MPAA and RIAA Legal Wars are Really a Delaying Tactic

The Atomic-Music Bomb

Update from the Underground Laboratories of the RIAA

But here's the real scoop of the day: the RIAA doesn't really care if it wins or loses. The goal here is to keep losses at a minimum while the industry prepares high powered alternatives to MP3 and the Napster clones.

Recording Industry Association of America (RIAA) knows it can't actually win the battle over mp3 and other copying technologies. It's pretty certain it can deal a death blow to Napster and settle for millions with the likes of mp3.com.

But the RIAA can't defeat the millions and millions techies and music fans who will always be able to make copies and trade them over the Internet. While Napster grows busier by the day, record companies can fight a legal battle, frighten consumers and attempt to stem the tide of on-line trading. But they can't actually win with a frontal assault.

What the recording industry needs is a secret weapon. An atomic-music bomb!

And one is currently under development. Actually, dozens are under development and several are actually available right now. What was missing was a way to deploy the nuke. A kind of "long range" music missile. But that's going to be ready in a few weeks

Several secure music formats exist, including Liquid Audio and Windows Media (which is now supported by Napster.) MP3 is the main format swapped through Napster and Gnutella and searched for via engines such as Audiograb and Scour. What if there was a way of harnessing the popularity of MP3 while still being able to track and earn money from listeners?

For the past two years, the major labels have been preparing to sell authorized downloads of popular recordings via services that are expected to begin rolling out this summer. The industry is also quietly devising plans for other digital services, some of which are based on the same fundamental principle behind Napster.

San Francisco technology company Trymedia has developed one very intriguing possibility. Here's how it works: a special digital watermark, named ActiveMARK, is embedded into the MP3 sound file. Listeners can download and hear a low-quality trial version; if they want to hear the full version they are directed to a website to register. Registration might involve payment or simply handing over an e-mail address. When the user passes on or swaps the MP3 again, the process starts over, with the next listener being required to register as well.

Research has shown that many traders would be willing to pay a small fee for downloading music, if the process were easy.

The key to the "atomic music bomb" is to get it inside the system. Tools like ActiveMARK are likely to proliferate in future as they allow record companies or artists to monitor the usage of their music and stay in touch with fans.

"This isn’t a question of survivability. It’s a question of the market for our products vastly expanding."      - Strauss Zelnick Chief Executive of Bertelsmann AG’s BMG Entertainment unit

The music industry hopes to build a music store into each personal computer. And then to turn each user into a sales representative for the industry. BMG has been working for several years to structure a commercial download system that uses both retail channels and sales efforts by music fans themselves. Fans could pass on downloaded albums through e-mail or put their downloads into Napster-style file-sharing directories.

Music industry visionaries see a future where fans could start a chain of sales and then reap rewards, such as early access to new music or commissions or credits toward future music purchases. Sort of a multi-level music marketing machine.

The detonator to the atomic music bomb is the tamper resistant coding and ease of use that would enable most fans to "pay for play."

The guided missile will be industry marketing. Some blockbuster recordings will likely be exclusively available — or available first — in protected computer formats. If there is no CD there will be no ripping - no illegal trading. And early releases are likely to be free! Only later will you pay the piper.

This is all well and good, but the WIZARD wonders if this might limit the transfer music enough that fans would lose interest. We are still convinced that file active sharing can be a tool to the industry.

The WIZARD believes the real answer still lies in royalties being paid by users of a slick service like Napster. Don't limit trading. Give fans a pay service that also facilitates purchase of CDs and on-line music. Make fans pay to log on, but give value for the service.

This industries plans are still like prohibition. Go ahead, make trading mp3s legal and then collect a little money on each transfer. Sony Music Entertainment and Universal recently announced a joint venture to develop just such a service. Under the Sony plan consumers would pay a flat fee for as much music as they wanted.

The WIZARD believes this approach would reduce the incentive for piracy. But most record executives aren't ready to get on board. EMI’s Ken Berry says his company is interested in such new models but has “concerns” about schemes that would reduce the price of music.