TCS Daily


Seizing the Pre-Pubescent Pirates

By Fraser Seitel - September 17, 2003 12:00 AM

"We really look at it as stealing, because to us, it's black and white. Either you pay for it or you don't."                          

-- Nelly, Universal Records artist

"Are you headed to junior high schools to round up the usual suspects?"       

-- Sen. Dick Durbin, D-Ill

The mood wasn't exactly hospitable this month, when Recording Industry Association of America (RIAA) President Cary Sherman appeared before a Senate Judiciary Committee hearing.

 

Some senators were downright peeved that the recording industry's legal assault on 260 music file-swappers had resulted in well-publicized lawsuits of 21st century pirates, from a 12-year-old New York girl who lives in a public housing project to a septuagenarian Texas grandfather.

 

Of course, there's little question that the record companies were within their rights. Downloading music without paying for it is against the law and has, according to the industry, cost companies and artists millions in lost revenue. Besides, if you wrote a book and somebody downloaded it for nothing -- you, too, would be plenty teed off (believe me!).

 

Now, we believe in free markets -- but not that "free!" The decision to "give away" intellectual property -- which is how bands from the Grateful Dead to Widespread Panic to The String Cheese Incident to Phish got famous -- ought to be up to the artist, not the consumer.

 

But -- and it's a big "but" -- there's a right way to seek consumer redress, and there's a wrong way. And here, as Sen. Durbin rightly points out, the recording industry has been way off base.

 

Siccing 700 rabid lawyers to invade the privacy of a posse of prepubescent potential purchasers isn't the best way to win fan loyalty. Indeed as one Internet swapping service president put it, the recording companies "in their infinite wisdom have decided to not only alienate their own customers but to drive them into bankruptcy through litigation."

 

Already, irate music aficionados are congregating on the newly created suedbytheriaa.com Web site to protest the heavy-handed tactics of the Time Warners, EMIs, Bertlesmans and Sonys. In other words, in consumer relations terms, there's gotta be a better way. Like f'rinstance.

 

Cut the Cost of CDs

 

The key to proper public relations is thoughtful action. Performance must precede publicity.

 

So instead of suing the bejeezus out of their customers, the record companies ought to demonstrate that they have their fans' best interests at heart by reducing the exorbitant cost of CDs.

 

There's a reason CD sales have plunged steadily over the past three years, and it isn't all due to music downloading. In fact, since the start of the industry's 2003 "get tough" legal policy, between June 15 and August 3 the decline in CD sales accelerated.

 

Many music downloaders justify their actions by claiming that CD costs "are outrageous." In 2002, the industry settled a lawsuit with 43 states over charges the record companies conspired in the 1990s to set minimum prices for CDs.

 

The fact is it's outrageous to charge $22 for a CD, whether you're talking about Sarah Brightman or Li'l Kim. If CD "raw materials" cost well south of $10 -- as they do -- then why not accommodate cash-strapped music buyers and lower prices, especially if it will revive slumping sales? That's just simple, sensible economics.

 

Accordingly, last week in a positive sign, Universal Music Group announced it would slash the wholesale price of its CDs and recommend retailers lower prices by 30%. In a less positive sign, the other major record companies pointedly refused to follow suit.

 

Too bad.

 

Announcing cutbacks in CD prices would make more palatable, i.e. "provide cover," for the industry's ongoing all-out legal assault on Internet privacy.

 

Package More Individual or Two-Song CDs

 

The best public relations solutions are creative solutions. Anybody can sue. But not everybody can think creatively -- come up with innovative answers to consumer concerns.

 

In the case of music downloading, file swappers claim that since most CDs don't contain more than one or two good tunes, plunking down $22 bucks for 10 unwanted songs is a waste. So they illegally download the one song on the CD they find appealing.

 

In response, the industry ought to increase production of mini-CD singles, or doubles, or triples. In other words, keep the customer satisfied -- not to mention "buying" -- by packaging more popular songs in a more economical format.

 

Record firms must promote this production of mini-discs as a demonstration of their willingness to "compromise" with disgruntled buyers.

 

Devise an Internet Solution

 

Another time-honored PR principle is "if you can't beat 'em, join 'em." Historically, record company executives considered the Internet a threat, opting to "frustrate" its use rather than accommodate its customers' desire to use it. Such a disdainful and cavalier attitude toward customer preference helped bring the industry to its current despised state.

 

The fact is that just as the vinyl record gave way to the cassette and then to the CD, downloading music from the Internet is here to stay, whether Mr. Bertelsmann or Mr. Vivendi or Mr. Time or Mr. Warner like it or not. So if they can't "beat" the downloading phenomenon -- and they can't -- record companies ought to consider ways to harness Internet technology to provide alternatives to customers.

 

Fledgling for-pay music download services, like Apple Computer and Buy.com's BuyMusic.com, have shown promise. Apple's iTunes has sold more than 10 million song downloads since its April launch. Now the industry needs to create a similar service for the majority of computer users on the Windows platform.

 

Lighten Up

 

Finally, there is the time-honored consumer relations maxim that you attract more bees with honey than with vinegar. (Thanks Mom.) Record company moguls are among the least credible players in society -- right behind used car salesmen, talk show hosts and politicians. So it makes little strategic sense for the industry to turn up the rhetorical and legal heat on consumer downloaders. Much better would be for the industry to respond with a more thoughtful and compassionate, triple-barreled PR offensive.

 

First, implement programs to deal with customer concerns about pricing and packaging,

 

Second, initiate appropriate legal action to protect the livelihood of the thousands of hard-working artists and writers and record store employees and others, who seek fair compensation for that which they produce,

 

And third, when action is taken against alleged downloading perpetrators, make clear to one and all that the goal is to "settle" for fair compensation, rather than to litigate.

 

Fraser P. Seitel, managing partner of Emerald Partners communications consultancy, is author of IdeaWise: How to Transform Your Ideas into Tomorrow's Innovations.

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