Wired blogs a report on the disparate effects working on the release of Radiohead’s In Rainbows.

Radiohead’s “pay what you want” distribution gamble paid-off despite — or perhaps because of — rampant file sharing, according to new analysis from Will Page, chief economist at the MCPS-PRS Alliance, a British rights organization, and Eric Garland, CEO of Big Champagne.

Radiohead’s notorious release strategy for In Rainbows, which allowed fans to download it for an optional price with a valid e-mail address, was considered to have been a failure by some because the album became wildly popular on file sharing networks almost immediately upon its release.

But Garland and Page’s, “In Rainbows, On Torrents” report, slated to be released on the MCPS-PRS website on Friday, indicates that Radiohead’s strategy was a success nonetheless, contributing to the album topping the charts in both the UK and United States and a wildly successful worldwide tour. When it comes to judging whether an album is a success these days, the old metrics just don’t cut it.

Now, the last sentence seems pretty obvious to me and I’m not sure if I agree that the album was considered a failure. But the rest of the article crunches some interesting numbers.  And here’s the part most sobering if you’re in the music industry:

“The venue hypothesis suggests that even when the price approaches zero, all other things being equal, people are more likely to act habitually (say, using The Pirate Bay) than to break their habit (say, visiting www.InRainbows.com),” reads one section of the report. In other words, people tend to develop habits around the acquisition of music; once they find something that works, they tend to keep using it. As the paper mentions, “The Pirate Bay is a powerful brand with a sterling reputation in the minds of millions of young music fans.”

It’s also easier to use in a lot of ways, has a better and more complete selection, and, in a key way, offers a better product!

Not everything is on the torrent networks, of course, but you have to be impressed that you don’t have to deal with DRM and often have the choice of bitrate speeds, which iTunes doesn’t have. Also, with video, you don’t get those annoying FBI warnings and legal boilerplate about how the commentaries don’t reflect the opinions of 20th-Century Fox.

In other words, the free illegal product is better than the legitimate one.

The entire British broadband infrastructure has buckled under to the international music industry and will will join with them to police file-sharing, the British press is reporting. They apparently did this to stave off the threat of legislation, which means that by their calculations the music industry had the British Parliament in its pocket.

This is the most outlandish development yet in the music industry’s insane, debilitating, destructive, petulant and useless campaign against its customers around the world:

As part of the memorandum of understanding—signed by BT, Virgin, Carphone Warehouse, Orange, Tiscali and BSkyB—a pilot three-step process will be used to identify repeat offenders.

The first step is a letter, “intended to be educational” to an internet user about the “account abuse”, the second a suspension of the account until the customers agrees in writing not to offend again, and the final step is cancelling an account.

While it’s unlikely the US would ever adopt such measures, the step shows that the industry will adopt whatever it can get away with overseas. The moves are pointless because the sheer volume of the file-sharing is impossible to stop; it’s dangerous because there’s no way to distinguish between legitimate and non-legitimate content, and policing will inevitably ensnare the innocent or disrupt their service; it promises an escalating, unwinnable arms race of technology to get around any measures the industry takes; it will leave some thousands of hapless casualties, just as the US drug war has; and for Britons it establishes a precedent where what should be a neutral information channel can be monitored for illegal activity

Slashdot discussion here.

The Guardian also has a rough transcript of a conference call on the subject with the president of British Phonographic Industry, the equivalent of the RIAA. Here’s his triumphant statement:

All major ISPs in the UK now recognise that they have responsibility to deal with illegal file sharing on their networks.

The trouble with this—and why presumably it won’t happen over here—is that it puts the ISPs in the position of policing the content of the internet traffic.

In the UK, if you’re a kid between the ages of 14 and 24, the number is about 800 tracks, and it accounts for half of your music, a new British study has found:

Teenagers and students have an average of more than 800 illegally copied songs each on their digital music players, the largest academic survey of young people’s music ownership has found.

The average digital music player carries 1,770 songs, meaning that 48 per cent of the collection is copied illegally. The proportion of illegally downloaded tracks rises to 61 per cent among 14 to 17-year-olds. In addition, 14 per cent of CDs (one in seven) in a young person’s collection are copied.

(Link via The Daily Swarm.) One would assume that British kids are less technologically attuned than U.S. ones and that the figures would be higher over here. (On the other hand, music is traditionally more expensive in Britain; will investigate broadband penetration there vs. here.)

