The Online Mistakes Of The Music Business

Bad decisions lead to lost revenues

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In the April issue of Blender, they take a look at the "20 biggest record company screw-ups of all time."

Topping the list is the major record labels and the Recording Industry Association of America (RIAA) for rejecting a billion dollar settlement from Napster and not finding a way to make money off file sharing services.

The report says, "The labels’ campaign to stop their music from being acquired for free across the Internet has been like trying to cork a hurricane-upward of a billion files are swapped every month on peer-to-peer networks. Since Napster closed, ‘there’s been no decline in the rate of online piracy,’ says Eric Garland of media analysts BigChampagne.

The much-loathed RIAA appears again at number five for suing single mother of two Jammie Thomas for using the P2P service Kazaa to illegally share MP3 files of 24 songs. Last October she was found guilty and ordered to pay $222,000 in fines which equals $9,250 per song. Thomas is planning to appeal.

Coming in at the number nine spot is Sony BMG for putting copy-protection software on CDs, which installed a "rootkit" on users computers along with not allowing people to make more than three copies of legally purchased CDs and making them vulnerable to viruses.

The Department of Homeland Security issued an advisory and Sony recalled 4 million CDs. The label was accused of spying on its customer’s listening habits and ordered to pay several million dollars to settle class-action lawsuits that alleged violations of spyware laws.

Landing at number 19 is the recording industry’s decision to abandon the single format and force people to buy entire albums. "Greed to force consumers to buy an album [resulted] in the loss of an entire generation of record consumers," says Billboard charts expert Joel Whitburn.

"People who could only afford to buy their favorite hit of the week were told it wasn’t available as a single. Instead, they stopped going to record shops and turned their attention to illegally downloading songs."


The Online Mistakes Of The Music Business
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