Music sales slide despite RIAA's crushing blows against piracy

Downloads did more than double in 2005. but they still account for less than 5 per cent of total music sales. Apple dominates this market with iTunes, leaving the likes of Real and Napster to fight over scraps. For example, despite noble efforts to attract new business at colleges and to confuse consumers with misleading anti-Apple ads, Napster continued to post loss after loss during 2005 and saw its shares drop from close to $10 to $3.50. Meanwhile, Apple's shares went up more than 100 per cent.

Other sites such as Pandora show just how hard the RIAA makes it to buy music. The folks at Pandora have done everything they can to circumvent online music restrictions by letting users set up a type of radio station. You pick the bands that you like, and then the Pandora service goes and finds new music that you might enjoy. You can let Pandora play in the background, and the service is to some degree addictive and useful.

On the other hand, you're only allowed to skip about six songs an hour because of music industry restrictions. Then, Pandora doesn't even sell you the songs directly. It links to iTunes and gains just a few pennies every time it facilitates a sale.

Bless the Pandora crew for finding a creative way to play within the rules, but this type of service goes to show just how hopeless the music industry is at making use of the internet.

The obvious motivation behind the music industry's fight against music trading on the internet is that it hoped to cash in on the new online music formats just as it had done with the move from records to tapes and then CDs. The pigopolists wanted you to buy entire music collections once again. The labels, however, didn't come up with online stores quick enough and have spent the last few years trying to stop companies that did create such stores.

The hope has long been that online music would drive a new boom and that artists, publishers, moguls and device makers would all benefit.

Well, they haven't. Instead, Apple has benefitted. Apple has made billions off the iPod and even breathed new life into its computer business as a result of the device. It now owns the vast majority of the download market and has the labels scrambling for a way to deal with the company. New York's Attorney General Eliot Spitzer has subpoenaed the major labels to make sure they're doing this dealing in a fair way.

The very company with the "Rip, Mix, Burn" slogan so hated by the music and movie industry has come to own the delivery of music and even TV shows on the web. That's got to make Apple's CEO Steve Jobs laugh but does little for consumers who are stuck with DRM (digital rights management) locks on their music regardless of who wins the current battle.

The truth of the matter is that the music industry will go on searching for this boom for a long, long time. It will keep blaming piracy and not itself for failing to reach the end goal. Thousands of music buyers will be sued. The music labels themselves will probably be sued. Companies like Pandora will pop up, die and pop up again. Napster will keep floundering. And consumers will continue reading the fine print of DRM handouts included with CDs and online to tracks to figure out when and where they can play the music they own. In this environment, music sales can't do anything but decline.

It won't happen in 2006, but eventually the music labels will realize how wrong they've been. This cycle has run its course before, dating all the way back to the player piano and the first recordings of live performances. One day, a smarter than average pigopolist will realize that DRM-laced downloads, gimpy online services and lawsuits aren't the best means for winning consumers' hearts. That's when music sales will rise again.

So, while we might be in the dark ages of online entertainment, we do have hope. And that's something, although not something to be particularly proud of. ®