Read further and you can see this is part of an industry push to drum up support for either subscription-based music services or a de facto tax on ISPs, to compensate the labels for the money lost to file-sharing:

British Music Rights [a UK artists group] argues that the solution partly lies in developing new legal services that make breaking copyright unappealing.

[Group capo Fergal] Sharkey [yes, that Fergal Sharkey] said: “The positive message is that 80 per cent of downloaders said they would pay for a legal subscription-based service, and they told us they would be willing to pay more than a few pounds a month.”

British Music Rights declined to release the exact amount but it is believed to be about £10 a month.

The organisation is trying to help the record companies to persuade internet service providers to sign up to a new type of music service, in which vast catalogues of songs are available for an add-on fee to a broadband package. Agreements with providers such as Virgin Media are expected in the next few weeks.

In France last week, Orange, France Telecom’s mobile arm, reached agreement with all four main record companies to provide downloads of more than a million songs to mobile phones and home computers for ¤12 (£9.40) a month.

Music sales have been falling steadily and the big companies are desperate to strike subscription-based agreements rather than rely on one-off CD and download sales.

Yesterday, the RIAA withdrew one of its many cases against legal file sharers, instead of facing the potential of getting its little legal nose spanked on the “making available” issue in front of a pesky judge. (This is the state of affairs where it can get file-sharing judgments against people without actually showing that they, you know shared files—that they just made files available.)

Details on that case, Warner vs. Cassin, here.

Today, the organization refiled the same suit against the same family, without telling the new judge it had withdrawn the old one.

Details at Ray Beckerman’s intrepid Recording Industry vs. the People blog.

Also in Billboard, the mag’s legal expert, Susan Butler, spends some time in the RIAA’s war room. Her story ($) is a dispassionate account of how exactly the organization wastes its time in a pointless, debilitating war on its own customers pursues its legal rights against wholesale copyright violations:

Deep inside the national headquarters of the RIAA is a purple room. Tinted windows shade the faces of young men and women working behind computer screens. They are part of the team investigating the illegal sharing of music files over peer-to-peer (P2P) networks, and they protect their identities carefully.

Such precautions are a reflection of the charged environment in which the RIAA is operating. The trade group views anti-piracy enforcement as vital to the recording industry’s future.

There are some …. interesting facts:

Despite the RIAA’s efforts, data suggests that demand for pirated content remains strong. A recent NPD Group report estimates that 19% of U.S. Internet subscribers 13 and older download free music from P2P services, barely less than the 20% reported when the RIAA began its user litigation campaign in 2003.

(I find the idea that file-sharing has in any way decreased in the last few years entirely far-fetched, but whatever.)

Here’s how it all works:

When a consumer rips a song from a CD and gives the digital file a name, the computer hardware, ripping software and other digital data together create a digital file identified by a distinct hash code. If the user rips the same song with an older computer—even with the same software—the file will have a different hash code. The slightest change in the music source, computer hardware, ripping software, P2P protocol, file name or length of recording will change the hash code identifying the resulting MP3 file.

For example, while searching for a Madonna song at the RIAA offices, dozens of users were sharing the same Madonna title over LimeWire—but six users were sharing the digital files with identical hash codes. Since it is highly improbable that more than one user would have the exact combination of equipment and timing to create identical hash codes, the investigator says, the six users are likely sharing copies of the same file that one person originally uploaded to the Internet and that was later downloaded and shared by other users.

And goes on from there:

Once the popular hash is identified, the MediaSentry program makes contact with the user through a “TCP handshake”—essentially a conversation between the Web server and the Web client, like LimeWire, via the Internet transmission control protocol.

“Are you online and do you have this hash code?” the program asks. If the user’s program says “yes,” then the user is pegged. Just one digital file is enough for the RIAA to send a take-down notice.

That’s what a judge in Los Angeles has ruled, according to Cnet. The company is Torrent Spy. The story said the company earned the judge’s enmity by allegedly destroying evidence:

According to the court, TorrentSpy operators had intentionally modified or deleted directory headings naming copyrighted titles and forum posts that explained how to find specific copyrighted works; concealed IP addresses of users; and withheld the names and addresses of forum moderators. The company had previously been fined $30,000 for violations of discovery orders and were warned of severe sanctions if they continued to ignore the orders.

The fine was based on a $30,000 fine for each of more than 3500 movies or TV shows torrented.

