Walking the plank/ Recording industry takes wrong approach by

0 Comments | Gazette, The (Colorado Springs), Sep 17, 2003

A lot of unsuspecting Americans learned a hard lesson about property rights last week after a recording industry trade group started suing people for downloading and sharing music over the Internet without compensating the companies and artists responsible for it. At least 261 individuals were sued, including a football player at the University of Colorado, in what the industry intends as a shot across the bow for millions of Internet music pirates it blames for a 31 percent drop in CD sales.

If Americans are too afraid to download music, they might begin buying it again, the industry seems to believe. And so the search for scapegoats was on - with the Recording Industry Association of America claiming its first big "win" after its lawyers squeezed a $2,000 settlement from a 12-year-old girl living in a New York public housing project.

But we believe the effort, while right in principle, is hopelessly wrongheaded and bound to backfire. Although its tactics are heavy- handed, and likely to make even more music fans into music industry enemies, the association clearly is right about one thing. Intellectual property is as real as material property, in our view, though admittedly a lot harder to protect with the advent of the Internet and other information age technologies. But property rights don't become void just because new technologies make it easier to violate them.

File downloaders almost certainly are guilty of a new age form of theft, which doesn't become less a wrong just because it's so widespread. But the industry is guilty, too, of trying to prop up declining sales by suing its customer base and attempting to stifle technological innovation that threatens its profit margins. Rather than offer consumers more affordable products and better on-line options, RIAA and its member companies have generally tried to stop the burgeoning new technology through a series of lawsuits and public service announcements equating file-sharing with shoplifting.

We don't doubt that downloading music has cut into recording company profits. But the industry must share the blame for slumping sales because it churns out overpriced but mediocre products. When a newly released CD can cost anywhere from $12 to $20, a fairly hefty sum for adults, not to mention younger people, it's no wonder music fans will choose the cheaper, if dishonest alternative of downloading songs.

We believe most music fans would be willing to pay a fair price for a new CD, or for the privilege of downloading popular singles through the Internet. But there's understandable reluctance, resentment and resistance to trying new music or artists when the price of a CD is so high, and the companies have declined to respond to clear market signals from sticker-shocked music fans by lowering prices.

The industry is right in standing up for intellectual property rights. But where it has gone wrong is in looking to lawsuits and intimidation to retain its profitability, rather than searching for creative, market-oriented ways to turn pirates into music patrons once again.

One major label took a step in the right direction several weeks back when it cut the wholesale price of its CDs by a couple of bucks. It's too early to tell if that's enough to bring in more buyers, or lead to an industry-wide reappraisal of pricing strategies more friendly to music patrons. But we believe the carrot will do the industry much more good than the stick.

We'd prefer that the masters of marketing in the music industry spend less of their time and energy trying to intimidate erstwhile patrons and blocking innovative technologies, and more on producing a better product at more affordable prices, and in harnessing those new technologies for their own benefit.

The collapse in Cancun

The collapse of the World Trade Organization's round of trade talks in Cancun, Mexico, over the weekend is hardly the end of hopes for a world with fewer barriers to trade. It's the beginning of a process expected to take four years. But it demonstrates that the path to freer trade, as always, is hardly without detours. And it should serve as a wake-up call to developed countries such as the United States and those in the European Union that massive subsidies to farmers can have unpleasant consequences.

The issue that caused more than 20 countries led by Brazil to walk out of the talks was the subsidies developed countries give to agriculture, which can make agricultural imports cheaper in some countries than homegrown food.

The less-developed countries are being pressured by the WTO to reduce protective tariffs and other barriers, and had hoped to get a commitment from the more industrialized countries to reduce agricultural subsidies in return. When it became apparent, in their view, that the United States and European Union wouldn't budge on the issue, the less-developed nations walked out.

More important than agricultural subsidies, at least in the United States, in undercutting Third World farmers are large-scale factory- farm techniques and putatively humanitarian food aid. Getting rid of the subsidies would be good public policy, but might not help Third World farmers as much as many hope.