boycott-riaa.com - Article: The Phony Moral debate

The Phony Moral debate

Posted by Tom Barger on April 8, 2005 at 11:29 PM (printer friendly)

http://bigpicture.typepad.com/comments/2005/04/new_arguments_a.html

New Arguments Against P2P: The Phony Moral Debate

by Barry L. Ritholtz

�Its Illegal.� That�s the phrase the Recording Industry have been chanting nonstop for the past 5 years. It has been the mantra of the big labels and studios ever since Napster winked into existence.

But a subtle shift is already underway. As we await the Supreme Court�s decision in the Grokster case, the industry -- or in this case, its apologists -- is positioning itself for a defeat on the merits. They want and need a fall back position, in the event the Supreme Court decides not to overturn the well settled law -- "substantial non infringing use" -- of Sony BetaMax case.

If the Betamax decision is not overturned, than on the law, the case is over: Articles such as this one -- File-sharing case worries Indie artists -- incontrovertibly demonstrate the inescapable conclusion that not only are there substantial non infringing uses for P2P, but they are from direct business competitors to the Big Labels. If P2P is quashed, it would have the effect of limiting competition to the majors from the small, underfunded, scrappy independents.

And that�s even before we get to the issue of stifling technological innovation.

Indeed, knowledgeable observers have long since figured out that P2P is not about copyright at all. Instead, its about disintermediation -- getting the Labels out of the middle, removing them from between the artist and the listener.

Of course the labels are horrified about P2P -- it makes them irrelevant. Who the hell wants to be replaced by a collaborative filter?

But even if the industry wins the Grokster case, the result will be a pyrrhic victory, largely unenforceable against the free roaming decentralized software the Recording Industry inadvertently birthed when they litigated the centralized Napster to death. In fact, just this past week, the WSJ Op-Ed page acknowledged that stopping swapping is all but impossible:

Allofmp3, which resides in . . . Russia, and was described to me by one knowledgeable user as "more or less legal." Even if the anti-Grokster forces can next afford to spend 10 years to win (and enforce) MGM v. Putin et al. in the Hague, there will always be another wave of digitized aliens hacking through the copyright walls. There has to be a better way.�

So a new approach has been hatched: Apologists for the industry are replacing the catchphrase �Its illegal� with a new mantra.

Are you ready to hear what it is? (Hold onto your seat): �Its morally wrong.� Allow that to sink in a moment. One of the most corrupt, decadent, morally bankrupt industries the planet has ever seen is now making the argument that people should not use P2P -- due to the ethical considerations: �It may seem quaintly old school to suggest that people should stop downloading culture without paying simply because it's the right thing to do. But that may be the best option available.� -Daniel Henninger, WSJ I find that approach utterly fascinating, more than a little infuriating, and outright hilarious -- all at once. The Recording Industry must be hellbent on getting into the Guinness Book of World Records for the most hypocritical, disingenuous, cynical, and intellectually dishonest arguments in the history of mankind.

You want to play that way? OK, I'm game. Let�s go along. If the industry wants to have a discussion on morality, lets have a closer look at this black kettle, the house of glass they want to throw stones from. Let's examine how the industry arrived at where it is today -- but according to their wishes, from an ethical standpoint.

Remember, we are not arguing about what is legal, but rather what is RIGHT or WRONG:

Price Fixing: Wrong (and Illegal):

Lets start our discussion with the Free Markets. Our capitalist system relies on competition to set prices on goods and services. But what happens when the distributors of these very same goods get together and illegally fix prices?

That conspiracy does substantial damage to both consumers of these useful and creative arts, as well as their creators. When a group of plutocrats thwarts the capitalist system, everyone but them loses. Consumers have less access to these works, as the Labels illegally maintained prices higher than the market place would have borne. These oligopolists extract monopoly profits, while the bands sell that many less units. And the creators of these works, who
derive the lion�s share of their income from publishing their music and playing to audiences, gets that much less exposure, recognition and money.

Its just wrong.

Amazingly, even after they got caught, the recording industry cheated on their price fixing settlement. Part of the resolution included donations of CDs to libraries. In direct contradiction to the spirit of the agreement, the labels used the opportunity to dump tons of junk CDs -- old, unpopular, and many repeats of the same CDs -- onto libraries.

It was only after a group of Librarians contacted the State Attorney Generals involved in the case -- along with some uncomfortable press coverage -- that the industry was embarrassed into doing the right thing.

The framers of the constitution wanted to strike a balance between encouraging artists and inventors to create works, yet allowing the populace to benefit from these works. The balance is a monopoly �for limited Times to Authors and Inventors�

The Recording Industries have trampled the concept of limited, via a corrupt land grab. They bought a series of copyright extensions, after greasing Congress with millions of dollars. Intellectual property which should have fallen into the public domain for the use and enjoyment of U.S. citizens instead remains property not of their creators, but of large corporations who had little if any hand in their creation.

