music and videos for their own use. It is now a fact of life. When the RIAA, Jack Valenti of the Motion Picture Association of America or head Mouseketeer Michael Eisner whine to Congress about this issue consumers are often lumped in with real pirates. That's why it's been easy for many law-abiding consumers to justify downloads and CD copying and, to paraphrase '60s radical Abbie Hoffman, "Steal This CD." Or as consumer Ron Arnold, 39, of Royal Oak, Mich., was quoted as saying in another Times story on CD copy protection by Amy Harmon: "Being treated like a criminal makes me want to act like one."
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Cut music CD prices on new releases. With movies on DVD priced at around $20 or so, consumers have got to be thinking, "Why am I paying $20 for audio CDs with only 60 or 80 minutes of entertainment?" Knowledge is power and consumers now know blank CDs cost pennies each. Consumers feel they have been robbed for years by the recording industry in paying upwards of $20 each for music CDs. If the recording artists are complaining that they are not getting paid the proper royalties (see below), where's all the money been going? As good PR at least, cut your prices on new releases.
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Don't steal from the people that create your products. Again, that's not good business, or good PR, for any industry. RIAA's Rosen described recording artists as its "lifeblood." If that's true, why does the industry habitually rip off artists by not paying them royalties or miscalculating royalties? Strauss in his Times article said that in January, a week before she died, Peggy Lee won, along with several hundred other artists and their heirs, a class action suit on royalties. Consumers are loyal to the artists, not the labels that sell their wares. Set standards on accounting practices and treat the artists with more respect.
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Work closely with CE and computer manufacturers to work on some type of standards to protect copyrighted product, while allowing digital recording for consumer use.
This middle-aged baby boomer is inclined to agree with the point in Weintraub's story that the only thing the industry and the artists agree on is that the music "is not as good as it used to be." (Plenty of consumers seem to agree. TV ratings for the Grammy show were the lowest in a decade.) Music managers claim the problem is that the big media companies that own the record labels have failed to nurture new acts. Cut the layers of do-nothing management at record companies, give more power to the people who love and create the music, the artists themselves, and maybe the labels will have more hits and be more profitable.
The time was yesterday to develop an online music distribution strategy to counter Napster and the rest. They shouldn't have been surprised. IBM and Blockbuster floated the idea to download music and movies in 1991, to the horror of the entertainment industry. Hollywood squelched that plan and quickly put their heads back in the sand, instead of looking for ways to embrace new technology.
Some things don't change.
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