Indulge with me in a thought experiment.
Suppose you download thousands of MP3s over filesharing networks, and then, one day, you get nailed with the threat of a lawsuit from the RIAA. The RIAA then asks you to pay a fee to settle it now, so that you don’t face huge infringement costs. You agree to do so, using your credit card, over the phone with an anonymous settlement representative (not actually a lawyer).
How is this that much different from collective licensing like ASCAP? The idea behind collective licensing for file sharing is to enable users to share files freely while paying a fee, similar to how radio stations and restaurants pay a fee to play whatever music they want. The details might get hideously complicated and I have serious reservations about adding more taxes to my ISP connection, but I do believe collective licensing is the only way out of the woods for those in the entertainment industry not interested in real sharing.
Anyway, what is the difference between how the RIAA is implementing their lawsuit campaign, and the way collective licenses might work for file sharing? You’re paying a ‘one-time’ fee to settle your debts to the recording industries for revenues they think you cost them while downloading and sharing files.
There are some differences. For one, the settlement fee the second time around is likely to be a lot higher and perhaps the RIAA won’t even offer you the right to settle the next time they contact you. You would probably end up in court facing massive statutory fines with no option of settlement. Second, the settlement fee is probably a lot higher than what the market would decide on. And finally, the settlement fee is being extracted by threat of impending lawsuit, not subscription obligation.
But the fundamentals of the transaction are very similar: users are already engaging in filesharing, the RIAA threatens with large fines if they don’t pay a fee, and then, when they do pay the fee, they’re off the hook for the time being.
The RIAA, knowingly or not, has effectively painted their way into a corner supporting collective licensing as the future of their business model. Whether or not the campaign is profitable is a matter of debate, but with fewer than 1% of RIAA victims choosing to fight the lawsuits, the math is in their favor: 30,000 lawsuits multiplied by a conservative $2,500 per settlement garners the RIAA at least $75,000,000 over the course of their anti-filesharing inquisition. While the payouts do not exactly make up for lost revenue from the death of their cash cow, and granted the settlements have been totally ineffective stopping file sharing, someone at the RIAA must have done the math and realized the settlements are now a full fledged revenue stream.
So while the RIAA may huff and puff and say the lawsuits are about punishing people for ‘making available’ (an specious legal argument to begin with) and exposing the rampant theft of our cultural heritage perpetrated by America’s youth, we should really see them for what they are: an adaptation by a business to secure a new source of revenue.
The pity it in all is that the RIAA is ruining lives by doing so. If they were to just embrace collective licensing as a legitimate form of revenue, there would be a lot less friction in the marketplace for music and filesharing.
*Note that this post doesn’t take into account the differences between collective licensing and voluntary collective licensing, and over simplifies the whole topic quite a bit, and for that, please accept my apologies.