The Impeccable Logic of the RIAA

Here’s a site with a chart from RIAA, corrected and evaluated by Michael DeGusta.

Back in the 4th installment of “They Hate Us For Our Freedoms”, I suggested that the RIAA knew exactly what they were doing — fighting a scorched-earth rear-guard action against hopeless odds. I think these charts make that clear.

The common theory explaining the drop in music CD sales — held by all who are not in thrall to RIAA — is that we are allocating our scarce entertainment/discretionary time/dollars to other things. We play video games. We surf the web. We spend less time listening to music, and less time doing things that are enhanced by listening to music, like reading books. I buy as many books as I ever did, but they tend to stack up unread while I attend to the 1200 items on my RSS feed. The Internet is destroying the old businesses, not just recorded music but also radio in general, TV, books, newspapers, and magazines, and it’s not through piracy or “information wants to be free”. It’s because there’s only so many entertainment dollars to go around, and (more importantly) there’s only so much time available for entertaining ourselves. More and more of that time is spent online.

One reason for small-scale music piracy — students downloading songs they like — is that the marginal value of a song to the downloader is close to zero. We’re not talking production costs or reimbursement of the artist here, that’s the supply side of the supply and demand curve. We are talking about the demand curve, and this demand curve is nearly vertical, and nearly zero. I may like a song, but it’s not going to contribute that much to my day, not the way it did thirty years ago. What’s it worth to buy a newspaper to read on the bus? Certainly not the $1.50 they want to charge, not when I can gMail or Tweet or Farm my ville on line while riding, or at least play Angry Birds. When you look at it from the standpoint of how much comparitive satisfaction I can get, you can see why those businesses are dying.

The big record companies are laagered up on a hilltop under the RIAA banner, and they know they are doomed. They know that even if a corporate entity with their logo exists five years from now, it won’t be them. It might be some nimble purveyor of services to what used to be called “indie bands” and which by then will be called “bands”. It might be some administrative group, hired to handle download sales of video game soundtracks. Whatever it is, it won’t be them, because their organizational structure and personal skills and business methods are obsolete. Nobody needs them. Nobody wants them. Customers and clients are fleeing as fast as they can. Under the circumstances, what’s a doomed executive to do? Exactly what the RIAA members are doing. Commenters on the RIAA approach to life are always horrified, and ask questions like “why would you want to treat your customers that way?” The honest response would be, these people are fast becoming not our customers, there’s nothing we can do about it, and carving a slice of meat off their butt as they slide out the door may be the last sustinence we will get from them under any circumstances.

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3 Responses to “The Impeccable Logic of the RIAA”

  1. Kurt Says:

    Neill Gaiman’s fiance, the singer Amanda Palmer, broke with recording companies, sold a fair number of copies of her first solo album (which I have and, in quirky moments, enjoy quite a lot), and is selling her new album on her website using a pay what you can model–after having set a precedent that art should be free but artists have to eat, so she also gives concerts with sliding fees, or online concerts with donation buckets, and has been known to hold online auctions for album and concert promo paraphenalia. She’s not going to get rich, but she clearly loves what she’s doing and doesn’t seem to care that her man is rich. A much smaller % goes to the music industry, a larger % goes to her. It’ll be interesting to see if that sort of Bohemian approach–still capitalism, but a sort of household instead of corporate variety. Otherwise, music companies are turning to reality TV for their dollars.

    • FoundOnWeb Says:

      Your note triggered a whole avalanche of stuff I’ve been reading and should write up just for me:

    • Very few performers ever made it really big. Like authors.
    • Cory Doctorow gives away his books. When he first started everybody said, “it’s OK for you, you’re an unknown with nothing to lose.” Now they say “It’s OK for you, you’re a big name author.”
    • One of the other blogs talks about having a thousand dedicated fans, and that’s all you need to make a living.
    • Humble Bundle has a pay what you want event every year, keeps part, and gives a chunk to charity. Last year it was $million to charity.

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