RIAA Loss Report Contradicts Nielsen Sales Record

DerekAtLC writes "In a not-so-surprising twist of the tables, RIAA reporting of 'losses' is a little bit off. An interesting blurb at Ars Technica referencing a Kensei News article points out that Nielsen's Soundscan (Which tracks retail point-of-sale numbers for the music industry) shows a 10% increase in sales from Q1 2003 to Q1 2004. The RIAA has recently reported drops in revenue from last year, citing online piracy as the main problem. The crux of the issue? The RIAA hasn't been talking about sales or revenue in terms of sales to consumers or money generated via those sales. The RIAA talks about losses in terms of number of units shipped to retail outlets. The article points out plenty of problems with this (and reasons why we are seeing the trend), but it is fairly obvious that the RIAA is not reporting the most 'useful' numbers to the public."

Out of business stores dont keep inventory.

Another interesting thing has happened over the last few years. The growth of mega-chains such as Best Buy plus the .com's joining into the marketplace have knocked mom and pop record stores out of existance.

Less stores selling music means not only are stores keeping smaller inventories, but some store inventories fell to zero as they left the business. There's just plain less "unsold" disks sitting in the system.

Re:Out of business stores dont keep inventory.

Less stores selling music means not only are stores keeping smaller inventories, but some store inventories fell to zero as they left the business. There's just plain less "unsold" disks sitting in the system.

This seems like a highly debateable point as to causes of lower inventory levels. Traditionally, inventory levels have been an indirect measure of confidence in the economy. However, utilization of JIT methods aided by technology enables businesses to run at lower levels than previously thought acceptable. In fact, there really isn't any contradiction to the principles of economic order quantity because both ordering costs and turn around times are much lower. This is truly a new paradign.

Re:Out of business stores dont keep inventory.

Isn't this the opposite of capitalism?

For years, I had to go to run down stores with poor customer service and no inventory. Now, I can order online.

Why would we want to go backwards? Aren't we supposed to evolve? If you want your mom and pop store to succeed, shouldn't you be searching for a niche/market in which you excel? Do you think the world really owes your mom and pop store a favor?

I don't think so. I hate *most* mom and pop stores. Too many salesmen, too many commissions. Too little inventory, too poor customer service. Too high prices, too many just grunge music fans.

When I buy online, I hear reviews from people that listen to MY music. Not yours, I'm not limited to some little twat that only listens to such and such music.

Note to moderators - This post is objective.

Re:Out of business stores dont keep inventory.

Too many salesmen, too many commissions. Too little inventory, too poor customer service. Too high prices, too many just grunge music fans.

Uh, isn't that most huge chains? And what customer service are you referring to from any online store? Customer service to them is tracking your order. Let's take music stores for example.

Killer mom-and-pop stores still exist ESPECIALLY in record sales; in big cities (like Chicago) where the music scene is all about a well stocked record store, it's MUCH preferred over a chain. You walk into the store, hum a few lines, and it can be pretty damn impressive when the guy behind the counter a) knows who you are and b) can name the tune immediately. Not to mention the fact that they know what you like and drop you tidbits about what's coming out, and if you like certain bands, that you'll like certain OTHER bands, on top of which, special ordering is sooo painless most of the time. They also more often than not have a pulse on what's going on locally. And where do you get this limited selection bs?? I find MORE stuff at my local record store (and not even the obscure and/or local stuff) down the street, along with a whole slew of imports. Half the time I can't find the exact stuff I want online, like a very specific concerto recording (almost always easily found by my fave classical music place) or that Jawbreaker import that has been out of print forever.

Now don't get me wrong; I also love places like amazon when I know exactly what I want... but no internet store is going to take the place of stopping in at Reckless and chatting (or arguing!) with the music geeks on both sides of the counter about the newest album releases, etc etc.

More Mega-Store Efficiencies and Other Trends

> Another interesting thing has happened over the last few years. The growth of mega-chains such as Best Buy plus the .com's joining into the marketplace have knocked mom and pop record stores out of existance.

Excellent point. But it goes further than you suggest.

It is much easier for a mega-store to predict its sales, and manage its inventory efficiently, than it is for a small store.

For example, a small store might receive shipments once a week, or even once a month. For a given CD, that store might expect to sell just two copies before the next shipment, but a week or a month is a long time to be sold out of something, so that store will want to stock three, or more likely four copies of that CD. That's 50% excess inventory on average. Plus, there is nothing the small store can do with that excess except to return it with the next delivery truck.

