Record Industry Win in Capitol Records v Thomas a Public Relations Problem

By Richard Menta 6/20/09

I'm sure RIAA and the major record labels are very happy with their victory in Capitol Records v. Thomas-Rasset, but even they appeared caught off-guard by the large damages awarded to them. So much so they kept rather low key about the win. As Ars Technica noted "though clearly pleased, [they] had no desire to showboat this one." There is good reason for the industry's subdued reaction. From a public relations standpoint it's possible the award will cost the industry far more than the dollar figure the jury affixed to each song download.

It's hard to place a dollar figure on goodwill, because it is so difficult to isolate and measure. The value of goodwill is real though, so much so that industry as a whole spends billions of dollars in PR activities to ensure they stay in the consumers favor. The record industry has not been so good at protecting its name. In fact, it's efforts have been atrocious as I went into lengthy and methodical detail back in August of 2007 in the article Record Industry Woes Aggravated by Years of Bad PR.

For years I felt I was the only one who wrote about the negative PR effects of the industry's war against file sharing. The record labels point to file sharing as ther main cause of year-to-year revenue drops the industry experienced since ther original Napster was shuttered in 2001. The rise of DVD and video game sales have also had an effect, though the industry rarely points to them as culprits. In my heart I feel this nearly decade long string of horrible PR is the number one culprit. But, as I pointed out earlier, it's very difficult to measure the effect of badwill, so my opinion can quickly be dismissed as a factor by those who simply don't want to deal with it. More are starting to realize that this damage is real.

Many posting their opinion on the trial feel the award is an embarassment. Almost two million dollars for 24 songs. That's a lot of money for two dozen tracks that retail on iTunes for $0.99 each. The anger generated on posts throughout the Web over Capitol Records v. Thomas-Rasset is loud and quite visible.

"It's another pyrrhic victory for the music industry" wrote Motley Fool in it's article The RIAA's Win Is Yet Another Loss. "Nice going, RIAA. You're the Kobe Bryant of the music industry. You may have won it all this month, but that just means that even more people despise you now than you'll ever know."

In it's article Big Music File-Sharing Penalties Getting Tuned Out the Pittsburgh Post-Gazette quotes Electronic Frontier Foundation attorney Frederick von Lohmann who also feel the labels lost more with the court victory. "If you read between the lines, the recording industry is a little chagrined. They're not celebrating, saying this is what she deserved," he said. "They're sensitive this is an outrageous amount. Even people who are otherwise on their side wouldn't disagree. In some ways, this assists critics of the recording industry."

The headlines alone suggest many now recognize severity of the issue. 'Insane' $1.9 million verdict could prove RIAA's downfall writes ZDNet.

The damage that the major labels and the RIAA have done to the record industry's reputation is extensive and long-lasting. The question is not if Capitol Records v. Thomas-Rasset will make it worse, but by how much. A sharp drop in CD sales the week following the trial would be a most visible reaction, though most times the drama occurs over months rather than a single week. This only makes it easier to deny the direct effect for those who wish to continue to bury their heads in the sand.

I don't think there are many of those people left, not with CD sales down over 20% from last year. That's why the industry for once appears worried over the potential backlash of this trial.



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