The company’s response:

TorrentSpy’s attorney, Ira Rothken, called that ruling “draconian in nature and unfair.” He said he did not believe any data was intentionally destroyed, and that some actions were taken to protect the privacy of TorrentSpy users.

Rothken also said at the time that TorrentSpy would appeal any decision on damages.

Such rulings are pointless; there are a dozen other torrent search sites coordinating the transfer of untold gigabytes of music and movies every hour, most of them based outside the U.S. The case is another petulant move by Big Content, in this case the MPAA, to take as many small fry down down with it as possible.

Ars Technica notes that the RIAA spent $2M-plus lobbying Congress last year.

What was it spending money on? The answer is pretty interesting. The whole article is worth reading. Here’re the most outrageous parts:

1.  The PRO-IP Act: “The far-reaching PRO-IP Act* was introduced to the House in December 2007. The bill would create a new executive office, the Office of the US Intellectual Property Enforcement Representative, which would be charged with coordinating IP enforcement at the national and international levels. IP agents would be sent to other countries to assist in investigation and crackdowns in much the same way as they do drug-trafficking investigations.”
2. The Intellectual Property Enforcement Act: “Over in the Senate, the Intellectual Property Enforcement ActPIRATE Act. The RIAA loves this bill because it would outsource the thousands of copyright infringement lawsuits filed each year to the Department of Justice, saving the group millions of dollars in legal fees. The IPEA would also increase funding for the FBI’s investigations of crimes “related to the theft of intellectual property.” The IPEA has also yet to emerge from committee.”
3.  The College Opportunity and Affordability Act: “The RIAA’s interest in the College Opportunity and Affordability Act comes from a very controversial provision that requires schools to make plans to implement copyright filters on their networks and offer legal alternatives to file-sharing. Colleges and universities across the country opposed the IP enforcement provision of the financial aid funding bill out of fears that it would ultimately lead to financial aid being cut off. House staffers have told Ars that is not the case, saying that failure to plan for filters and legal music services would have no consequences.”

Aside from the first, each of these are fairly pernicious in the way they expand an already pointlessly over-the-top battle against an enemy, file-sharing, that is unstoppable.

 * As Ars notes, the PRO-IP Act deserves a special footnote for a particularly creative provision that has, for the time being, at least, been taken out: A tweak that would make, say an illegally copied ten-song compilation CD eligible for dectuple penalties, if dectuple is a word, on the ground that each separate song is a separate violation.

An important tangential issue in the file-sharing case Elektra v. Barker has been decided, and it sure looks like a big win for the RIAA.

The issue was whether simply having music available on one’s computer for download is “distribution.” If merely having some files in a KaZaa shared folder is distribution, that makes a whole lot of people vulnerable—and makes it easier  for the record industry, which otherwise would have to find the evidence that files made available were actually transferred to someone else’s computer.

Due to some technical details the court—a federal District Court in New York—is making the labels amend their complaint, but the thrust of the opinion is plain. Here’s a lawyer Ars Technica talked to:

[Electronic Frontier Foundation attorney Howard] Von Lohmann called the decision well-reasoned, but unfortunate. “I understand how the court went wrong and the unfortunate result,” he told Ars. “And he admits that his decision is not without disagreement; he understands the contours of the issue. But clearly, he really engaged the subject and read all of the law.”

In Billboard, Susan Butler takes the time to quote the relevant section of the law, which sure makes it sound like this was a pipe dream from the start:

Although copyright law does not define a “distribution,” it does define “publication.”

The law states that publication is “the distribution of copies or phonorecords [i.e., audio copies of sound recordings] of a work to the public by sale or other transfer of ownership, or by rental, lease, or lending. The offering to distribute copies or phonorecords to a group of persons for purposes of further distribution, public performance, or public display, constitutes publication.”

It seems pretty plain to me, but I’m no lawyer.

For the record, Hitsville’s position is that file-sharing is wrong, but since a) there’s no way to stop it; b) it comes after decades of much more unsavory industry practices; c) the record companies have been incompetent in their moves to digital distribution; and d) the legal assaults have been extreme and counterproductive, at this point the industry deserves what it gets.

Portfolio.com has an exclusive story detailing another shoe-drop in a slowly coalescing line of music-industry thinking that ISPs should charge customers fees to compensate the labels for their losses to online downloading. That idea has been floating around for a long time, and even has a history; cassette tapes were taxed back in the day to compensate the industry for the scourge of that era, which was known as “home taping.”