But a mega-store will receive shipments every day. Plus, the mega-store might expect to sell 5 copies per day of that same CD. So let's say the mega-store keeps 10 copies of that CD on the shelf, with re-orders every day, and ends up returning the excess 5 copies at the end of a month. But that's 5 copies returned on a month's sales of 150 copies, which, in the long run, only represents an excess inventory of 3%.

And let's not forget the mega-stores' other advantages for efficient inventory management, including computerized check-outs, and the ability to move inventory around from one store to another.

So it shouldn't surprise us if excess CD shipments have been drastically reduced.

I can see another way in which Internet Radio, and music downloads would lead to more efficient sales. Today's buyer will go the the record store with better knowledge of what he/she likes and wants. Thus, that buyer will be less likely to pick up the mass-marketed Britney Spears CD, and more likely to pick up some lesser known band. It's not worth it to the record store to stock extra boxes of a small band's CD, the way they would with a Britney Spears CD. Plus, it's less likely for there to be a sudden rush on that small band. Thus, the trend is away from the mass-marketed items, where it's worth it to be wasteful (and necessary, to meet the peaks), and toward more highly focussed items, which sell a few at a time. And let's not forget the increase in the almost-100%-efficient special order sales.

As to the drop in international sales, I think that is more likely to be a shift away from the heavily-advertised American groups, and toward the less-advertised local groups in each country. Once again, Internet Radio and downloads would allow listeners in each country to discover those other groups, rather than simply being led by U.S. advertising. I assume that many, if not most of those smaller groups' sales in other countries are _not_ measured by the RIAA.

Re:More Mega-Store Efficiencies and Other Trends

As to the drop in international sales, I think that is more likely to be a shift away from the heavily-advertised American groups, and toward the less-advertised local groups in each country. Once again, Internet Radio and downloads would allow listeners in each country to discover those other groups, rather than simply being led by U.S. advertising. I assume that many, if not most of those smaller groups' sales in other countries are _not_ measured by the RIAA.

I don't know if this is a trend everywhere, but it seems to be true for Norway. First quarter this year, the sale of Norwegian CDs* was up by 46% volume (54% value) compared to the same period last year. 21% per cent of the CDs sold were Norwegian, up from 14% last year.

* Not including singles and DVDs, which probably would have pushed the numbers even higher.

Ref: Sterk økning i salg av norsk musikk [www.dn.no] (in Norwegian, I'm afraid ...:)

It's time to change sampling techniques?

I think the problem that is affecting groups like the RIAA, MPAA, the television networks, and so on is the fact that their techniques for measuring things like sales and viewership are being rapidly obseleted by changes in communications technology.

If you're read Alvin Toffler's book The Third Wave, Toffer some 25 years ago said that as more communications choices for consumers become available, old means to measuring "eyeballs" won't work anymore. I mean look at what has happened since The Third Wave was published in 1979:

1. Consumers now possess the technology to time shift TV programming by videocassette recorders and increasing digital Personal Video Recorders, which is making the idea of prime time meaningless.

2. The choice of TV programming has literally increased exponentially. Back in 1979, most Americans could only watch at most 5-7 channels of TV programming on over-air broadcasts; today, cable TV has expanded the available channels to over 70 and small-dish satellite TV has expanded the available channels to over 200!

3. The rise of pre-recorded videocassettes and now DVD's have drastically altered the landscape of both movies and TV programming. Indeed, many movies are only breaking even with home video sales (or doubling their profit with home video sales!) and there's now the new trend of complete TV seasons available on DVD! I'm sure HBO has enjoyed healthy sales of full seasons of The Sopranos, Sex and the City, and Six Feet Under on DVD sets.

4. The rise of the public Internet has also started to affect TV viewership, as several recent surveys have shown.

5. Current methods of measuring TV viewership don't take into account the increasing trend of large scale public viewing of TV programs at public gathering places and/or having a large group of friends watching the program at someone's residence. For example, the final episode of Friends probably got underreported by Neilsen tracking because a large portion of viewers probably saw it in a group setting either in a public place or at a private residence with a large living room.

6. Tracking sales of music will have to be revamped, especially in light of the way Wal-Mart handles sales inventories, the sheer retail power of Best Buy, the heavy use of online sales at Amazon and Barnes & Noble web sites, and individual song downloads at various legal sites such as Apple's iTunes web site.

