RIAA President Cary Sherman Participates in Online Chat with College Newspaper Reporters
November 18, 2005
Following is a transcript of the Nov. 18, 2005 CP NewsLink conference between college journalists and Cary Sherman, president of the Recording Industry Association of America (RIAA).
----------------------------------------------------
Friday, November 18, 2005 2:00 p.m. EDT
----------------------------------------------------
moderator: OK, let's begin. Thank you, everyone, for coming to the Recording Industry
Association of America (RIAA)'s CPNewsLink newsmaker conference today.
moderator We are pleased to welcome as our CPNewsLink guest this afternoon Mr. Cary
Sherman, president of the Recording Industry Association of America (RIAA). The
RIAA's member companies are responsible for creating, manufacturing, or distributing
90 percent of all legitimate sound recordings sold in the United States.
moderator: As many of you know, the RIAA is an organization frequently in the news
when it comes to issues of online file sharing and music piracy, and recent weeks
have been no exception. The recent shutdowns of file sharing services Grokster and
i2hub have generated headlines across the country.
moderator: Today, we will have the chance to hear from Mr. Sherman on these developments
and others affecting colleges and universities in the wake of the Supreme Court's
Grokster decision this summer.
moderator: Mr. Sherman, welcome.
cary_sherman_riaa: Good afternoon. It's great to join you all once again in this
forum. I very much appreciate the invitation. Before taking your questions, I have
just a few opening remarks.
cary_sherman_riaa: When it comes to illegal downloading, a great deal has changed
since I last participated in an online chat with college reporters in April of this
year: The U.S. Supreme Court has ruled unanimously in MGM v. Grokster that not only
individuals but businesses that encourage illegal file sharing can be held accountable
for their actions.
cary_sherman_riaa: That decision was followed by a series of similar international
rulings in Korea, Taiwan and Australia, where the Federal Court found Kazaa to be
illegal.
cary_sherman_riaa: Earlier this month, Grokster agreed to settle with the major
record companies, movie studios and publishers, marking an important milestone in
the continuing transformation of the online marketplace. And just this week, we
saw reports that i2hub had gone dark.
cary_sherman_riaa: What does all of this mean? Contrary to what you might think,
it means even more options for enjoying music and movies online. These developments
have given the legitimate online marketplace a tremendous boost - enhancing our
ability to invest in new bands and new music.
cary_sherman_riaa: This is, after all, about more than just the artists at the top
of the Billboard charts. This is about the next generation of music. It's less about
the musicians of today and more about the unsigned musicians of tomorrow. When you
download a song illegally or burn a copy for everyone on your dorm, you are undermining
the ability of the music companies to invest in the next great up-and-coming band
you have yet to hear about.
cary_sherman_riaa: The impact of these efforts is already being felt on college
campuses across the country, with almost 80 schools now offering students a legitimate
music service. This is tremendous progress from just two years ago, when this map
was qute literally empty. Yet we recognize that there is considerable work still
to be done, particularly in regard to addressing the emerging challenges of campus
Local Area Networks or LANs as well as unauthorized hacks of iTunes such as myTunes
and ourTunes.
cary_sherman_riaa: We look forward to continuing our work with the university community
on these important issues as well as our work with music services that respect the
laws protecting creators.
cary_sherman_riaa: With that, I am happy to take your questions.
moderator: Let's begin with a question that's on everyone's mind...
<Q>On a timely note, what do you make of the shutdown of the i2hub file-sharing
network earlier this week? What does it mean for students and file-sharing on campus?
<A>cary_sherman_riaa: We've seen the same reports that i2hub has shut down. To the
extent that this reflects their reading of the Grokster decision, we're not surprised.
In fact, other p2p's appear to have read the decision the same way, as WinMX has
also reportedly shut down, and other p2p's are in active discussions for how to
turn their businesses into legitimate services. What this ultimately means is that
venture capital money and advertising money will flow to licensed music services,
which will give them the incentive to innovate and provide even better music experiences
to their consumers. The winner will be music fans who want better and better online
music experiences.
moderator: OK, now we will turn it over to our participants for some questions.
Participants, if you can, when asking a question, please state your school and newspaper
name at the front of your question.
moderator: And now we will move to take our first question... Please stand by.
<Q>UMass - Amherst, The Massachusetts Daily Collegian: Mr. Sherman, I am wondering
what your thoughts are on the price of music to the public. In that what is the
production cost of a CD and how much of the money goes to the musicians and the
record company as profit. I feel that a lot of people cannot justify spending $15
on a CD to give more money to people that are already very wealthy.
