CNET reports that the RIAA is
suing Usenet.com. The reason is that UseNet stores recent MP3 that people pass to each other:
For efficiency's sake, recent posts to newsgroups are stored on the Usenet provider's server (as opposed to saved on a subscriber's computer as mailing lists are).
Some newsgroups, like alt.binaries.pictures, are devoted to the distribution of binary files. Of particular relevance to the RIAA lawsuit is that there are around 652 newsgroups with the phrase "MP3" in their names.
Declan McCullough, writing at CNet notes the strategy is to take down an obvious target like UseNet, and use that judgement as backup case law to take on less sure targets.
Usenet.com boasts that signing up for an account "gives you access to millions of MP3 files and also enables you to post your own files the same way and share them with the whole world."
Clearly they didn't run that language by their lawyers first.
So will the RIAA win? Thanks to improvident boasts like that, they stand a good chance. One reason the U.S. Supreme Court ruled against Grokster is that the justices believed that StreamCast's executives had tried to lure pirates into using the Morpheus application. The justices also said that neither company filtered copyrighted material and "the business models employed by Grokster and StreamCast confirm that their principal object was use of their software to download copyrighted works."
What the RIAA's doing here is a classic litigation strategy: sue someone who a judge is likely to say is a clear offender, and then invoke that decision when targeting someone who's a more marginal case. Usenet.com may be first, in other words, but newsgroup providers like AT&T, Verizon, and Stanford may well be next.
But this is the classic "win the battle, lose the war" approach of an industry that just doesn't
get the way the internet works. Trying to close down free music on the net is impossible, and its going to waste a lot of time and money that could be better spent on the way.
The reasons Music Piracy is currently a valid business model are threefold in the main:
Firstly, the 'Net is a very large and powerful "invisible hand" market force - it is setting the price for music, and that price is per song, digitally delivered, not per album, printed on expensive physical media. The price to the end user has to come down, and will do so, and current incumbents must adapt to that.
Secondly, (and stemming from the above) the Music Industry does not have a direct "free to air" business model. Plenty of other Media players (TV stations for example) do, and they can better afford to play the cards dealt in in the 'Net's Invisible Hand. It needs to get one.
Thirdly, the Internet represeents a restructuring in the supply chain, like the move from horse to car, pony express to telegraph, etc etc. It's time has come, the thing the RIAA has to do is align its business models to the new supply chain, not try and force the new supply chain to fit into its old world model. It can't, it has nowhere near the resources required to turn back the clock (its doubtful if anyone does in fact).
The fact is that as supply chains become more efficient (and in the music industry's case also shift from physical to digital), value is typically returned to the key players - the actual producers and consumers. In this world, traditional scarcity based aggregation can no longer hold such a major part of the surplus in the chain - the defection of branded musicians in the last few months (Led Zep being the latest) is merely a reflection of the future becoming the present. Apple's iTunes showed that it is possible to have a music selling supply chain that makes money, so at some point they will lose their war, at some point someone will say "look, this isn't about Usenet or whoever, its about you trying to restrict business model competition". And its the artists content that is copyrighted (which is apparently about 10% of the return on a CD sale), not the rest of the business model nor the price of the end media.
But in the meantime, to fund this war, they are using the % they take off the artist's works, an amount they can only get due to the current supply chain structure. In the emerging supply chain that function is largely redundant and they need to add value in new ways, as neither the customer nor the artist wants to pay for it now - and that is the fundamental strategic flaw in the approach. History tells us that you cannot prop up redundant structures for very long in an open market, nor corner supply of any good, and it is ruinously expensive paddling against the tide while you are doing it.
Thus, rather than using these revenues obtained in the current supply chain to attempt to hold on to it, they are far better served using the revenues to transition themselves.
Postscript...now they're
after Universities