I think if the various media companies actually bother to change their way of monitoring sales/viewership they could actually get a far more accurate measurement, something that could eliminate underreporting of actual sales/viewership.

No surprise there

So the RIAA won't stop at bending the facts a little -- okay, a lot -- on their way to ripping fair use out of America. Nothing we didn't know.

What will be interesting will be to see how much play this gets in the mainstream media. Probably no more than any of the other facts that aren't convenient for the "hackers steal $billions on teh intarweb" headlines they like to run. :-|

Dont forget

They also tend to count every single pirated copy as a loss. Even though, if forced to buy, most of it would not be purchased.

In related news...

The US census is now counting every possible sperm-egg combination as a "potential" citizen.

Re:In related news...

In that case, my left hand is guilty of mass murder...

Re:In related news...

... not to mention mass turbation.

Re:In related news...

Well, if we learned anything from Monty Python, it's that: There are Jews in the world. There are Buddhists. There are Hindus and Mormons, and then There are those that follow Mohammed, but I've never been one of them. I'm a Roman Catholic, And have been since before I was born, And the one thing they say about Catholics is: They'll take you as soon as you're warm. You don't have to be a six-footer. You don't have to have a great brain. You don't have to have any clothes on. You're A Catholic the moment Dad came, Because... ...Every sperm is sacred. Every sperm is great. If a sperm is wasted, God gets quite irate. Every sperm is sacred. Every sperm is great. If a sperm is wasted, God gets quite irate. Let the heathen spill theirs On the dusty ground. God shall make them pay for Each sperm that can't be found. Every sperm is wanted. Every sperm is good. Every sperm is needed In your neighbourhood. Hindu, Taoist, Mormon, Spill theirs just anywhere, But God loves those who treat their Semen with more care. Every sperm is sacred. Every sperm is great. If a sperm is wasted,... ...God gets quite irate. Every sperm is sacred. Every sperm is good. Every sperm is needed... ...In your neighbourhood! Every sperm is useful. Every sperm is fine. God needs everybody's. Mine! And mine! And mine! Let the Pagan spill theirs O'er mountain, hill, and plain. God shall strike them down for Each sperm that's spilt in vain. Every sperm is sacred. Every sperm is good. Every sperm is needed In your neighbourhood. Every sperm is sacred. Every sperm is great. If a sperm is wasted, God gets quite iraaaaate! Actually, I'm more Protestant, and - as a member "of the Protestant Reformed Church, which successfully challenged the autocratic power of the Papacy in the mid-sixteenth century, we can wear little rubber devices to prevent issue." "...and, by wearing a rubber sheath over my old feller, I could insure... that, when I came off, (someone) would not be impregnated." After all, "...That's what being a Protestant's all about. That's why it's the church for me. That's why it's the church for anyone who respects the individual and the individual's right to decide for him or herself. When Martin Luther nailed his protest up to the church door in fifteen-seventeen, he may not have realised the full significance of what he was doing, but four hundred years later, thanks to him, my dear, I can wear whatever I want on my John Thomas,... [sniff] ...and, Protestantism doesn't stop at the simple condom! Oh, no! I can wear French Ticklers if I want....French Ticklers. Black Mambos. Crocodile Ribs. Sheaths that are designed not only to protect, but also to enhance the stimulation of sexual congress....I can go down the road any time I want and walk into Harry's and hold my head up high and say in a loud, steady voice, 'Harry, I want you to sell me a condom. In fact, today, I think I'll have a French Tickler, for I am a Protestant.'" But, I digress. Monty Python is great.

Re:In related news...

Fine so long as I can claim the dependants.

Re:using that to condemn phony accounting is fine

if the RIAA charges more than you want to pay, that doesn't mean you get to take it anyway.

First, it's not theft, it's copyright infringement.

Second, if a person can't afford to buy something, they're not morally obligated to thrash themselves with the spiked whip of capitalist ethics. They hurt no one by doing so.

Strict adherance to law is simply strict adherance to politicians. They're the ones who make it.

Re:using that to condemn phony accounting is fine

...if a person can't afford to buy something, they're not morally obligated to thrash themselves with the spiked whip of capitalist ethics...

Much like if a closed source software company wants your software, but can't "afford" to abide by the rules of the GPL, they're not morally obligated to thrash themselves with the spiked whip of GNU ethics.

