The RIAA, the primary trade association for the American recording industry with a $27.7 million annual budget, is enjoying a string of recent political and legal victories.
In last year's Grokster case, the U.S. Supreme Court unanimously overturned a lower court's ruling that favored file-swapping networks. Federal judges have been upholding stiff fines against individual file swappers, and the online marketplace for music is booming.
Congress has enacted new laws backed by the RIAA that target peer-to-peer pirates with federal felonies, and a Republican administration is talking up the need for even stiffer ones. (Last year's new felonies have already led to jail time for some).
Yet obstacles remain. A draft proposal in the House of Representatives to tighten copyright law has still not yet been formally announced--possibly because of opposition by technology firms--since CNET News.com wrote about it more than a month ago. A federal appeals court has effectively blocked a move by the recording industry to ask the Federal Communications Commission to outlaw certain digital radio receivers. And Sen. Ted Stevens, the Republican chairman of an influential committee, has publicly expressed skepticism about an RIAA-backed proposal that he worried would hurt his ability to use his iPod.
Mitch Bainwol, RIAA's chairman and CEO, and Cary Sherman, RIAA's president, recently visited News.com's San Francisco offices to talk about the music industry, Congress, and digital rights management. (The two rank among Washington's best-paid lobbyists, with a combined salary of $1.85 million in 2003.) Following are excerpts from the conversation.
Q: How is the digital music marketplace looking from your perspective?
Bainwol: Digital sales are rising at a value that is larger than the decline in physical sales. We went through a pretty extraordinary time (recently). What you're seeing now is proof of that exercise. The promise of the digital marketplace is being realized. There's new optimism.
Q: How much of that is because of the Supreme Court's ruling in Grokster and your lawsuits against individual file swappers?
Bainwol: Our view of Grokster is that the court struck the right balance. If you (download music) illegally, there are risks--whether they are legal or viruses.
Sherman: I'm either at risk, or I get out, or I go legit. There are a number of conversations happening about "how do I go legit?" We can't talk about what's going on, but there are a lot of conversations. There's a lot to be said for converting these businesses.
Q: Do your view your lawsuits, even ones where you sued a 12-year-old girl or a Boston grandmother, as a success overall and do you think the process is working?
Sherman: Yes. We're feeling pretty good. There will be the opportunity for business models that are consistent with P2P networks (such as demo versions or low quality). There have been a lot of conversations recently about ad-supported models.
Bainwol: Now there is additional legal clarity.
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