New Plan To Save Music Industry: Jailing Leakers

When Guns N' Roses released "Chinese Democracy" last November, it shot to the No. 3 spot on Billboard. The album, the group's first since 1991, has so far sold more than 2.6 million worldwide, Billboard recently reported.

But the Recording Industry Association of America thinks sales would have been even greater had Kevin Cogill not posted tracks on his blog last year, before the official album release date. Cogill was arrested last year and pleaded guilty to a misdemeanor. At the time, his lawyer anticipated the court would place Cogill on probation.

Now, in a victim impact statement, the RIAA says that leak cost it more than $3 million. The organization arrived at that figure by multiplying the estimated number of unauthorized downloads (which it pegged at 350,000) by the retail cost of the album ($8.91).

But there's a problem with this math: Not everyone who downloaded would have otherwise purchased the album. Some of the downloaders might have spent money on a CD, but others might have ripped free streams, or borrowed copies from friends, or simply have ignored the album altogether. In fact, at least one other court has recognized that downloads don't equate to lost sales.

The music industry has said it will be happy with $30,000 in restitution and public service announcements by Cogill.

Cogill has other problems, though. The prosecutor in the case is demanding prison time, even though the probation department recommended a sentence of probation. Why? The U.S. Attorney's Office says probation won't adequately protect the music industry: "The recommendation does not reflect -- or discuss -- the gravity of the offense and will do nothing to deter other would-be leakers in this rapidly expanding threat to the music industry," the prosecutor argued in papers filed with the court.

Frankly, it's going to take a lot more resources than anything the U.S. Attorney's Office has at its disposal to protect the record labels from the threat to their business model posed by the Web. It's long past time the music industry came up with a business plan that acknowledges the reality that tracks will leak online and fans will share them.

3 comments about "New Plan To Save Music Industry: Jailing Leakers".
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  1. John Carnegie from Carnegie Consultants, March 17, 2009 at 5:30 p.m.

    I don't condone the actions taken by Kevin Cogill, but the RIAA is delusional to think that Chinese Democracy sales revenue was adversely affected by anyone other than Axl Rose. I'll be 44 in April, and 15 years was a long time to wait for the next Guns N' Roses album.

    The music industry was clearly warned that their business model needed to change as far back as 1990 (before the World Wide Web and mp3 files were being shuttled through cyberspace). They had almost 20 years to modify their actions, and assault by litigation won't gain them the lifetime customers that they covet.

    I've had the pleasure of consulting to a number of entrepreneurs that have created new business models that are attractive to new music enthusiasts and are producing financial rewards from a market segment with hundreds of billions of dollars in purchasing power (the same 'suspects' being litigated by the RIAA and labels).

    I welcome the opportunity to elaborate upon request...

  2. Lee Jarvis, March 20, 2009 at 1:03 p.m.

    Absolutely correct. The majors and RIAA are trying to force everyone to conform to their business models of the last 50 years. The industry has been revolutionised and the new generation of artists and entrepreneurs are coming up with amazing new ways to create, share, discover and monetise all the time. You need to adapt or you won't succeed in the future industry.

  3. Chris Johnson, April 15, 2009 at 2:54 p.m.

    I'd like to take you up on that offer John

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