The term of copyright now extends 75 years beyond the date of the author's death. This created a huge windfall for the companies who purchased these assets from their creators. Of course, this buy in was done when copyright was much shorter. The Sonny Bono Copyright Term Extension Act of 1998 (a/k/a "The Mickey Mouse Protection Act") resulted in a huge taking of public assets by private entities and a purchase under false pretenses from the songwriters. Its enabled by
bribery, and in direct opposition to the explicit wording of the US Constitution.

And, its all perfectly legal.

But that doesn�t matter, since today�s discussion is not about the legalities, but rather, about what�s right and wrong. The massive copyright extension amounts to true piracy, theft on the high seas from the public and the very works creators at issue here.

Wrong, but legal.

Radio Consolidation: Wrong (but Legal and Dumb):

The Nation�s airwaves are a limited and precious commodity, one that is supposed to be administered by the FCC and Congress on behalf of the Public.

Instead, thanks to some well greased Congressmen, yet another act of Piracy took place: The 1996 Telecommunications Reform Act. It radically changed the ownership limitations of the public airwaves, allowing another massive land grab. Companies such as Clear Channel Communications -- who helped pay for the legislation -- consolidated the radio industry.

Pre 1996 Act, local stations served their communities with local DJs, Program Managers, and Music Directors. Afterwards came McRadio. Instead of a vibrant competitive broadcast industry, with 1000s of different stations running all manners of programming, we now get music pumped across the country from some sterile fluorescent lit bunker somewhere in Texas.

Playlists shrunk dramatically, focus groups ruled the air, and the amount of content on the radio -- the actual number of different songs -- fell off a cliff.

That�s just wrong. The quality of what�s available for free over the public airwaves has dropped precipitously. Another wrong foisted on music fans.

The irony is that this land grab ended up doing major damage to both the Music Industry as well as Broadcast Radio itself. Listeners abandoned Radio in droves, flocking instead to iPods, Satellite Radio and the Internet. Singers and Songwriters were also hurt by this. You can�t buy what you never hear, and most people used to hear new music on the radio. No longer. Worse, Bands cannot sell tickets to a tour if no one has ever heard of them, SongWriters do not get publishing royalties if no one else is covering or performing their songs.

So who�s really hurting the Artists? Why its the Radio industry, and by virtue of their mute compliance, the Recording Industry.

From Payola to NoPlay-ola, in a few short years. That�s also wrong.

Refusing Digital Distribution: Wrong (but Legal and Very Dumb):

Winston Churchill once said "If you destroy a free market, you create a black market." In the 1990s, the marketplace was clamoring for a way to obtain content digitally. A well managed industry would have responded to this market demand by offering its consumers a fast, secure, legal -- and profitable -- way to do this. Digital distribution should have been a profit center, a new market for musicians to use to disperse their work, build relationships with their fans, and help sell concert tickets.

Instead, the industry acceded to the demands of their brick and mortar retailers. They ignored the marketplace, and crated an enormous void. Nature may hate a vacuum, but not nearly as much as the marketplace does. Napster wasn�t inevitable, but rather sprung into the void created by the Recording Industry. More irony: Tower Records recently filed for bankruptcy. The industry has misrun their business for decades, and now they are suffering the consequences of their poor judgement and bad behavior. Blaming P2P for their woes ignores the reality that this is a merely hell of their own devisement. And that's before we get to other bad behavior of the recording industry: Cheating their artists, foisting oppressive contracts onto young musicians, using Enron like accounting to avoid paying them. But you get the idea.

The Blackmarket for music -- brought to you by the recording industry. I expect a few years from now, B-School students will be reading studies of this enormous and unprecedented management screw up.

Unclean Hands
Apologists for the recording industry cannot in good faith argue that everyone but themselves needs to �do the right thing.� They have shown a propensity for doing the wrong thing -- both legal and illegal -- time and again.

I�m all for moral behavior. However, I have no patience for an ethics lectures from a corrupt and incompetent ring of real pirates.

