Mac Musings

Corporate Greed at Work: The RIAA, MPAA, Apple Computer, and Universal Music

Dan Knight - 2006.12.06 - Tip Jar

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"The love of money a root of all kinds of evil."
 - St. Paul, letter to Timothy

Greed isn't a good thing. In fact, it's considered on of the seven deadly sins. When combined with sloth or laziness (another one from the list), it's even worse. And when you add to it pride and gluttony (also deadly sin), you've got an unwanted combination.

Yet we see it every day, and some recent examples show the level of corporate depravity in today's world.

The RIAA vs. Anyone

With Apple and a host of other selling music online at 99¢ a pop, the RIAA is going after music "pirates". It's threatened to sue over 17,000 people, although it has yet to take a case to court. Some of those people have been children, grandmothers without computers, and even dead people.

Not one case has made it to court, but the RIAA has settled out of court with countless individuals for thousands of dollars. Why? Because in most cases it's cheaper for the person to settle than to hire a lawyer. It's practically extortion.

There's no doubt that the RIAA, the record companies, the copyright holders, and the artists are losing some income because of illegal file sharing. But the amount they are suing for is way more than the double- or triple-damages usually seen.

For the cost of sending another batch of emails, the RIAA can collect thousands upon thousands of dollars without ever proving their case or going to court. In fact, in cases that have been scheduled for court, the RIAA has done all it can to prevent that from happening.

Greed. Sloth. Gluttony.

Why not concentrate on shutting down the file sharing and licensing this music to people who have it illegally rather than lining your pockets through the threat of a lawsuit?

The MPAA vs. Anyone

If you have a TV over 29" in size, "comfortable" seating for two or more, and stereo sound from your videos, the MPAA wants the law to declare you a movie theater - and collect a $50 license fee to make up for all of those sales they lose when you have friends over to watch the latest DVD in your own home.

That assumes that you do have friends over to watch videos. And that there's some magical difference between a 20" TV and a 30" one. And that mono sound should keep you below the radar no matter how big your TV or how many seats you have. And that having more than a single chair in front of your TV implies that your home theater isn't exclusively for private use.

Yes, I realize that videos are for "private use" only, but it's insane to think that just because I have my girlfriend over to watch a movie we just rented, I have to pay a license fee. Sorry, MPAA, but what goes on in my living room is private; this is not a theater open to the public.

Like the RIAA with its file sharing lawsuits, the MPAA sees a way to make money without doing a blessed thing.

Of course, the RIAA has already demonstrated that the threat of a lawsuit is enough to get some people to cave. If the MPAA ever has a way to track who buys large screen TVs, rest assured that they'll attempt the same kind of nonsense.

Apple vs. iPod Accessory Makers

When the iPod was new, Apple welcomed companies that made accessories for their fledgling device. They later added an optional "Made for iPod" program to identify products tested to work with the iPod. All it cost was 10% of the retail price, later adjusted downward to 10% of wholesale. All good and well.

Then Apple made the program mandatory for everyone who made an accessory that used the iPod's dock connector. At 10% of wholesale, that adds a lot to a $400 speaker system, and that was clearly unfair to the consumer. So Apple changed course and switched to a US$4 per unit fee.

That's great for Bose and others who make high-end iPod accessories, but for those who make $20 cables, it could boost retail by 50% by the time costs are added on at distribution and retail.

Isn't Apple making enough selling tens of millions of iPods per year and through their iTunes Store?

If the iPod weren't so popular - helped along by those accessory makers - we might see a revolution of some sort. And Apple should remember that its FireWire license fees were what precipitated the creation of the USB 2.0 standard, which has eclipsed FireWire. Even Apple's own iPod no longer supports the older, superior standard.

I don't mind seeing a company make money from the products it sells, but forcing accessory makers to pay a per-unit fee amounts to extortion.

Universal Music

The latest player in the "let's see how much money we can grab without any cost to ourselves" game is Universal Music, which negotiated a $1 per unit fee from Microsoft on the Zune media player.

So what, you might wonder. The Zune is a bust compared to the iPod and other digital music players on the market.

Well, Apple's contract with Universal Music comes up for renewal soon, and Universal's CEO has already hinted at wanting the same kind of deal they got from Microsoft.

Universal Music is already making money selling CDs to retailers and digital downloads through Apple and others. Isn't it enough to make money from their product? Do they have to grab for a bit of money from every iPod shuffle sold?

Thanks to the iPod and the iTunes Store, Apple has single-handedly created a new, lower cost distribution channel for Universal's products. It costs Universal no more whether one person or a million people buy a track, and Apple has no inventory costs. Once a track has been added to iTunes, it turns into a money machine for Apple and the music publishers.

I hope that Apple won't cave to Universal's greed. If that means dropping the Universal catalog from the iTunes Store to make its point, that's something Universal is going to notice more than anyone else. After all, it's not like we have a subscription music system where they can unlicense the tracks on our iPods.

Greed Is Bad

Greed is bad, and the hubris we're seeing from these companies with near monopoly power and huge legal teams makes sure that what feels like extortion is perfectly legal.

"The love of money a root of all kinds of evil." Let's hope the RIAA, MPAA, Apple, and Universal Music are more interested in making a legitimate profit than some of these mob-like tactics seem to indicate. LEM

Further Reading

Dan Knight has been using Macs since 1986, sold Macs for several years, supported them for many more years, and has been publishing Low End Mac since April 1997. If you find Dan's articles helpful, please consider making a donation to his tip jar.

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