October 5th, 2007
Does suing customers make business sense?
The RIAA is feeling pretty good about itself this morning.
Not only did it win a $220,000 civil judgement against Jammie Thomas of Minnesota for using Kazaa, but mainstream media reported she was “found guilty.”
The lobby had won smaller settlements against thousands of people before this. Ms. Thomas was the first to test the claims in court.
So, has the RIAA won? Well, music sales are down, and have been falling for seven years. Legal downloads are up, but total revenues for the industry have fallen 25%, despite rising prices which now reach $20 for a single CD at retail.
Add to that the cost of the RIAA lawyers. Then consider an online poll taken even today showed more people believe downloading music is not a crime than believe it is, 50-45%. And consider the efforts of more-and-more musical groups to break away from the RIAA’s clutches and market music on their own.
Let me put it this way. I doubt this year’s Christmas party at the RIAA is going to be as fancy as the one thrown in 1999. Not if the accountants have anything to say about it. (They usually do.)
The whole point of open source and the Internet business model is that you don’t have to sue your best customers in order to make a profit. The fact that many businesses feel compelled to do this shows just how revolutionary that model remains.
Fact is business models don’t change very often. The last such change with similar impact was the branding revolution made possible by the mass production techniques of the late 19th century. I’ve got another song lyric about that here:
“Why it’s the Uneeda Biscuit made the trouble. Uneeda, Uneeda put the crackers in a package in a packet. The Uneeda Biscuit in an air-tight sanitary package made the cracker barrel obsolete. Obsolete.
Obsolete. Obsolete. Obsolete.”
Remember that The Music Man, from which this lyric was taken, appeared almost 50 years after the business model it celebrated, alongside other musicals extolling mass production and merchandising like The Pajama Game.
Thanks to this blog post, you can start writing that great musical about Internet business models now. I hear Harry Connick Jr. is available.
Just don’t publish it as an album through the RIAA.
Dana Blankenhorn has been a business journalist for 30 years, a tech freelancer since 1983. You can follow Dana on Twitter. See his full profile and disclosure of his industry affiliations.
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| 10/05/07
