Current and former leaders of the RIAA seem to disagree on the efficiency of the organization’s antipiracy efforts. In a recent interview, Mitch Bainwol—the current CEO of the RIAA—said that illegal music downloading may have already peaked and is destined for a downhill ride:
“The problem has not been eliminated,” he says. “But we believe digital downloads have emerged into a growing, thriving business, and file-trading is flat.”
There is little doubt about the growing, thriving legal downloading business, as evidenced by Apple’s iTMS and others putting a serious dent in the overall music market. USA Today mentions a 77 percent increase in digital sales, though my own analysis of the numbers points to a 149 percent boost from 2004 to 2005. We do agree on about a 7 percent digital marketshare, though in my case, the figures don’t account for subscription services like Napster or newcomers like URGE.
But filetrading analyst company BigChampagne reports a 15 percent increase in media-swapping users year-over-year, up to “nearly 10 million people” on the sharing networks at any given time. It’s unclear whether that’s a US-only figure or a global one, but it’s a respectable chunk of the broadband population either way.
Taken together in a generous interpretation, you could say that illegal downloading may be reaching market saturation where the people who want to swap files illegaly are already doing it and the rest of us simply have no interest in that activity. Less charitably, I could point out that 15 percent annual growth means doubling the number of users in five years, and Mr. Bainwol did avoid the inconvenient issue of the number of files actually traded. If I say that the current lawsuit strategy hasn’t been particularly successful, I’d have support from former RIAA CEO Hilary Rosen:
[F]or the record, I do share a concern that the lawsuits have outlived most of their usefulness and that the record companies need to work harder to implement a strategy that legitimizes more p2p sites and expands the download and subscription pool by working harder with the tech community to get devices and music services to work better together. That is how their business will expand most quickly. The iPod is still too small a part of the overall potential of the market and its propietary DRM just bugs me. Speaking of DRM, it is time to rethink that strategy as well.
Ms. Rosen touches on several issues we find troubling here at the Orbiting HQ, notably DRM restrictions and the value of legal downloading as a tool against piracy. Of course, it would have been nice if she had woken up to this worldview a little earlier in her service with the RIAA, but better late than never as it never hurts to have (former) insider support on important issues like these. Now, perhaps she can go have a little fireside chat with her old friends the music label heads…