If, like many of us, you object to the scenario I have outlined above, you will want to vigorously support copyright law. That is the root of your moral obligation - not capitalist ethics, but your own ethics. This is very much like supporting free speech: I may object to the uses that the RIAA and MPAA make of copyright law, but I will support their right to do so.

Re:using that to condemn phony accounting is fine

The supposed victims of copyright law shouldn't be able to ask for taxes on CD's and internet connections

You mean like in Canada and most of Europe, where this happens?

You shouldn't get to copy their stuff without permission, because our laws say you don't have the right to.

You mean except after 28 years, or for that matter, any reasonable delay, when it becomes public domain? Oh, I mean lifetime of author (~60-80) + 75 years.

Laws don't have to say what's right. The beauty of the US Constitution is that I have many rights, that there wasn't any need to explicitly put into writing. That "our" laws, and by this, I'm using your words, not mine, say otherwise, is sad. But "our" isn't so accurate anyway, is it. Some corporate lobbyists sent a Lear jet to DC, to pick up a few congressional friends for a game of golf at a resort. You see, senators like that, because there's not that great a chance that Air Force 1 will ever be theirs. Then, the lobbyist tell them how horrible it is, that Mickey Mouse will be public domain, and they'll lose something they deserve to keep! Oh no! But the senators, high on complimentary nose candy, they're too stupid to realize, hey, only a 2 minute clip, Steamboat Willy is actually going to become public domain, because Mickey is trademarked.

And then, the really fun stuff starts. Millions of apologists like you stand up, and say "Thank god we protected Micke!" even if it means you're being stolen from. As if some korean knockoff could be any worse than the tripe Disney tosses to the public.

There exist many systems far more efficient and fair for compensating creative people. But we're not getting close to those systems, we're moving away from them. So forgive me if I roll my eyes when I see you cheerleading.

Re:using that to condemn phony accounting is fine

[snipping sarcastic rebuttal]

Sorry, but you completely changed the point just to fit something unfunny. I'll bypass it for the points you attempt to make:

Your attitude wouldn't be nearly so obnoxious, if the subhumans you were apologizing for didn't try so hard to murder every single bit of free entertainment there used to be.

How's this? I'm not apologizing for anyone, nor supporting the actions of the RIAA/MPAA. I'm against anyone who thinks that if they can't afford something, then they're perfectly allowed to steal it. Steal, as in, not pay for something which can only legally be obtained by paying.

You can't afford Windows XP Pro, but hate Windows XP Home, so you should be allowed to pirate it because it's too high a price. Same with Photoshop and Acrobat Writer.

No one's being hurt, after all, since you couldn't afford them anyways.

Except, well, you're gaining something from their use and taking away a profit from those who created it. There are free alternatives to nearly every software package out there, so why not use them? If they don't meet your needs, lower your needs or raise your disposable income.

For music and movies, there are free alternatives. Nick Park released one of his ten mini-films for free on his website. Many big bands have free music on their websites. There are concerts you should be able to find in your area which have little to no charge to attend.

So, again, how on earth are the RIAA/MPAA killing free entertainment? Oh, yeah, they're trying to retain their monopolies and losing. So what? Help them die off by NOT listening to/watching their productions, even if you could do it for free, and support those who meet your price range or code of ethics.

How long til they actively start lobbying against it? With software, we already see the "free/open software threatens the livelyhood's of programmers!" bullshit, and that being true (god, that was hard to type, even as a "for the sake of the argument"), does not the guy that puts up a free novel on the web not steal from those trying to sell theirs?

So? Educate the opposite. Pass out free copies of software you legally can. Offer to train a person or two in how to use it so that perhaps they can show off to others, and pass along the knowledge.

But playing the "Someone else put this up for free, so we must stop it" bit is boring already. There are free novels available, and free stories, free music, free movies, free everything. As much as people hate competition and will try what they can to limit the damage competition does, supporting free alternatives helps them to grow. So please stop using this as an argument that free alternatives are dying; they won't if people like you help them out.

If I play the guitar on my front lawn, am I not robbing poor little Britney Spears?

No, and I have no idea why you bothered with this logic. It's not based on anything in my post.

You arguments are old and tired, and have nothing to do with logic. If they want to be artists, fine, you'd think they'd be flattered so many want their "art".

How does it have nothing to do with logic? The parent poster suggested that if people cannot afford a service, they are not morally obligated to pay for it, but can still receive it. Where's the logic in that? And I provided examples of how stupid it really sounds when it does not involve a geek trying to get free entertainment.