<A>cary_sherman_riaa: It's a common misconception that when people spend $15 on
a CD, they're simply paying ultra-rich megastars and big record labels. First, a
lot of that $15 goes to the record retailer who is trying to make a living by selling
music. But more importantly, behind the artist you've heard of, there are countless
others who have contributed to that recording or to trying to make that recording
a commercial success. Studio musicians and background vocalists, the members of
the band, the studio engineers, the producers, the songwriters and publishers, the
marketing and promotion people -- you wouldn't believe how many people get involved
in the making of a CD from conception to distribution. They make their living by
the revenues that are earned from the sale of the product. When people download
it without paying for it, or get a burned copy from someone else, there's that much
less money for the people who worked to make that recording. And there's also a
lot less for record labels to invest in another artist tomorrow.
<Q>USC, Daily Trojan: Can you please briefly explain what I2Hub is?
<A>cary_sherman_riaa: i2hub is (or was) a file-sharing network that was specifically
configured to operate on Internet2, an ultra-high-speed network largely used for
academic research purposes. Unfortunately, the major use of i2hub was copyright
infringement, especially of movies and music albums, because they could be transferred
in minutes instead of hours.
<Q>Columbia University, Columbia Spectator: With fears of illegal file sharing throughout
the music industry, many companies have taken measures into their own hands. Within
the last two weeks, there has been a great deal of discussion about Sony BMG's rootkit
program. Does the RIAA condone such actions on the part of individual companies
to protect their profits?
<A>cary_sherman_riaa: There is nothing unusual about technology being used to protect
intellectual property. You can't simply make an extra copy of a Microsoft operating
system, or virtually any other commercially-released software program for that matter.
Same with videogames. Movies, too, are protected. Why should CDs be any different?
<A>cary_sherman_riaa: The problem with the SonyBMG situation is that the technology
they used contained a security vulnerability of which they were unaware. They have
apologized for their mistake, ceased manufacture of CDs with that technology,and
pulled CDs with that technology from store shelves. Seems very responsible to me.
How many times that software applications created the same problem? Lots. I wonder
whether they've taken as aggressive steps as SonyBMG has when those vulnerabilities
were discovered, or did they just post a patch on the Internet?
<A>cary_sherman_riaa: One other thing to point out: The music industry has been
more permissive about copying of its copyrighted product than virtually any other
industry. How many burns are you allowed of a movie? None. How many of a videogame?
None. You get the idea. Even the CDs with content protection allow consumers to
burn 3 copies or so for personal use. The idea is not to inhibit personal use, but
to allow personal use but discourage (not prevent, you can never prevent) copying
well beyond personal use.
<Q>University of Southern Mississippi, The Student Printz: History seems to show
that anything done to stop files sharing will only create new methods and technologies
to get around their controls. In light of that, should the middlemen (RIAA, et al)
be thinking about ways to bring consumers what they want -- which they'll mostly
end up getting in any case -- instead of futilely struggling to keep their finger
in the dike, which ultimately only causes further public unhappiness with them?
<A>cary_sherman_riaa: History also shows that no matter what is done to stop bank
robberies or shoplifting, some people will always find a way around those techniques.
Does that mean we should simply give up and allow people to take what they should
be paying for? Record companies ARE trying to give consumers what they want. Think
of how music was available just a couple of years ago and how it's available now.
You can buy an individual track, at any time of the day or night, and get it instantly
on line. You can subscribe to services with a million-and-a-half tunes to choose
from that you can listen to whenever you want, for an all-you-can-eat monthly fee.
<A>cary_sherman_riaa: And these models are just the beginning. Online offerings
(as well as new forms of physical offerings) will continue to get better and better.
That's the marketplace at work.
<Q>University of Southern Mississippi, The Student Printz: If gun makers are not
liable for the public's illegal use of their products, why are p2p sites?
<A>cary_sherman_riaa: <A>If a gun manufacturer encouraged a gun owner to use the
gun in the commission of a crime, you can be sure that they'd be liable. The Supreme
Court said that Grokster could be liable for actively encouraging or inducing its
users to commit copyright infringement.
<Q>CPLisa: A question submitted via e-mail... It has been said that since the lawsuits
began a couple of years ago, the number of P2P users has doubled. It seems that
the lawsuits are not really that effective at stopping the file-sharing problem.
What can the RIAA do at this point to make a bigger difference in the ongoing battle
against piracy?
