CNET has a terrific interview with Rio Caraeff of Universal Music Group’s eLabs. Caraeff is a new breed of record exec – the kind of people we’d actually want running the industry. He’s a software guy and a mobile guy.

UMG digital chief on iTunes, DRM, and Android [CNET Digital Media]

The record industry has clearly seen the light on DRM, so that’s not really news, except that now you can see them saying it in public (and I imagine there has been long-running internal lobbying from those in the industry who got it long ago).

The news for me really what he has to say about the mobile space – his expertise. On iPod, he says what we don’t need is more proprietary alternatives: “I don’t think having more devices and more proprietary software or hardware in the market is the right answer.”

But most encouraging to me is how bullish he is on Google’s Android platform – and the fact that the proof is already available in the numbers available now. It seems the Web world is attracted to whatever is shiny, new, and not-ready-for-primetime, so bloggers last week forgot about Android and moved on to Palm’s (not-shipping) WebOS and Palm pre. That’s all fine and good, and WebOS certainly follows some of the same trends Android does, but let’s not lose focus just yet, right?

Universal worked with Amazon on their integrated Android store, and the results sound very impressive.

…now Amazon will tell you that Android is their single largest source of downloads from any third-party partnership that they’ve ever done. It’s a tremendous amount of consumption that we’re seeing once you integrate it seamlessly into a user experience that’s elegant and easy to use. It’s not 10 clicks. It’s very elegant and easy. We’re starting to see consumption increase significantly.

It’s early days on Android. There’s not that many out there on T-Mobile, but even with the small amount out there, they’re downloading and purchasing a ton of music over the air on T-Mobile.

This to me points to some encouraging signs:

Android has an edge for developers. Note that from a development, user experience, and deployment perspective, the Android platform was a big part of this success. You couldn’t do an Amazon store on the iPhone.

Android has legs. None of that would be meaningful if it weren’t translating to sales. But this says to me that the open Android platform can be a successful outlet, without necessarily needing a middleman like Apple. And it suggests some positive things for, say, developers selling software (or musicians doing weird, 99-cent generative music games) on the platform.

Mobile sales in general could be big for music. The whole problem for the record industry isn’t all that complicated: it’s that one medium (CDs) has been shrinking in dollar figures faster than its successor (online music) has been growing. So the industry just needs new growth. It’s encouraging to see that that could mean just selling music at reasonable prices, free of DRM. That’s a huge change from the previous plan, which appeared to be slicing 30 seconds out of a track, calling it a “ringtone,” and charging more than you would for a single.

There’s plenty worth checking out in the whole story. But this does make me feel even more excited about Android and what’s possible. The Amazon store is amazing: you buy and download tracks over the air, and then bring them back to your machine. Sure, you can do that with iTunes, and finally iTunes doesn’t have DRM on its tracks. But Amazon was able to come onto the device as a third party (working with HTC, Google, and TMobile). With Apple, the only way to get tracks back on your computer is to go through their iTunes conduit. With Amazon, you can do whatever you like. And the underlying stacks that enable the app are all open source, from the APIs to the developer tools. That’s a pretty marked difference.

Having a different mechanism for selling music could also mean that the UMG of tomorrow is very different from the UMG of yesterday. It’s certainly encouraging to think there are people at the company who see technology in the way a lot of the rest of us do. But this could also mean new opportunities for independent artists and smaller labels – and greater opportunities for everyone making music.

We’ll be looking more at the Android platform in 2009, and other trends in mobile. Now I just need to get myself a G1.

Much of the debate online about the record industry has devolved – with quite a lot of help from the misguided message of the US trade group, the RIAA – into a debate about piracy. It winds up being something dumb, like, “Piracy is evil!” “No, piracy is great!” Wow, this should be a really insightful discussion – I can’t wait!

Piracy is, pure and simple, “loss prevention.” People often laugh off the comparison between piracy and things like shoplifting. But I think that comparison isn’t made enough – because if it were made, and made fairly, the record industry might remember what it’s business actually is. It’s business is selling something. If that becomes secondary to preventing theft, they cease to be a real business. Whether you’re scared of piracy or think it’s harmless, you ought to be able to agree. This ignorance is a disease that has threatened at times to infect music software creators, too – and I think the same issues apply.

