They’ve been quick to criticise attempts by rivals to provide on-line access to music but exceedingly slow to come up with an alternative. Now the five major labels, representing 85 per cent of the industry, are readying their own digital distribution and moving rapidly to unplug all competition.

The Recording Industry Association of America (RIAA), representing over 600 record companies, is going after music pirates with specialised computer hacking software which can delete illegal files or prevent downloads using a type of denial of service attack.

The industry is also pushing law changes to embed copy-protection controls in nearly all PCs and consumer electronic devices believing this will speed up the official distribution of movie and film content over fast internet.

Now after several devastating blows to pioneering on-line outlets and further court action in progress the American Justice Department, the European Commission and independent on-line players are asking if this action isn’t in fact anti-competitive.

This year pioneering sites MP3.com and Napster have fallen into mainstream ownership and copycat sites Scour and Aimster have been shut down. Now MusicCity and its Morpheus package, Kazaa’s Media Desktop and Grokster are facing court action for sharing music, movie and software files. In recent months, more than 34 million versions of these programs have been downloaded from CNET Download.com.

MP3.com, which opened a Pandora’s box on digital downloads four years ago, achieving a database of a million songs from unsigned bands, is facing a radical restructure. The site, which has 37 million registered users, fell foul of the major labels when it launched its My.mp3.com file-swapping service.

Last year French media conglomerate Vivendi Universal sued for copyright infringement winning $118 million before buying the company. It’ll now use MP3.com technology for its own on-line subscription.

File-swapping pioneer Napster was also sued. The RIAA forced it to pay $US26 million for unauthorised use of music and an advance of $US10 million against future royalties. Napster, temporarily shut after being sold to European recording giant Bertlesman (BMG), will also be resurrected as a mainstream service.

Since Napster’s decline the on-line community has looked elsewhere to feed its appetite for free music. Consulting firm Webnoize estimates 3.05 billion files were downloaded during August using FastTrack, Audiogalaxy, iMesh, BearShare, Limewire and Gnutella software. That compares with 2.79 billion files downloaded through Napster at its peak in February.

Analyst Jupiter Media Matrix says Word-of-mouth, mainly from a younger (17-24 years) male dominated audience is driving the new round of exponential growth for next-generation file-sharing services. Users of alternative software grew a massive 492 percent, to 6.9 million between March and August.

In preparation for mainstream services the RIAA has reached agreement with the bulk of songwriters and music publishers MusicNet (RealNetworks, Warner Music, EMI Group and Bertelsmann AG's BMG) and Pressplay (Vivendi Universal and Sony Music) will launch later this year but now the US Justice Department is wondering whether their owners aren’t going too far to ensure their market dominance.

Meanwhile music sales slumped five per cent in all major markets, except France and the UK during the first six months of 2001. New Zealand is no exception - some music chains claim sales have slid about 2000 units per month. Illegal CD copying and on-line file swapping are being blamed.

The Recording Industry Association of New Zealand (RIANZ) agrees revenues are being undermined by rampant illegal copying and is gearing to counter this with a school’s campaign and court action.

In the US the National Association of Recording Merchandisers (NARM) says record companies have contributed to the problem by failing to provide attractive retail alternatives to file sharing. It says retailers could have been competing with the trend but instead CD prices are increasing and consumers are "engaging in CD-burning and file sharing on a massive scale."

While industry paranoia highlights an uncomfortable trend toward dishonesty, contributing factors are often overlooked. MP3 rose to global prominence because major labels didn’t support ‘world music’ or reinvest profits to foster and encourage new artists beyond a tight radio-play prescription. They have led by example with their technology and the pay for play process.

Attempts to shut down entrepreneurial on-line sites by refusing access to legitimate content or crippling CDs so they can’t be copied for personal use will only result in a major backlash from consumers. Only ethical education and peer pressure will protect artist incomes and make it uncool to buy from commercial counterfeiters.

The cost of CDs is far too high for a piece of plastic worth little more than $1 a unit. Even parallel importing has made little difference to local pricing ($25-$36). Perhaps authorised web sites or retail outlets should offer legitimate do-it-yourself compilations?

The major labels also need to assume some cultural responsibility for the nations where they make their profits or at least align with labels that do. Consumers and artists want a better digital deal.

Email: wordman@wordworx.co.nz
Web: http://www.wordworx.co.nz