Best Of '99: Digital Nation: RIAA Turns A Corner On Net Piracy

Association President Hilary Rosen says market share is now the music industry's main online concern.

[Editor's note: Over the holiday season, SonicNet is looking back at 1999's top stories, chosen by our editors and writers. This story originally ran on Tuesday, May 11.]

Staff Writer Chris Nelson writes:

The music industry is donning a sexy new face for cyberspace — and it's such a change from its familiar mug that some in the online arena may not recognize it.

Gone are the worried eyes, fearful of MP3 piracy. Instead, there's the confident, teeth-gritting grin of a Wall Streeter determined not to lose in the marketplace.

"The majors are going to be aggressively in [the online world] in a big way," RIAA President Hilary Rosen said Tuesday (May 11). As chief executive officer of the Recording Industry Association of America, Rosen is, to many, the actual face of the music industry.

This time last year, the RIAA hung onto a careening Internet with white knuckles after the organization was caught off-guard by the MP3 phenomenon. Legal teams filed lawsuits against unauthorized MP3 websites, seeking $100,000 for each song illegally posted.

Now the industry has turned a philosophical corner.

Piracy obviously still exists, Rosen said. "But I think there is enough enthusiasm for the legitimate market that we can safely say that piracy is not out of control."

Setting copyright bandits on the back burner frees the RIAA to figure out how major labels can maintain a dominant presence in a largely untested online marketplace.

Rosen subscribes to industry analyst Mark Hardie's theory that the online music world is on its way from the piracy era into the promotional era, in which the Internet's chief use will be publicity. It's an enticing road to ride: After the promo era, according to Hardie, comes the commerce era, in which the digital delivery of music will be worth $1.1 billion in the U.S. by 2003.

Rosen vows not to let the traditional music industry be left behind by cyber-savvy competitors — the way, she says, major networks missed the boat on cable TV, and telephone companies were caught snoozing on cellular technology. "The record companies are not going to make that mistake with the Internet," she said.

The shift explains why many in the industry didn't see last week's announcement that Universal Music Group would begin selling music by download this fall — about six months before copyright protection standards are set to be in place — as breaking the ranks of a united front.

Leonardo Chiariglione, executive director of the industry's Secure Digital Music Initiative, said music giant UMG's plan will be a valuable trial for the industry. He stopped short of calling the company a guinea pig.

"If the Universal protection system is robust and can be played on a portable device, that's great — we don't need anything else," he said.

It's conceivable that the online deals and alliances that are heralded almost daily soon will be welcomed by major labels.

If a corner actually has been turned, the next time a band decides to release its single online — as Public Enemy did recently with "Do You Wanna Go Our Way???"

(RealAudio

excerpt) — or a singer wants to issue online music for a tour, label executives might see it as one step closer to Hardie's predicted commerce era.

The challenge ahead is not only to achieve a formidable online presence. To Rosen, another big hurdle is making online music attractive. After all, when there's no physical product to sell, music may begin to seem disposable.

"Once art can be reduced to ones and zeroes, how do we continue to promote the value of the creativity?" she asked.

It's a question she'll be answering for some time to come.

* * *

The Grateful Dead announced Tuesday (May 11) a policy supporting,

under certain guidelines, fans who trade MP3s of the band's fan-recorded

live performances. Webmasters are prohibited from charging for downloads,

from soliciting advertising for their websites and from selling data

about fans downloading the songs, according to band lawyer Eric Doney.

The policy is thought to be one of the first of its kind. ...

Songs by The Prodigy's Liam Howlett, the Pixies,

Bauhaus, the Cult, the Charlatans, Love and

Rockets, The Fall and others soon will be available for

purchase as downloadable Liquid Audio files from England's Beggars

Banquet label. Under a partnership with Liquid Audio announced Monday, the label revealed it will offer more than 2,000 tracks for

sale online. ...

Pennywise have posted three MP3 tracks from their Straight

Ahead (June 8) album on the band's official website (www.pennywisdom.com).

The title track, "U.S. of Me" (listed under its original title of "My

Own Country") and "Greed" are available in the "In the Studio" section

of the site. ...

Billboard debuted its "Top Internet Album Sales" chart last week.

The Cranberries' Bury the Hatchet landed at #1. The index

tracks online disc sales from retailers such as CDNow and Best Buy online,

as well as labels such as Grand Royal and official artist sites. ...

Beginning this summer, Liquid Audio tracks will be compatible with the

recently launched RealJukebox digital music player, according to a Liquid

Audio spokesperson. The program already supports MP3, Real's G2 and the

a2b music formats. ...

The music industry's Secure Digital Music Initiative (SDMI) wrapped up

its latest meeting last week in London. Executive Director Leonardo

Chiariglione said the collective is on target to have copyright protection

standards for portable digital music players by June 30.