<A>cary_sherman_riaa: There's a lot of conflicting data about the level of p2p file
sharing. It's not easy to monitor what is actually happening on the Internet, so
I guess it's not surprising that the data would be inconsistent. We've seen data
that shows that file-sharing has remained relatively flat, and some that shows growth,
but at far lower than the rate it was growing before the lawsuits. And relative
to broadband penetration, which has gone way up, file-sharing has been either level
or gone up only slightly.
<A>cary_sherman_riaa: Whatever we do, we know that file-sharing will continue, just
as physical piracy will always continue no matter what we do. We all recognize that
the most important thing we can do to deal with illegal activity online is give
consumers a better alternative -- a legal service that they love. That's what lots
of companies are now doing, and we hope that ultimately the legitimate marketplace
will outpace the illegal downloads.
<Q>U. of Houston: What future measures does the RIAA plan against music piracy?
Is it going to be protected so no one can make a copy of cds?
<A>cary_sherman_riaa: You've got to distinguish between what RIAA does and what
individual record companies do. RIAA will continue to protect intellectual property
rights in court, etc. But only an individual record company can decide to use copy
protection on a CD. Record companies have different policies on whether to use such
technology, but I know of no record companies in the US that have sought to prevent
the making of any copies at all. Everyone understands that consumers want to be
able to listen to their music in their car, in the family room, at the beach, and
that allowing them to do that is part of giving them a great music experience. So
even when a CD is protected, it will almost certainly allow personal use copying.
moderator: And that leaves us time for one more question.
<Q>UMass - Amherst, The Massachusetts Daily Collegian: Thank you for your answer,
Mr. Sherman. Is it not rather harsh of the RIAA to be suing college students that
most likely will not have the ability to pay the fines imposed on them? And along
those same lines will the RIAA still follow though with the lawsuits even after
all the p2p networks are shutdown and college students get the point and stop downloading
music illegally?
<A>cary_sherman_riaa: Obviously, anyone who has stopped downloading (or uploading)
illegally will not get sued. Lots of college students try to justify taking music
for free because they can't afford it. That, of course, is no excuse, any more than
it would justify stealing a CD from a record store. And for generations, students
have spent their hard-earned dollars on the music they love in the local college
record store. How many of those stores are left now? Makes you realize just what
the impact of illegal downloading can be, and why we've taken the actions we have.
moderator: Mr. Sherman, any closing remarks?
cary_sherman_riaa: I want to thank all of you for participating in this afternoon's
chat. Illegal file sharing on college campuses is an issue that looms large for
us, making it all the more important that we take opportunities such as this to
help the higher education community better understand our positions and actions.
Thank you for your thoughtful questions and for your time today.
moderator: This concludes today's newsmaker conference with Cary Sherman, president
of the Recording Industry Association of America (RIAA). The conference is brought
to you on CPNewsLink, a joint service of College Publisher and Collegiate Presswire.
moderator: On behalf of the RIAA, thank you for attending, and thank you for your
interest. And, on behalf of the college journalists attending this event, and those
reading about it, our thanks go out to Mr. Sherman for taking time out of his busy
schedule to chat with us today.
moderator: If you have additional questions about this story, please direct them
to Jonathan Lamy, Jenni Engebretsen, or Amanda Hunter of the RIAA at (202) 775-0101.
moderator: Additionally, for your use in writing a story, we will be sending a full
transcript of this event over Collegiate Presswire to all of our subscribing newspapers
shortly, and we'll be posting a copy on the front page of the CPNewsLink website
after that. (http://www.cpnewslink.com)
moderator: As a reminder, we will be hosting additional CP NewsLink newsmaker events
throughout the upcoming year, so please keep an eye on this website for details.
moderator: We hope you enjoyed this chat, and trust that it provided you with some
insight and perspectives into this issue for your use in writing stories on this
topic.
moderator: Thank you, once again, for attending today's CP NewsLink conference.
moderator: Good bye, everyone!
#####
The Recording Industry Association of America (RIAA) is the trade organization that supports and promotes the creative and financial vitality of the major music companies. Its members are the music labels that comprise the most vibrant record industry in the world. RIAAŽ members create, manufacture and/or distribute approximately 85% of all legitimate recorded music produced and sold in the United States.
In support of this mission, the RIAA works to protect the intellectual property and First Amendment rights of artists and music labels; conduct consumer, industry and technical research; and monitor and review state and federal laws, regulations and policies. The RIAAŽ also certifies GoldŽ, PlatinumŽ, Multi- Platinum™ and Diamond sales awards as well as Los Premios De Oro y Platino™, an award celebrating Latin music sales.