The interesting twist this time, which takes it out of the no-go category, is that the fees would be voluntary, and allow those paying it to download all the music they want for free.

The thrust of the Postfolio account is that Warner capo Edward Bronfman has hired a guy named Richard Griffin, who used to run Geffen’s digital operation and who according to the story has a reputation as a “industry critic.” Here’s his money quote:

“Today, it has become purely voluntary to pay for music,” Griffin told Portfolio.com in an exclusive sit-down this week. “If I tell you to go listen to this band, you could pay, or you might not. It’s pretty much up to you. So the music business has become a big tip jar.”

Go ahead and savor those last words for a few seconds. Coming from someone in an industry that has treated its customers like an ATM machine for the last fifty years, it’s a heady concept.

As for particulars, the story says:

Bronfman has asked Griffin, formerly Geffen Music’s digital chief, to develop a model that would create a pool of money from user fees to be distributed to artists and copyright holders. Warner has given Griffin a three-year contract to form a new organization to spearhead the plan.

Later in the story, Griffin says he’ll be forming a company that in the long term will not be owned by Warner to somehow institute the plan. The story includes some critics of the idea, on the predictable grounds. A$5 per month fee is floated, but Griffin says the figure would somehow be negotiated in each country.

To Hitsville, the big problem doesn’t really get addressed. The labels’ chief raisons d’etre—finding artists, developing their careers, manufacturing and marketing their music—have all been shown to be done better by different institutions. The main effect a new cash pool like this—which Griffin speculates might raise as much as $20 billion a year—would have is to prop up an industry no one really wants or needs any more.

In this sense, the plan may be a hail mary pass by a guy leading a company, the Warner Music Group, whose stock price is about a sixth of that it was two years ago, and his buddies, all of whom are in the same sinking boat.
Griffin carefully says the industry has no set $5 a month fee in mind—that was Portfolio’s supposition—but freely uses the $20 billion figure. That’s a little strange; the music industry right now represents only half that, in the U.S. at least, down from about $15 billion in the 1990s. (He may be talking globally.) But if you were running a music company in today’s climate, wouldn’t you love something that would take you back to your revenue levels before the digital tsunami hit?

To which a consumer might respond: Your idea has merit—but how about we institute it without you?

———-

Previously in Hitsville:

Should the record industry tax ISPs?

Lots and lots to mull on here. Lifehacker got a note from a reader who said she’d been torrenting movies. She wrote:

Yesterday I received a letter in the mail from Cablevision (my ISP) saying that Paramount/Dreamworks had filed a complaint with them regarding my illegal download of one of their films.

The letter states that I am not being sued and my service is not being disconnected at this point but that Paramount/Dreamworks has the right to pursue legal action against me and Cablevision was warning me of that.

The site asks for similar stories and advice for the poor thing, and gets a flood. It’s hard to tell what’s real and what’s fake, but there’s a lot of seemingly sincere testimony that points out the grey areas going on ouside the press, and the courtrooms, as this orthographically creative comment suggests:

Happened to me a WHILE back with Cox. They tol me to delete the data and to not continue downloading copywriten materials. Then they told me to call them when I had done so. No biggy. They aren;t as bad as the RIA.

Music consumers, the record industry wants you to know that this is going to hurt them more than it’s going to hurt you! If the Recording Industry Association of America sues you, it’s … for your own good.

“This is a form of tough love,” said Jonathan Lamy, a spokesman for the RIAA in Washington, which is made up of the biggest music industry labels.

That comes from a column up at Marketwatch by Therese Poletti. I looked it up and find it comes from an interview Cnet did with Lamy last year.

Lamy is talking about the tens of thousands of lawsuits the industry group has filed against online file-sharers. Hitsville’s position is that, while sharing music that way is unquestionably wrong, the RIAA’s tactics are counterproductive and useless in any case, given the nature of the new digital world.

Why the industry persists in this initiative, however, is also tied to the nature of the new digital world. There is nothing else it can do. It’s hard to see a model of the future that has a meaningful role for the record companies, as they are configured today. What the RIAA calls “tough love” from this vantage point seems more like the thrashings about of a wolverine with its leg caught in a trap.

Or if you want a more culturally evocative metaphor, check out Poletti’s column:

As any fan of “The Sopranos” knows, the mob often takes out its enemies in a gruesome fashion as a way to warn others to fall in line.