The counter-argument even from some RIAA critics is that record sales don’t matter to musicians, or that sales of recordings is doomed. Those are interesting arguments. They just don’t have actual facts to back them up. With musicians selling music direct and working out new means of distribution with labels, the former is silly. Sure, not all musicians rely on music sales – some of us rely on things like teaching guitar lessons or (ahem) writing about music technology. But many other artists do think about selling music. Digital tech means that for bands like Sound Tribe Sector 9, they can even tie this to lucrative live performance. (STS9 now earns lots of revenue by selling downloads of live performances to concertgoers. I’m sure others could follow; I just happen to talk to the STS9 guys and know this.)  And most importantly, with explosive growth in mobile music, online music downloads, streaming music, Internet radio, terrestrial digital radio, music communities, the recording as a business is here to stay, whether you like it or not.

Not that you’d know any of this listening to the RIAA, because the only issue they want to talk about is piracy – not the actual sales one would associate with an “industry.” So why is no one calling foul – not only because the RIAA pursues abusive legal intimidation, but because they seem unable to act in their own self interest as an industry? Isn’t that a little … odd?

The problem is, music recording is often treated differently from other businesses; we view it in a vacuum, without precedent or comparison.

Have a quick look at the RIAA’s website:

http://riaa.org/

Today, on December 16, 2008, the top headline is about an anti-piracy bill. The top blurb is about parents and teachers on digital downloading. Then we have some sales statistics, news on anti-piracy items, a whole section on piracy identification, piracy and parents, some links in the nav bar on piracy … you get the message. In fact, the only thing that would tell you that this is the Recording Industry Association of America and not the Association of Intellectual Property Lobbyists and Lawyers is some proud stats on “gold and platinum records.”

So, the only thing that would make me want to go into the record business is info on their top-selling records. Except, of course, that’s equally ironic and backwards-looking. We know that generally the new world market for music is less interested in explosive singles – there’s more selection, more variety in genres, more different kinds of people listening. The RIAA’s homepage is currently celebrating “50 Years of Gold Records.” That looks back to an era when American music tastes didn’t cross over between white and black artists. Some of those albums were wonderful, but with deep racial divides and uniform tastes, it was hardly a golden age. In 2008, the US has elected an African-American President who listens to music on his iPod. But never mind business growth and business potential: that wouldn’t fit into the RIAA’s victimization of itself. If the RIAA can portray itself as a failing industry, they have extra ammunition in what seems to be their one and only priority: fighting online piracy. If actual sales go down the tubes in the process, so be it. (In fairness, sometimes the RIAA does seem to be seriously deluded in their arbitrary nostalgia. Exhibit A: The CD: A Better Value Than Ever is one of their key statistics papers. Where’s “Online: A Massive New Market”?)

To see just how absurd this is, let’s compare another industry that’s having tough times – the National Retail Federation. They’re certainly in an unenviable place, with consumer confidence in the US at historic lows. And retailers get hit hard by theft – harder, you might argue, than the music industry. If you own a store, you get hit by shoplifting; it’s a fact of life. That’s real, material goods walking out the door, goods the retailer can’t replace, in an industry known for its razor-thin margins. Look at retail theft, and you might be glad to be in the record industry, selling online goods that won’t be irrevocably damaged by digital theft and that can have substantial profit margins and loyal, passionate fans. Oh, by the way: music has been historically more recession-proof than a lot of segments of retail.

If the NRF behaved like the RIAA, we’d see nothing but anti-shoplifting info. We’d see educational flyers warning parents about the dangers of their kids stealing candy bars, extensive statistics on loss, new lobbying for tough, one-strike-you’re-out prison sentences, and so on. Of course, that isn’t the priority of the site. The NRF lobbies, too, but on a range of issues. They cover “loss prevention” – they’d be nuts not to – but among other issues, like merchandising, logistics, finance, information technology, marketing. They have events that work on everything from supply chain to credit. Gee, it’s almost like they’re running a real industry. I’m not saying I agree with the positions of retailers. I’m saying they seem to be acting in their own self-interest, which is something you can usually take for granted with a business.

Focusing entirely on loss prevention is something retailers have sometimes done, with disastrous consequences. Tell your staff to stop shoplifting and forget to tell them to concentrate on helping customers buy stuff, and watch what happens. Lock your merchandise behind glass cases and watch what happens. You’ll wind up with safe merchandise: safe, unsold merchandise. The lessons of digital music and DRM clearly point to the same phenomenon.

You can apply the same communications test to other businesses. The American Wind Energy Association, for instance, talks about what’s great about wind energy. They talk about jobs and societal benefits. They lobby, too, to keep wind a priority. Now, wind energy has nothing to do with music, but that’s precisely the point, too. Why can’t you substitute the word “music” in the above sentences? Regardless of the nature of the business, this is what a business trade group ought to be doing.

