How do you measure the success or failure of the RIAA? (I have a few ideas).
I personally see the RIAA as a massive landgrab. Primarily, they attempt to curry favorable treatment from legislators, and subvert traditional aspects of copyright law via infinite extensions. They win the passage of favorable laws against consumer fair use and technology development, all the while avoiding legitimate economic competition.
In some arenas, the RIAA has been extremely successful in "framing the issues" for debate. Think about Napster, P2P, etc. There was hardly any discussion on the refusal of the music labels to address the growing demand for internet based digital music; Instead, the industry chose to placate offline retailers. Their poor business judgment all but ensured the rise of P2P. We haven’t even broached radio consolidation, formulaic product, or the over-emphasis on mega hits over the long tail.
Yet in terms of this debate, one must concede the RIAA has successsfully defined the terms of arguement. For example, consider this December 14 WSJ article by Ethan Smith the improvement in Warner music’s financial condition:
"Warner Music Group posted a narrower loss for the 10 months ended Sept. 30, but the company’s continuing red ink underscores the difficulties, such as rampant piracy, facing the global music business. "
The default belief system is that its "piracy," and not decades of a mediocre (and often flawed) business model — rather poorly executed at that — which is the root of all their problems. Recall that the same tactic was used about home taping — it was killing the music business in the 70s.
From a PR perspective, the RIAA has been extremely effective at framing the debate. "Piracy" seems to be the focus of all discussion. All other issues — price fixing, lack of comeptition, corruption, cheating their own artists, etc., are mostly ignored.
The RIAA Lost Every Lawsuit in 2004
Lots of stories get written when the Recording Industry Association of America sues people, but not much gets written about the aftermath of those suits.
There should be: In the last 12 months, the RIAA lost a landmark suit against Grokster (essentially legalizing peer-to-peer software), lost a suit to Verizon (holding that it did not have to provide names of its subscribers who the RIAA wanted to sue), and has yet to actually win against any of the thousands of individuals it has sued in court (some of the cases have been settled out of court, most are still pending). Suddenly, the RIAA isn’t looking so much as devastating as it does merely pathetic.
Still, while the RIAA is no longer the legal darling that successfully shut down Napster, it’s done an enormous amount of damage to the technology world (not to mention basic freedom) since it launched this crusade, and the group is far from finished. But here’s hoping some intelligent judges, tech-savvy lawmakers, and an activist public will continue to fight the power in 2005.
Truly incredible. But perhaps the best way to judge whether the RIAA is successful or not comes from their own site:
The Recording Industry Association of America (RIAA) is the trade group that represents the U.S. recording industry. Its mission is to foster a business and legal climate that supports and promotes our members’ creative and financial vitality . . . In support of this mission, the RIAA works to protect intellectual property rights worldwide and the First Amendment rights of artists; conduct consumer industry and technical research; and monitor and review state and federal laws, regulations and policies.
So how successful is the RIAA?
By their own measures, they have achieved some of their goals — at least in the short term. They have moved industry friendly legislation forward. And as mentioned above, they have successfully framed the debate over P2P and other new technologies.
Over the longer haul, however, they have turned their industry into one universally disliked by its clients and artists, alienating a huge percentage of their consumers; They have missed many many business opportunities and focused on the wrong issues, overemphasizing the glam of P2P litigation, over the nitty gritty hard work of counterfeit enforcement. Lastly, they have failed to adapt to the rapid pace of technological changes.
If their goal is to "support their members’ financial vitality," than we will not fully know the answer to this question for some time to come. But I have a sneaking suspicion that, without a significant shift, the answer will be not very well.
The Long Tail
Wired Magazine, October 2004
Warner Music Posts Narrower Loss
THE WALL STREET JOURNAL, December 14, 2004; Page B6
Best Sign that the Legal System Just Might Work: The RIAA Lost Every Lawsuit in 2004
Mobile PC Mag, 10:40 AM – Monday, December 6 2004
Once again, guest poster Rob Fraim delivers some market related humor:
Back in the 19th century when I started in this business I had to go to the company home office for several weeks of training. On one of the final days all of the rookie brokers were required to make a presentation to the class – a speech regarding the business, goals, aspirations, motivation, blah, blah.
“Since so much of the new-guy training back at the firm where I started in the business was about sales stuff (rather than teaching us anything about investing) I wrote a song. I had my guitar with me and so instead of giving a yada-yada speech I sang my song.”
Cold Caller Blues lyrics:
This may have gotten overlooked last week — if you follow currency, sentiment, or precious metals, its an interview worth reading.
Let me once again mention that the Online WSJ is well worth $40 a year — and it also includes access to Barron’s.
Here’s an excerpt of the interview:
Gold prices have surged 50% since early 2002 to more than $450 an ounce, and some market watchers are brazenly slapping a $1,000 price target on the metal for the near future.
That crystal-ball forecast seems heady. But John Bridges, a senior gold analyst at J.P. Morgan Chase & Co. since 1995 and author of "The Golden Goose" newsletter, says gold has already hit that level — even passed it — when adjusted for inflation. But he still has "problems with gold as an investment."
And it’s not all about the flailing dollar. Other factors, some real (supply-and-demand) and some eccentric (Indian thoughts of the afterlife) are playing a role, says Joseph Foster, portfolio manager of the $290 million Van Eck International Investors Gold fund, the first of its kind in the U.S. that dates back to 1956. He calls gold "the ultimate form of currency."
Can gold keep shining? Is $1,000 an ounce a realistic target? And how does inflation factor in? Messrs. Bridges and Foster answer our questions.
* * *
The Wall Street Journal Online: Gold is up 14% since late 2003, but the Amex Gold Bug index (a basket of gold stocks) is down 11% from a year ago. Why hasn’t the price of gold filtered into the price of many gold-oriented stocks?
Mr. Bridges: We’re positive on gold as hedge against the weaker dollar. Even if the dollar does recover, the strain on the world’s economic system by these swings in currencies suggests having gold as insurance isn’t such a bad idea.
Gold producers are suffering quite significantly from higher energy prices. Diesel has become quite a big part of some mining operating costs — as much as 20%. Then you also have the strength of the resource currencies — the Australian and Canadian dollars and the South African rand. Even the Peruvian sol is appreciating against the dollar. A lot of these big diversified miners have operations in these countries, and that’s affecting their operations.
Mr. Foster: We went through a severe correction back in
April and May, for both gold and gold shares. They were down
substantially. If you look at the performance since then through the
end of November, the Philadelphia Gold and Silver index (XAU) is up
37%. Gold prices are up 20%. So you look over that longer time frame,
and the shares have done fairly well. They’ve significantly
Since this not anywhere else on line, and because Daniel did such a nice job with it, here’s a taste of his perspective — for your reading and investing pleasure:
1. Don’t swing for the fences; Never put it all on red.
Never, ever, let one trade determine your profit and loss for the year, or if it goes wrong, put your capital at risk. I did it once and the memory of that experience burns me almost daily. In most cases, margin should be avoided and "doubling down" a bad trade is a sucker’s bet. Most times it just pays to take the loss and move on. The good thing about being a trader is that every day there are new opportunities to make money. Just make sure you can stay in the game.
2. When the market is bad, its time to be more cautious.
Sounds obvious, but when the market is below key moving averages, unless that trade looks really enticing, it is probably better to sit on your hands. We did a lot of hand-sitting during the bear market and we survived better than most.