RIAA Changing Its Tactics -- An Economic Decision

It was reported by the Wall Street Journal, AP and other news sources today that the RIAA plans to stops its mass lawsuits against consumers.  Instead, the music-industry group is forging agreements with ISP's that will send notices to heavy uploaders asking them to stop.  If they don't stop, then the ISP's will presumably take action, such as slowing down the abuser's connection or possibly discontinuing service all together.

The presumed rationale for this change in strategy is that mass litigation wasn't getting the right results, and that it was alienating consumers.  First, we should get one thing straight.  The RIAA has never been particularly concerned about alienating consumers, and I'm sure that attitude hasn't changed.  They didn't suddenly "see the light" and get the urge to be perceived as a kinder, gentler enforcement agency.

This is about the money.  Litigation is very expensive, and the RIAA has not won every time it's been pushed to the wall by a defendant.  A couple of high profile losses (such as the Foster case in 2006) probably emboldened some defendants.  That means that the RIAA actually has to go to court and prove their case sometimes, and that gets very expensive.  In a pure cost-benefit analysis, the RIAA (and its member labels) probably realized that the aggressive tactics simply aren't economically efficient.

Also, the ISP's are apparently more willing now than in the past to cooperate with the RIAA.   The ISP's traditionally had no interest in alienating their customers in order to help the music industry.  The DMCA protects ISP's from liability for infringement by their users.  So, why would they do more than what is legally required?

One possible answer is that ISP's are expanding beyond being simple data pipelines and instead more actively participating in content distribution.  I imagine their plan is to somehow convert the illegal music traffic into legal music traffic from which they can extract a profit.  It's even possible that some new models for content distribution could emerge as a result.  

Ultimately, perhaps there is a way to monetize P2P activity.  That's been talked about for years; maybe this is the first step in getting serious about doing it.  With social networking being so prevalent and increasingly important in the digital landscape, it makes sense to integrate legal content distribution models into online communities.  ISP's might be in a good position to do that.

Bottom line -- the RIAA is changing tactics because the member labels don't want to keep paying for lawsuits.  Under these economic conditions, absolutely everyone is looking to cut every cost possible.  But this belt-tightening might ultimately lead to better distribution models and perhaps even more revenues and profits.  

Sometimes people don't do what's good for them until they're forced to.  Tough economic times may create a new wave of innovation and efficency  -- especially in the digitial media industry where the cost of distribution is potentially so inexpensive.  If every consumer is also a distributor, and the content owners are getting paid, I would call that a very efficient distribution model.

A Seemingly Successful Experiment in Paid Social Media

This is a really interesting article about a recent social media campaign undertaken by Kmart. In short, Kmart gave a $500 gift card to each of 6 influential bloggers and told them to go shopping at Kmart and then write about their experience. There was no censorship or editing, and the bloggers each disclosed the arrangement in their blog entries.

According to independent metrics, the campaign significantly raised Kmart's online profile. That's about the best 3 grand that company ever spent.

I don't think this strategy will work for everyone, and it could certainly become quickly overused. Plus, the bloggers run the risk of losing popularity if their blogs are viewed as corporate vehicles. With that said, it sure shows the power of social media and citizen journalism. I believe there are plenty of ways to capture that power without such a direct commercial inducement.

Digital public relations which seamlessly injects a product, service or brand into the collective digital dialogue is the model that makes sense. Companies that can provide an effective service in this regard should be very successful.

Satriani v. Coldplay - A Battle Worth Winning

Interesting news on Joe Satriani filing an action against Coldplay for copyright infringement.  He claims that the Coldplay hit single, Viva la Vida, infringes on his 2004 release, If I Could Fly.  I'm no musicologist (although I did graduate from Musicians Institute's guitar program), but I listened to both tracks and I can definitely see his point.  I anticipate there will be a settlement on terms that none of us will ever hear about.

From a business standpoint, the lesson is something I tell my clients all the time.  Litigation is expensive so make sure you're launching a battle that's worth winning.  In this case, the Coldplay song and album have been massively successful, and just got nominated for a total of 7 Grammys, including Record of the Year, Album of the Year and Song of the Year.  This is definitely a pie worth having a piece of.  If the record had sold a few thousand copies and then died, I imagine Joe's lawyers wouldn't have done much more than write a nasty letter, but when the stakes are high, the big guns come out.

It's a good lesson to learn and understand.  Lawsuits are not cheap or fun.  Before going down that path, make sure you can afford it (both financially and emotionally), and make sure you're chasing a prize that really warrants the risk.

Prop 8 - The Musical Shows The Power of New Media

It's been only a day, and Marc Shaiman's creative musical take on Prop 8 (the California anti-gay marriage initiative which was voted into law last month) is today's "next big thing" on the Net.  In less than 24 hours, the 3 minute video featured on funnyordie.com has already been seen almost 1.3 million times.  Those are pretty  impressive numbers when you consider the marketing budget is essentially $0.00.

This shows the power of viral marketing combined with a ubiquitous, instantaneous distribution system.  This media power is available to everyone, and we have barely begun scratching the surface of what can be accomplished with it.

Of course, Shaiman's musical features Jack Black, John C. Reilly, Neil Patrick Harris and a whole lot of other popular stars.  That certainly drives the huge appeal.  But all of that star power (not to mention Shaiman's own brilliant material) was spread through the power of the medium.  Without a digital media infrastructure, Shaiman would have had to make DVD copies and put them in a rack at Whole Foods Market (or some other establishment where his intended audience was likely to see it).  In other words, he probably wouldn't have bothered to create it at all.  But the ability to instantly make it available to the world is really what made it worth doing.  The digital media infrastructure facilitated and perhaps even inspired the creativity.

Of course, it is the power of this medium, and the fact that it is literally in its infancy, that caused  the WGA strike and may well lead to a SAG strike in the not too distant future.  Everyone sees where the entertainment business is going and they don't want to be left out in the cold.  Both sides probably have some valid points, but they might well kill the goose before it ever lays its first golden egg.  After all, over a million people may have already viewed Prop 8 - The Musical, but it certainly hasn't generated enough revenue to begin to pay for the production (if everyone hadn't been working for a cause instead of for their normal paychecks).

Mobile DTV Takes Another Step

A more technical (and very insightful) take from Greg Tarr on the importance of this week's technical developments in the Mobile DTV area:

Mobile DTV Takes Another Step: "

A seemingly minor yet important item came out of the Advanced Television Systems Committee (ATSC) this week in regard to the forthcoming Mobile DTV...

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Mobile DTV

This article from Broadcasting and Cable discusses how the technical hurdles have been cleared to allow digital television to be broadcast to mobile devices.  This allows manufacturers to start building the hardware that will put television in everyone's pocket.  This is a significant development for the media industry.

It marks another major milestone in giving consumers the content they want when and where they want it.  Obviously, when used in conjunction with other mobile technologies, the commercial possibilities are huge.  From a business standpoint, the end game here is to make consumers' buying behavior into a virtually seamless experience with their media usage.  See it, want it, get it -- anytime, anywhere.

I'm not saying that we want to encourage people to buy things they don't need or can't afford (I think there is too much of that going on already).  However, access to information about products and services should be linked (both in time and proximity) to the ability to actually obtain those products and services.  I think that is becoming a quality of life issue for this century.  Clearly, technology is the key to achieving that goal.