But no one said that they had a god-given right to make a job of it, or that they have any say in how I arrange bits on my hard drive. That they could make a living out of it, for a few decades, that doesn't make it any more profound or righteous.

Nor did I even imply it. However, no one has a god-given right to get services for free that are otherwise only obtainable through paying channels. Whether or not you could afford it makes no difference. You want that welfare, contact the gove

Re:Dont forget

> There are 2 ways to get music, buy and and steal it

No, there are 3 ways: Buy it, Steal It or Copy It

Copyright Infringement is not theft. It is kinda "like" theft, except nobody is left without the stolen item.

Until online music stores allowed you to buy music on demand for a single track, the only way to get music on demand for a single track was to commit copyright infringement.

Many students download music. They don't have music to spend on the music. How this can be termed a "lost sale" is beyond me. More like "free music for students might lead to future purchases when they have money" ... this works for Microsoft and software. Let's not get onto percieved value of music either - I buy most of my music at between 3 and 7 a CD from a store called FOPP in the UK, or online at play.com. This is what I consider a reasonable price for a CD. Not 14 to 18 that most new music comes out at - especially if I've only heard one or two tracks from the CD. Singles are overpriced as well ... 1.99 including video would be acceptable ... not the 3.99 or more that many of them are.

I'm sorry, but steal is the wrong word.

Re:Dont forget

> There are 2 ways to get music, buy and and steal it

No, there are 3 ways: Buy it, Steal It or Copy It

Where along the line did we forget Make It?

Re:Dont forget

I am somewhat reminded of a post regarding the appraisal of the Asian software market, and some of the ways the BSA calculates losses. From what I remember, it went something like this:

If Autocad Super Deluxe Enterprise Edition costs $10,000, and 100 Chinese children install it on their home PC, it obviously cost the industry One Million Dollars!

Same difference. If the RIAA stopped being a bunch of whiners and offered a P2P service for $10/mo, they would make SO much money. $120/year is MUCH MUCH more than I spend on CDs in a year. Unfortunately, some organizations are too set in their ways such that they wouldn't know opportunity if it threw a suitcase of money at them.

Re:Dont forget

$10 a month for unlimited downloads sounds great... although I don't think people would go for it for one simple reason... the P2P part. If they're paying $10 a month I can't see many people being willing to share their upload bandwidth, especially people on dial up and those with picky broadband providers. Maybe the solution to this though is treat bandwidth like a $$ credit. For every 100mb uploaded we take a dollar off your monthly fee. (of course then you're probably opening yourself up to some sort of scheme where a group of friends just downloads everything from each other)

The solution I see is the magic $5 price point for cds. Then you're getting into the range where it's harder to justify piracy or going to the trouble of burning your own, for the simple fact that you get a shiny new pressed cd with artwork for a low price. Plus $5 is like the magic number in the U.S. since you can get a value meal at most fast food places for that. I think a lot of people would go for that because it's easy to justify $5 since a cd is more permanent than a meal and americans are good at rationalizing away things like that. Oh I skipped breakfast=$5 so I'm breaking even for the day.

Re:Dont forget

Obviously either way you want the music. So if you stole it, it should be considered a lost sale, as you obviously wanted the music but chose to steal it instead of buying it.

Not true. Hypothetical example: I'll grab a copy of the latest Creed album (insert favorite over-hyped band here) if it's free and yeah, maybe I'll listen to it once or twice, but it's not worth it to me to pay $17.99, $15.99 or even $12.99 to be able to listen to it. So no, not every download is a lost sale. It's just basic economics:

• 10 people will buy it at $20
• 15 will buy it at $17
• 30 will buy it at $12
• 90 people will buy it at $1
• and millions will "buy" it for free.

Re:Dont forget

Wait hold the phone, you are saying there are ten people that listen to creed?

--Joey

Re:Dont forget

Wait hold the phone, you are saying there are ten people that listen to creed?

No. It was a hypothetical example, because no one listens to Creed.

Diatribe

There are 2 ways to get music, buy and and steal it (and please no diatribe on whether steal is the right word).

OK, you *know* it's the wrong word, and yet you use it anyway? You sir, are being an industry shill.

So if you stole it, it should be considered a lost sale, as you obviously wanted the music but chose to steal it instead of buying it.

