Legal notes: Cary’s way

Legal notes: Cary’s way

To millions of people, Cary Sherman is about as popular as Metallica’s black album at a disco. As president of the Recording Industry Association of America (RIAA), Sherman has vigorously prosecuted online music pirates, as the arch-enemy of popular file-swapping services from Napster to Kazaa. Sherman, 55, co-ordinates the RIAA’s legal, policy, and business objectives. Before joining the RIAA in 1997, Sherman worked at the Washington DC law firm of Arnold & Porter, where he headed the firm’s Intellectual Property and Technology Practice Group. Sherman not only represents musicians and songwriters, he is one as well.

His challenges today are daunting. He wants to wean millions of people off freewheeling file-swapping networks and steer them toward legitimate online music services. Sherman also says he aims to lead the music industry into wholeheartedly embracing the Internet and uploading its entire repertoire for legal online distribution.

IDG gave Sherman the chance to weigh in on a variety of hot topics, from suing music fans to buying songs online. Whatever happens it will, ultimately, affect the channel. An edited transcript of the conversation follows. TOM SPRING asked the questions.

How are your efforts to protect your members’ copyrights going? Sherman: Good. People are more aware now than ever before that uploading and downloading other people’s copyrighted music without permission is illegal. They’re thinking twice about doing it. Having taken the action we have — namely, going after individual infringers — it looks, initially, as though we are seeing a beneficial impact.

How have enforcement efforts evolved over time, and how might they change in the future? Sherman: We started with an education campaign, and have been running it for a number of years. Next we combined education with litigation against the peer-to-peer services for facilitating infringers.

But it became obvious that it would be necessary to go after the individual infringers once the courts ruled that Grokster and Morpheus couldn’t be held liable for the copyright infringements.

We will continue to pursue infringers. Anything less is like telling people that there won’t be anymore cops looking for speeders.

But the most significant component of our strategy is to offer legitimate alternatives. Unfortunately, some people feel they have an inalienable right to steal music.

So protecting copyrights includes offering new services like Apple iTunes.

Sherman: That’s right. It’s very difficult for legitimate services to compete with stolen copies of the same product. The RIAA is, in effect, taking action against a shoplifter in order to preserve the retailers’ market.

Don’t you risk perpetuating a decline in CD sales by suing music fans? Sherman: People need to understand enforcement actions are intended to support the legitimate alternatives. If consumers gravitate toward those legal services, we will have done our job.

The only people who will not buy CDs because we are taking action against infringers are the people stealing music. That’s not a very good customer base.

Retailers sue shoplifters. DirecTV has filed over 10,000 cases against people who steal their satellite signal. It just surprises me that when record companies do precisely the same thing, people think that it will alienate their customers.

What’s the public’s biggest misconception of the RIAA? Sherman: People think the RIAA is insensitive to what consumers want and assume we are trying to preserve old business models. That couldn’t be further from the reality.

The record industry has woken up to the reality of the new Internet marketplace. We are excited about the prospects that the Internet offers for an entirely new distribution mechanism for music.

We just have to bring the piracy under control to enable new business models to take root and prosper.

What kind of new business models are you talking about? Sherman: We are already making a lot of new business models. Just look at the past month, with the opening of Apple iTunes (for Windows), Napster is launching, and is only a couple months old. The number of legal download and subscription services that are getting really good reviews right now is staggering.

When do you think consumers will embrace legitimate services? I keep trying these services out, and am disappointed because of restrictions — and I still can’t find all the music I want. Sherman: First off, artists have an obligation to support the rest of the artistic community by licensing their works. Music services have not been able to get licenses from superstar artists like the Beatles. When an artist refuses to license their work, I think that is a vote in favor of piracy instead of the legitimate marketplace.

Do you feel like you need to improve the RIAA’s image with music fans? Sherman: We aren’t trying to win a popularity contest. This is about whether you’re going to have a vibrant music industry and an investment to support artists’ careers. If somebody has to be the heavy on this, better that it be the RIAA than the artists whose livelihoods are at stake.

Do you believe that the RIAA’s interests come before the interests of Silicon Valley companies that are trying to market tools that give consumers the ability to do more with their media? Sherman: No. This is not a question of one industry’s interests being more important than another’s. It’s a question of finding the right balance.

We love new technologies and have inevitably prospered from them.

What we are opposed to is businesses built on infringing other people’s copyrighted products. We love peer-to-peer technology; we hate businesses that are built on using peer-to-peer to sell advertising with the draw of stealing other people’s works.There are legitimate ways to use technology, and then there are abuses of technology.

Do you support mandating copyright protection mechanisms in PCs, CD players, or anything else that can play, record, or manipulate data? Sherman: We actually were not supporters of the Hollings bill that called for just such measures. We thought it was an important means of emphasising the problem of digital piracy. But technical mandates are not the best way to fix the piracy problem. These issues are best addressed voluntarily in the marketplace.

You mean makers of computer software and devices should voluntarily put restrictions on equipment? Sherman: Look at the DVD model, where multiple industries worked together to come up with some form of protection that was sufficient to encourage the motion picture studios to release their content on this new format, and consumer electronics and IT companies have been able to support (the medium) because they thought that these were reasonable protections.

In the age of digital distribution, some argue that the RIAA is obsolete. Why should the RIAA, which is composed primarily of five music companies, control 80 per cent of the music? Sherman: We have no problem with a music industry that is more diversified, that gives new opportunities for new labels and new artists. This is not about maintaining control; it’s about being fair in regards to the ability of people to get paid for their work.

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