WEEKLY WHINE

SLAP upside the brain

Thank you for joining us today. We've asked you here because you, along with the general public, stand at a critical juncture in your history. One path leads to mutual success and happiness for all. The other takes you down.

The problem, of course, is copyright infringement on the Internet, specifically of the albums that you and others like you mint. You don't like it, and the public doesn't really like taking the fruits of your labour without giving you fair compensation. But it beats the alternative. And that's what you have to recognise.

Millions around the world are guilty of infringing your copyrights on the music that your artists have created. But as it happens, you are guilty of monopolistic business practises and causing a market failure. This is not illegal, but the consequences are worse than the filesharing with which you're obsessed.

Now, let's take a look at the offences of which you stand accused.

POOR REASONING

Album sales are falling.

Filesharing is rising.

Therefore, increased filesharing causes decreased album sales.

Can you spot the flaw in this argument? No? The answer is: It's stupid.

Take a look at the circumstances in the entire world. Since 2000, economies across the entire world have begun the trek toward recession. Unemployment is rising, wages are falling, and consumer confidence is falling. What does this mean? Consumers are spending less disposable income. Now, here's another question for you. Are albums necessary for survival?

The answer is: Of course not. Hence, by definition, the portion of their income that consumers spend on music is disposable income. This is precisely the type of income of which consumers are spending less.

So, the cause of declining sales of records is not illegal filesharing online. It's just business.

WASTEFUL SPENDING

What does it cost to make an album? The public believes that you have to record the song and then manufacture the CDs. You know, though, that many more elements have to be included in the prices of CDs. The producer gets some money. The distributors get some money. The marketers get some money. The retailers get some money. The label gets some money.

Remember economics class? The business that can reduce marginal costs the most will generally have the best time in a free market. However, over the past couple of generations, the music industry has permitted marginal costs to rise steadily. Nobody's really noticed, because all the major labels, and most of the independent labels, have each allowed the same thing to happen.

Instead of whining about how the public doesn't understand your business, have you considered that perhaps you don't understand your business?

Most other industries are recovering from this economic slowdown, using a variety of methods. Most of these methods are concerned with - can you guess? Anyone? Anyone?

No, I didn't hear anyone say "cutting marginal costs". Let's try this another way.

What do layoffs, reorganising business units, and improving inventory control have in common? They can all reduce marginal costs. You will have to figure out how you can reduce your marginal costs.

PUBLIC RELATIONS DISASTERS

I have someone I'd like you to meet. Her name is Brianna Lahara, and she's twelve years old. Sound familiar? No?

You sued her - and you didn't even know who she was!

How about Durwood Pickle? He's seventy one years old. Do you know him?

You sued him - and you didn't even know who he was!

Are we the only ones who consider that completely moronic?

What's worse, you don't care who they are. You yourselves have admitted that your goal is to scare people. As a spokesperson put it, "The objective of this campaign is not to win a popularity contest, but to communicate a message of deterrence so people realize there can be consequences to this illegal behaviour." What sort of business practise is that?

You can check with realtors, retailers, and writers. People prefer to do business with people whom they trust. This is a poor way to earn the trust of the general population.

And then there's your little "amnesty" project. You - the members of the Recording Industry Association of America - have offered up a programme wherein you afford the "opportunity" for filesharers to stand up in the midst of a shooting war and ask you to stop shooting at them. The problem is that you cannot prevent any other potential copyright holders from suing the very people you're pretending to protect. You saw the Electronic Frontier Foundation's response, didn't you? Who are consumers going to believe, a group of massive corporations that have publicly stated that they don't care about their consumers, or a nonprofit organisation with a stated objective that favours individual rights?

As you can see, your industry is in a horrible mess. But there is a solution.

You need only join the GoobNet Sound Label Amnesty Programme. Here's how it works. You admit to a callous disregard to the very people whose money you want to take. You issue a public statement with quotations from at least three leading executives at your company, each of which expresses remorse in a straightforward, honest, and sincere manner.

In addition, you promise to do the following things:

1. Immediately withdraw from all lawsuits alleging copyright infringement against anyone using a point-to-point Internet filesharing service, and avoid any involvement in such lawsuits at any point in the future.
2. Make at least 99% of all tracks distributed by your company available for sale online, to users anywhere in the world, for prices no greater than 50% the equivalent cost of that track from a CD, ie, the suggested retail price of that CD divided by the number of tracks it contains.
3. Reduce the average suggested retail price of your CDs by 10% each of the next three years. Hence, on this date in 2006, your average CD cost should be 27% less than it is now.

We are willing to hold out our version of an olive branch. For those who want to wipe the slate clean and avoid a potential bankruptcy, this is the way to go. All labels who participate in the GoobNet SLAP will be rewarded: We, the general public, will resume buying your albums. The ones that don't suck, at least.

Again, thank you for joining us today. We hope we can trust you to do the right thing, although we suspect that we can't.