A "lost sale" is someone stealing a CD off the counter, or even a customer walking out without buying anything because the clerk pissed them off - but we are talking about copying from media that has alrady been bought, not the theft of a product. It's a subtle difference that business doesn't like to acknowledge because all they see is dollars that they didn't get. It's like NOS getting pissy abuot "lost sales" when people build a DIY nitrous system for their car. Sure, they didn't sell a kit to someone who was interested in their stuff, but if the price was closer to the reproduction cost + hassle of DIY, they probably would have. Not being competitive in the market place is the reason they "lose" sales like this, plain and simple.

Once again, it's not a lost sale if you weren't going to get it anyway. I'm interested in lots of music, but I'm not going to buy a $32 NZD industry backed CD because they are a complete rip-off (I also don't download MP3s either). Having said that, I bought a $5 NZD CD of driving music from the gas station last night. Pricing is a key issue - they'll bleat about the cost of producing new music, but if the industry wasn't snorting their profits and spent less playing at being rock stars prices would be more realistic.

And BTW, the same retail vs wholesale thing is the reason (pop star|idol) tops the charts the week of release - nobody bought it except the stores, but the punters see it in the charts and buy it 'cos a) it *must* be good if it's in the charts, b) it's advertised everywhere so it's all they know. The music recording industry is a joke - go down to the pub this weekend and supprt your local bands instead.

Re:Dont forget

The alternative is to account for the loss, like everyone else does, rather than attempting to mock up some elusive misdirected profit figure. For example:

I make a product; let's say it's a limited edition Newt Gingrich action figure. It costs me $2 worth of materials and I pay various employees about $1 worth of labor per item. Figure another buck in there for distribution costs. I sell these items for $28.50.

Now someone steals one of these little items. What have I lost? By normal accounting, approximately four bucks. By the RIAAs accounting, $28.50. Sure, $28.50 is what they list for, but does that mean that if I decide to list them for $285 each that my loss per item is now ten times as much, even though no one is buying them at that price? This is like those adds which throw in several free items and claim "A four hundred dollar value, only $19.95.". The only legitimate way to account for loss is by demonstrating what the item cost, not what you are asking for it. In fact, such accounting is circular, since the list price of a product invariably includes a markup to account for losses due to shoplifting.

Now, let's take this one step further. Someone sees one of my action figures in the store and, since they cannot afford one, goes home, looks at one the neighbor just bought and makes one which looks just like it. (My grandmother did this with Cabbage Patch Kids while I was growing up. She would make them for the kids whose parents could not buy them.) Now how much has the manufacturer lost? By any normal accounting, absolutely nothing: no materials, no labor, no distribution costs.

If this is done on a massive scale, then some loss of market can be alleged. On the other hand, most of the loss is not caused by the "theft", but by the fact that the manufacturer priced themselves out of a market. If those action figures where sold for $6 (a healthy 50% margin), someone would probably not waste time trying to duplicate it. My grandmother would not be making cottage industry Cabbage Patch Kids if they had sold for $10 apiece instead of $150+. This scenario only occurs when the price of an item is totally out of line with what it really costs to make the item.

Now, the unfortunate part of this, is that people should respond by supporting local, independent artists instead of copying RIAA distributed music. That may be, but you should recall that the RIAA has worked very hard to squash the distribution of anything they don't control. I happen to know a bunch of small-time musicians and performers and personally, I would rather support them then copy the crap that the RIAA publishes and, personally, I do. But, just like kids getting tormented in school for not having a Cabbage Patch Kid (and kids can be vicious, it is hard, even as adults, to not be mainstream and listen to mainstream things. The various cartels have made mainstream music and movies a requirement for participating in modern culture. If you don't have it, you aren't with it, you can wait outside.

Re:Dont forget

This actually is a bad analogy: you might not have bought the car, but *someone* probably would have. Since only one person can be in possession of a particular car, your (hopefully hypothetical) theft IS a lost sale: not only does the owner lose the potential sale to you, they also lose the potential sale to every other customer on the planet.

This is analogous to walking into a CD store, taking a CD off the shelf, and walking out without paying. The difference between shoplifting and making an extra copy of a CD is left as an exercise for the reader.

Daniel

It's not something we can ever get hard numbers on

I'm sure you know ever really getting hard numbers on piracy is impossible just because the nature of the industry and who would really buy something if they couldn't get it for free.

Honestly the responce to it? I think they should embrace and encourage, maybe give a biz model similar to what Napster was pushing for. A distributed model (sign the music so you know it isn't tampered with) that will is a premium up and above the free realm stuff like kazaa. That way people still get their free stuff, the music companies get a shit load of revenue without much effort on their part and everyone is a little happy.

