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Hey, Music Industry. You're suing the wrong people

Price is the problem. Not pirates

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Open...and Shut After years of lawsuits and fearmongering by the music industry, one thing is clear about piracy: the industry has been suing the wrong people.

According to new research, file-sharing is rather limited in North America and the European Union, though running relatively rampant throughout Latin America, Asia-Pacific, and the Middle East. Back in 2002, Tim O'Reilly called piracy "progressive taxation" – an idea that resonates even more today than it did when O'Reilly first coined the term.

We don't have a music piracy problem. Rather, we have a music pricing problem, with music sales in emerging economies crippled by pricing strategies that don't differentiate between the comparatively rich West and its less-rich neighbors.

You'd never know this by watching the Recording Industry Association of America, the music industry's trade organization, which has spent over a decade launching lawsuits against individuals and groups within the United States. And although the RIAA decided to drop its strategy of mass lawsuits back in 2008, it continues to collude with the MPAA to hound ISPs into spying on their users in an effort to fight piracy.

But forget for a minute whether the RIAA's actions are morally correct or not. Instead focus on whether they're actually successful.

By any measure, the RIAA's actions have yielded little fruit, in part because the organization has focused on easy but wrong targets. As The Economist reports, roughly 10 per cent of North Americans surveyed by Nielsen have used file-sharing software in the last three months. In the European Union, that number jumps to approximately 20 per cent.

But in emerging economies in Latin America (~45 per cent), Asia-Pacific (~42 per cent), and Middle East and Africa (~41 per cent), the percentages of those using file-sharing software is much higher.

We could assume that this is because the bulk of the world's population is comprised of thieves and liars, but this is probably a bad assumption. And while there are some social norms that differ between, say, the United States and China (copying software or music is viewed differently in the two places), it's much more likely that the major impetus behind "piracy" is economic and technological, not social.

Tim O'Reilly has argued" that piracy is progressive taxation in the sense that high-profile artists get "taxed" more heavily through piracy than obscure artists, who fundamentally gain by having their works "pirated" (thereby helping them get out of obscurity more quickly). Speaking about piracy of O'Reilly's online books, O'Reilly further noted:

[M]any of those who do infringe respond to little more than a polite letter asking them to take the materials down. Those servers that ignore our requests are typically in countries where the books are not available for sale or are far too expensive for local consumers to buy... The simplest way to get customers to stop trading illicit digital copies of music and movies is to give those customers a legitimate alternative, at a fair price.

The Economist drives this point home by calling out the price of The Dark Knight when it was released. In the US it went for roughly $20, while in Russia the same DVD sold for the equivalent of $75, and in India it went for the equivalent of $663.

The same pricing differential exists for music. A CD in India costs around 500 rupees, which is around $10. But the real cost, when taking GDP into account, is much higher.

It's unrealistic to expect people to pay such a high rate, relative to their country's GDP, for music.

It's also foolish to continue suing the wrong people. Given that the West apparently pays for most of its music, it's time for the RIAA to either look abroad with its lawsuits (good luck!), or better yet, find ways to match pricing and availability of music to individual markets.

Piracy is not a uniform problem throughout the world, so the RIAA's one-size-fits-all approach is as ineffective as it is misguided. ®

Matt Asay is senior vice president of business development at Strobe, a startup that offers an open source framework for building mobile apps. He was formerly chief operating officer of Ubuntu commercial operation Canonical. With more than a decade spent in open source, Asay served as Alfresco's general manager for the Americas and vice president of business development, and he helped put Novell on its open source track. Asay is an emeritus board member of the Open Source Initiative (OSI). His column, Open...and Shut, appears twice a week on The Register.

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