User Comments (These do not necessarily reflect the beliefs of this site)


gdZiemann	Date: April 8, 2005 @ 11:40 PM * Standing ovation *

Robbin-da-Hood	Date: April 9, 2005 @ 12:07 AM Bravo!!! Who could say more?

tomsong	Date: April 9, 2005 @ 12:13 AM Perhaps Mr. Leflaw has been waiting for me to write the whole catalogue of gangster abuse stories of the music business for years; or at least in collaboration with George. But I can't do better than this! Yay Barry. Barry is writing for the blog at ipaction.org. This is a link to bookmark for the latest on DC efforts. The good news is that they have gotten to be buddies with H. Clinton's office and at the least manageed to persuade her staff there is more that meets the eye on P2p legislation at the Senate Judiciary Committee.

tomsong	Date: April 9, 2005 @ 12:21 AM Again, at the risk of soundling like a "broken record"--I ask you to look at the abuse of free market principles. Record labels's true channel partners are retail stores and broadcast stations. The customer can go fuck themselves. (1) Propping up inferior songs and phony lip-syncing artists at radio by vast sums of payola. (2) Price-fixing and force-feeding a dozen songs on a customer who is interested in one song. Asking the regulatory agencies, the courts and Congress to protect anti-trust behaviour is asking for government welfare for a corrupt industry. Or in any other use of language, "copyright is a tax on consumers."

Goldenavatar	Date: April 9, 2005 @ 12:23 AM Wow.

wet1	Date: April 9, 2005 @ 12:54 AM After the pathetic squalling that was in the last article in which Mrs. Crow presents her "arguements" for the industry this is a breath of fresh air. Yet again outlining what many of us here have said time and again. My kudus to Barry for his style, both forthright and to the point. Much of the seamy and underhanded methods used by the industry of yesteryear has went long untold. It became a way to do business as they wanted it done. Stealing from the customer, the artist, the writer, and the market. Finally it has started to come home to roost. All is not the glitter and glamour that they would have you believe. That is just the frosting on a stale and unwholesome package. But the frosting on the cake has been tainted by the same package it surrounds. In droves people are leaving the established music industry that no longer offers what the customer wants. The industry that for so long had the lock and key on every aspect of the market has lost its toe hold and is in danger of loosing its footing on the slippery slopes of capitalism. Its responce? The same old same old. It is a national disgrace that the US can point to its lawmakers and show just what crooks look like. No wonder the average citizen no longer looks at the government with anything other than suspicion. That same suspicion will eventually catch those megacorporations in the same net. Honestly I believe that it has already begun. It is the reason the music, movie, and other major corporations are running around with the continual drumbeat of the sky is falling. In actuality, it is their own greed that has driven it to this point. Couldn't happen to a more deserving bunch...

MrDude	Date: April 9, 2005 @ 1:56 AM Big recording labels who pay the artists pennies on the dollar for their sales and then price gouge the public are trying to preach morality to us??? Puh-leaze!

leflaw	Date: April 9, 2005 @ 3:37 AM http://www.bigo.com.sg/features/billymay03.html

Spwee	Date: April 9, 2005 @ 3:59 AM It's all so laughable!

independentm...	Date: April 9, 2005 @ 8:05 AM Hat's off to Barry Ritholtz! (Thanks for bringing this in Tom!)

Lachatte	Date: April 9, 2005 @ 9:07 AM Ahhh, great article!!!

pepe512000	Date: April 9, 2005 @ 2:09 PM Have to send this one around to a few folks I know. Good job Tom.

gdZiemann	Date: April 9, 2005 @ 3:29 PM Read Leflaw's link!!! Written by Bill Glahn. If you liked the story at the top of this page, you'll love Glahn's story, which I thought was just as good.

gdZiemann	Date: April 9, 2005 @ 3:44 PM And on a second (ir third) reading of Barry's piece above, this caught my eye. "Of course the labels are horrified about P2P -- it makes them irrelevant. Who the hell wants to be replaced by a collaborative filter?" The RIAA is even exponentially more stupid than that. They are proactively asking to be ELIMINATED by a collaborative filter. What do they keep telling Kazaa and Grokster? "Filter us out." We're on the verge of figuring out how to do exactly that. They think they're suffering now. Wait till they get what they wished for.

ritholtz	Date: April 9, 2005 @ 6:11 PM I've written a lot of Music related analyses -- you can seee them here: http://bigpicture.typepad.com/comments/music/index.html

wet1	Date: April 9, 2005 @ 10:31 PM Thank you for the link, Barry, I spend better than an hour reading past writeups you have done.

INeedAlover	Date: April 9, 2005 @ 10:45 PM "Price-fixing and force-feeding a dozen songs on a customer who is interested in one song." Even after settling with the courts, price fixing continues yet today. They have lowered the selling price some, but everyone puts out a new CD the first week for a major act at $9.99. EVERYONE does. No there's no price fixing there....

INeedAlover	Date: April 9, 2005 @ 10:49 PM Funny thing how this article of morality by the record labels didn't even begin to discuss how the record labels have ripped off their artists for years. First they pretend not to know where to send royalty checks, or screw artists out of them any way they can. Many times record labels have ruined artists' careers. Signing with a record label became worst than slavery, with contracts that were all too much one sided and provided the record label with millions of profit without giving the true creator of the music a dime. Real morality there I'd say...