Of course they want to have absolute power over their product, think of the profit that could be made if they could control it no matter what. Or if they could do a pay to play model(pay per view), or if they could figure out a way to pull a microsoft in that they have a limited seat license that only one or 2, etc people could watch that copy of the movie at one time. That is a gold mine in their eyes and will be what they go for. Is it right...? No, but do they want it? Yes.

Piracy, P2P, and etc are just the latest buzz words for them to try and get what they can. Remember a couple of years ago how piracy was akin to supporting terroism, it is just getting more attention from you and I because it is now in a field that is affecting us more as techies.

1900s called, they want your business model back..

Sales are down for the RIAA... they're considering a CD sold at the point when they get paid for it, the point that it lands in the warehouse of a store chain, not the point at which it lands in a consumer's hands which is where Soundscan sets up its counting points.

The fact that store shelves are holding less in inventory is bad for them, but isn't exactly a sign of piracy, just a sign that the RIAA's business model is becoming dated.

I'm pretty sure that the major chains such as Wal-Mart and Best Buy would love to have a small CD factory in the back of each store in which they could print the discs and surrounding paperwork on a just-in-time basis. Afterall, both the music and liner notes could be available to the store over a digital network. Why ship physical packages that might not sell when you can just ship blank disks and figure out what to put on them later?

Bottom line, it's going to get worse for the RIAA. They profit from the wastes in the system, and the system just keeps getting better at not buying things that can't be sold to consumers...

Re:1900s called, they want your business model bac

Things change. Typically, no, commercial CDs aren't burned by a Plextor drive at the factory, but the market is changing and that's directing the industry to change too.

If burned discs aren't a solution, then they have to come up with a different solution. If they find a way to press one-off CDs because of the prodding, great for everybody. But maybe, just maybe, that's the hint that CDs themselves aren't the solution.

Don't consider it a problem that it can't be done now - it's an opportunity for a new product to be invented, a new mechanism to be introduced. Could be a digital distribution medium that will actually be researched rather than the crap they've been hacking together lately.
-N

I don't think it matters

If they have the moral and legal right to seek action against people who pirate music in the case where piracy is costing them lots of sales, then they have that same right in the case where it doesn't hurt them much or at all (or even helps them). Whether you have the right to copy music should not be decided based on how it affects the profits of the companies who make it. Either it belongs to them and these restrictions are permissible, or they are not.

Re:I don't think it matters

That's true. The problem is that using their numbers, they are lobbying congress to take consumers rights away and make the penalties for "casual piracy" (a few songs, as opposed to running a pirating ring where you copy and sell 1000s of discs) rediculous. They are also trying to do things like extend copyrights and such, which can easily negativly effect consumers.

They have the right to fight piracy. They DON'T have the right to use wildly missleading numbers to convince the government to help them prop up their failing business model.

Re:I don't think it matters

Well they have the right to use whatever misleading numbers they want.

Um, no they don't. It's called fraud.

Funny numbers?!?!

the RIAA is not reporting the most 'useful' numbers to the public."

OMG! Someone is using statistics to slant an issue their way! OMG!

Re:Funny numbers?!?!

All statistics are made up anyways, 3 out of 4 people know that.

Brownie points to the person who can identify that quote.

Well it makes since if you factor in....

... they have to hide the money they are keeping (stealing) from the artists somehow...

How Exactly is That Different

From all those companies lying about their revenue during the height of the stock market bubble/scam? Are the numbers the RIAA is reporting to us any better than the numbers Enron or Tyco reported to us?

Re:How Exactly is That Different

From all those companies lying about their revenue during the height of the stock market bubble/scam? Are the numbers the RIAA is reporting to us any better than the numbers Enron or Tyco reported to us?

The RIAA's numbers are at least correct counts of what they're supposed to be representing. However, consumers are paying less for music doesn't ring too when it's the wholesale transactions going down but not the number of retail transations. That just says there's less CDs sitting unsold on shelves these days...

We don't care about your stat...

Soundscan would also count an "unsigned artist's" CD just the same as any other because it went through the cash register... but the RIAA's stat doesn't include CDs sold by companies that aren't members of their group.

The RIAA represents most of the recording industry, but not all of it. Sales going down for the RIAA members does not always equate to sales going down for the industry...

You've got to make sure you know what a stat was really counting before you make conclusions based on it.