In fact, even other music advocacy groups seem to get it when the RIAA doesn’t. Performing rights groups BMI and ASCAP have certainly lobbied against piracy, but it hasn’t stopped them from doing anything else. Check out the ASCAP and BMI websites and you’ll see musicians, seminars on music business, actual music. What a novel concept.

There’s a lot of damage to undo, and it has nothing to do with the debate on piracy. Check out reader comments here, blog entries around the Web, and popular press outlets. The narrative about music: music purchasing is dead. Music online has no value. The music industry is on the verge of collapse.

Guess where these narratives came from? You’ve got it: direct from the RIAA. People passed over the scare tactics the RIAA tried to peddle on piracy, and bought into their scare tactics on the industry as a whole. The RIAA has done massive, long-term damage to the image of music as a business. They’ve devalued the work that we as musicians do. They’ve squandered massive business opportunities online, and made an uphill battle for the people trying to take advantage of those opportunities independently.

I respect people who want culture to be free and shared. Music as a business should never be the only view of music, because it’s a cultural activity, with deep, personal, emotional value that can never be quantified. But for the same reason, I value any discussion that helps protect a business that promotes that cultural activity. We live in a world with grocery bills; in the US, we pay for health insurance. Damaging the business is dangerous to musical activity, period. The RIAA and its members are certainly entitled to have opinions about policy and law as they relate to piracy. But when those groups focus on those issues in the exclusion of all else, they do damage to the industry as a whole – including musicians who have nothing to do with them or their member labels. So it’s time to really start focusing on these other, challenging issues. Each time someone says that business is doomed, even if they’re doing so in the context of being critical of the RIAA, they’re unknowingly let the RIAA set the agenda for discussion. And I think it’s long past time for a more productive agenda.

I look forward to the RIAA’s one valuable commodity: its yearly sales figures. They’ve shown massive growth in downloaded and streamed digital formats that suggest that all of this is simply a transition from one format to another. (Furthering that argument, they even show growth in odd places, like vinyl records last year!) It’s purely a business issue. But it’s about time “industry” and “business” got mentioned together again. Stay tuned.

Discuss. (I’ve said enough.)

What happens when people targeted by record industry legal intimidation fight back? What if they not only defend themselves, but go on the offensive, counterclaiming the industry is abusing the law and legal process? What if courts decide the industry really can’t hijack an unrelated PC belonging to someone’s Mom and Dad? That’s what’s at stake in a case in Rhode Island.

Now, the exciting conclusion to the face-off between record industry lawyers and a class full of Harvard Law students and their professor. Well – sort of. This is legal drama we’re talking, so it may be neither exciting nor conclusive.

Our Story So Far

The case was this: as part of ongoing threats of litigation, Rhode Island residents Arthur and Judie Tenenbaum faced legal pressure from the US record industry group, the RIAA, on behalf of their son, Joel, a grad student at Boston University. Joel is accused of sharing music files online. 7 songs allegedly shared translates to $1 million in damages, according to the industry’s arithmetic, but it may not be the damages that are really what’s in question.

Here’s where things get a little weird. The hearing yesterday in Rhode Island federal court addressed a motion by the record industry to force Joel’s parents to produce their home computer, so that the computer could be inspected for evidence of illegal file sharing.  That would have made no sense, given that Joel is off at grad school, Arthur and Judie didn’t own the computer when Joel lived with them, and even the RIAA isn’t alleging that piracy took place on the computer. (You could place his uncle under house arrest and seize his parakeet as a witness, too, if you’re going to get that tangential to the case at hand.)

The hearing yesterday was rescheduled to January 6, however, because the Tenenbaum’s lead counsel – Professor Charles Nesson from Harvard Law School – was not admitted to argue in a Rhode Island court. (There’s a legal question there; I don’t think it’s just that they hate the Red Sox.)

The industry responded with a motion to prohibit any use of the parents’ computer until January 6. (Yes, Merry Christmas to you, too, RIAA.) I’m not sure what that would have accomplished, but the judge denied their request.

So, bottom line: the Tenenbaums get to hang onto their computer until January 6, and we find out what happens later.

You can expect a good fight, however. The Harvard team aren’t just defending Joel: they have a counterclaim. The basic argument: the RIAA isn’t really recovering compensation. The goal, says the countersuit, is simply to make young people, parents, and schools afraid of computer use. They are looking for damages from the RIAA, claiming that, as a criminal statute, the “Digital Theft Deterrence Act of 1999” the RIAA is using as its weapon deserves a trial by jury – and in the meantime, the RIAA has abused the law and the civil process of the courts.