The same can be said of the campaign over the past four years instigated by the dreaded Recording Industry Association of America, more commonly known as the RIAA, which has been on a mission to stop or slow down the practice of illegal music downloading online.

Their special target, as most people know, has been college students, with some seeing their very education come under threat for what used to be a time-honored tradition — copying their friends’ music.

[…]

Much like the New York mob family in “The Sopranos,” the RIAA is trying to send a blunt message—that downloading free music using peer-to-peer networks could cost them dearly.

I don’t condone music piracy, but the RIAA’s tactics are nearly as bad as the actions of mobsters, real or fictional.

Ars Technica notes the year anniversary of the RIAA’s war on college students with a chat with RIAA prez Cary Sherman.

As Billboard noted in a column I mentioned last week, CD sales are down another nearly 20 percent for January from last year. The effect the RIAA’s campaign against its customers is having can only be described a truly excellent. Sherman is now in the precise position of a captain of a sinking ship directing his crew to take pot shots at the rats leaving it.

But Ars is polite.

Here’s how the numbers look after a year. The RIAA has sent out 5,404 letters in 13 “waves” to over 160 colleges and universities. Of the 5,003 settlement letters sent prior to the batch of 401 that went out last week, “more than” 2,300 of those have resulted in the targeted students settling with the RIAA. 2,465 students have been hit with lawsuits, and all of those are moving through the legal system at different rates. At $3,000 per settlement, over 2,300 settlements translates into at least $6.9 million.

There are other numbers you can generate from those figures. For instance, let’s estimate, I don’t know, $5,000 in RIAA legal fees for each of the cases it pursues. Multiply that by the roughly 2500 cases, and you have more than $10 million. Even if the group’s legal fees are half that, it’s still a wash financially, before you take into account the millions more its silly media campaign costs. And, as the continuing decline in sales indicates, it’s obvious the group’s war is having no effect.

You want to call the effort quixotic, but Don Quixote wasn’t sadistic, vengeful and grim.

The interview is mostly filled with Sherman’s spinning whatever questions Ars asks. Like this:

“Our basic survey data is that the majority of consumers don’t have a problem with the lawsuits,”   [Sherman said]. “You would never know that from reading blogs and websites, [but] when you go out to the general public, our favorables/unfavorables haven’t changed at all.”

But of course, among not the general public but music fans, one suspects the group’s unfavorables have changed. (On the other hand, it’s possible they couldn’t go any lower!) There are two interesting discussions. One is when Sherman contends that the leveling off of activity on the music networks is a result of the RIAA suits. But a rep from Big Champaign, which monitors such activity, says it’s simply a case of market saturation.

The other is when Sherman is asked why Harvard is absent from the list of schools the RIAA has targeted. Ars speculates that it’s due to the industry’s being afraid of teeing off some of the legal talent at Harvard. That seems a little thin; a lot of colleges and universities have serious law schools, right?

In the LAT, a level-headed discussion of the semantics and legalities of file-sharing by one of the paper’s editorial page writers, Jon Healy. He notes how the very term “file-sharing” steals a semantic high ground (it’s not “file-stealing“) but points out as well that the simplistic “file-sharing equals theft” equation of the records companies isn’t quite right either*:

[T]here’s a fundamental difference between intellectual property (copyrights, patents, trademarks) and real property (houses, cars, plasma TVs): The latter is tangible and limited in supply, the former is not. “Copyright infringement is not ‘theft’ in the same way that taking a CD from a store is theft,” said Mark Lemley, a copyright expert at Stanford University Law School. “If I take your physical property, I have it and you no longer do. If I copy your song, I have it, but so do you.”

Not a lot here that’s new, just a lucid primer if you’re in the mood for it.

* Hitsville’s position is that file-sharing is stealing, for a reason that Healy doesn’t quite get to. It doesn’t steal someone else’s property; but it unquestionably steals part of the value of it, ranging from a miniscule percentage to, in theory, 100 percent of it. The RIAA’s war on file-sharing is still wrong because it’s destructive and pointless, and the RIAA has no moral high ground in any case because it’s been ripping off artists and consumers for decades. In the end, the pointlessness part of this will become definitive. All the file-sharing and bit torrent networks could be shut down entirely and permanently tomorrow and the net result, say, three years from now, would not appreciably change. The data transfer methods would just evolve, primarily through emailed zip files and the so-called “sneaker net”—i.e., handing a friend 1000 songs on a DVD.