Coverage

Some reading on the story from elsewhere:

Legal Jujitsu in a File-Sharing Copyright Case [NY Times]

Billion Dollar Charlie vs. the RIAA [Boston Globe]

RIAA Vs. Web 2.0? Social Media and Litigation [Slashdot, on the use of social media to combat the RIAA]

Boston Illegal: Will the RIAA finally get what it deserves? [Robert Cringley editorial for InfoWorld]

Judge postpones hearing in key RIAA lawsuit [CNET News]

And for an extra oddity:

RIAA May Be Violating a Court Order In California [Slashdot]

What This is About

Before we get another heated discussion going, let’s consider what this case is really about. Forget for a second the record industry’s business, the real issues around piracy and the value of music online. Ultimately, this is simply the case of an industry group that has been allowed to run wild, using legal intimidation and excessive, heavy-headed techniques. Going after Mom and Dad’s unrelated PC is clearly an unnecessary invasion of privacy.

The problem is, the strategy only works until someone protests. The assumption is that applying ample legal pressure gets more would-be defendants to settle out of court, saving a real legal test and helping the RIAA demonstrate that it’s doing something. Critics have said just that for years, but this could be a high-profile repudiation of these techniques if the Harvard team can move forward.

And as for the larger issues about the industry and its business, well, what about that? The RIAA’s response to criticism, even from members and music content owners, has been that the ends justify the means. But what, exactly, is the group accomplishing on behalf of their member businesses? Is their case really so weak that they have to resort to intimidation?

Many musicians are indeed opposed to piracy – and also believe the value of music, and the relationship listeners can have with artists and labels, can protect music as a business. Music creators are aware how much income comes from relationships – from freelance work, from t-shirt sales, from teaching, from live shows, and the many ways artists and creators support themselves. The single-minded, obsessive focus on piracy that would drive the RIAA to these tactics in the exclusion of all else seems to come from some alternate dimension.

Of course, this kind of nonsense only short-circuits those discussions. And from a legal perspective, the central question remains: is what the industry doing even appropriate to the law and legal process. We’ll follow this one as it develops.

Music DRM may be a thing of the past, online sales may be growing, but that doesn’t mean the U.S. record industry has missed a beat in its ongoing legal and lobbying campaign against music piracy online.

The latest battle starts today in Rhode Island federal court. The difference this time: the RIAA and record companies will have to face a Harvard Law prof and his students. Prof. Charles Nesson and his team allege the industry is abusing the court system, unfairly making “examples” out of the people they’re suing, and invading privacy.

Whatever your feelings about the righteousness of litigation as a deterrent to piracy, the case in particular gets pretty strange. Rhode Island residents Arthur and Judie Tenenbaum face having their home computer seized as evidence, despite the fact that even the industry legal team doesn’t contend this particular computer was used for the alleged downloading. The couple’s son faces a stunning $1 million+ in possible damages, but only allegedly shared seven songs on Kazaa – and the couple didn’t even own the computer when their son lived with them.

The team will be up for interviews, so I’ll try to follow up – let us know if you have questions for them. More here:

RIAA v. Joel Tenenbaum @ the blog CyberOne: Law in the Court of Public Opinion [Harvard Law]

Updated: Early word is that the hearing has been rescheduled, Prof. Nesson isn’t admitted to argue in a Rhode Island court, and the judge (rightfully) denied the RIAA motion to look at Joel Tenenbaum’s parents’ computer, since it wasn’t involved. More official details forthcoming.

In other news, Jim Griffin of Warner Music Group continues to push a plan to offer a blanket license to campuses to avoid litigation by allowing students to pay a voluntary monthly fee to download music from file sharing services. It’s not entirely clear to me why this scheme continues to attack such ire online. Ars Technica rightfully says hold the kneejerk responses and wait for the details. There’s certainly a precedent: clubs, bars, concert venues, and the like already pay blanket license fees for performance rights, and the revenue is ultimately distributed to the people who own the work (think publishers and writers). That’s not to say the plan isn’t rife with potential problems, and it seems to me could even endanger efforts to encourage things like Creative Commons licensing. But without more details, it’s tough to criticize the idea without taking into account both its pitfalls and potential.

One thing everyone ought to be able to agree on, perhaps even some of the beleaguered record labels: ongoing litigation has been ugly and unproductive, and still doesn’t solve the underlying problem. With broad wireless Internet access on the horizon, even if I were to play devil’s advocate and assume I was an RIAA member wanting to stop campus sharing, it seems just scaring campuses into blocking these services isn’t really a solution.

And as artists, our primary concern ought to be that these responses aren’t doing what we most desperately need: establishing a real business model and promotional possibilities for emerging distribution online.