RIAA LEGAL CHIEF PLEDGES THAT SUITS WILL CONTINUE

Of the 1,500 suits filed, about 400 have settled and none has gone to trial, Marks said. RIAA hasn’t sought to go after any particular demographic of consumer in suing individuals because “we don’t know who they are,” Marks said. Recent actions have been filed against “John Doe” defendants, citing their IP addresses where the most prolific unauthorized P2P activity has been found by RIAA investigators sampling the sites as any user would, Marks said. P2P sharers currently targeted typically offer several hundred songs for unauthorized downloads, Marks said. He said that average has declined steadily since publicity about the RIAA’s legal campaign began last year.

Responding to a question whether the RIAA would go after a college freshman found to have downloaded 12 songs and unaware of the legal ramifications, Marks said the casual downloader was “certainly not our target.” At the same time, the casual user who downloads only 10 or 20 unauthorized songs “has to be made aware that that is just as illegal” as the P2P user who offers hundreds for unauthorized file-sharing, Marks said. RIAA’s legal campaign “will evolve over time,” so as to who would be targeted, “it’s hard to say never this, never that,” Marks said.

The suits were never meant as “a money-making enterprise” to recoup the losses from unauthorized downloads, Marks said. The legal campaign was designed as a “deterrent” and “part of a broader plan, and the main part of that plan is really to provide an environment” for music downloads to “flourish on a legitimate basis,” Marks said. Legitimate music downloads recently surpassed 2 million weekly for the first time, Marks said: “That’s a great thing, but it pales in comparison to the illegal activity.”

The campaign of filing suits against individuals “will continue for the foreseeable future, no doubt about it,” Marks said. He said an important by-product of the campaign was that it has “created a national debate,” and the awareness raised as a result has “trickled down” to the grass-roots consumer. He said polls taken in late 2002 showed only 1/3 of those surveyed believed unauthorized P2P file-sharing was wrong. Those same polls taken today show a “35-point shift” toward belief it’s wrong, Marks said.

Marks conceded there’s “no specific data” to prove a reduction in illegal P2P activity related to a slight resurgence recently in packaged music CD sales. Unauthorized file-sharing was “growing like wildfire” before the suits; “now at least we've stopped the growth,” Marks said. At the same time, he emphasized that the campaign “is not a witch hunt against P2P technology,” which RIAA believes can be harnessed for legitimate business purposes.

Keynoter Sean Ryan, vp-music services at RealNetworks, said his company puts stock in research reports that the legitimate digital music market in the U.S. will grow to $200 million in 2004 sales from $75 million last year. He said 60% of that revenues will come from a la carte downloads, the rest from subscriptions. He predicted a market shakeout of unsuccessful ventures by year-end, making the market more fertile for survivors in 2005, when there’s the potential for sales to grow to $500 million.

Responding to a questioner, Ryan said “this is the first generation of music that has had downgraded quality from the previous one.” With the further growth of the online music business next year will come the emergence of “market segmentation,” including the introduction of “premium services” offering “much higher” audio quality than MP3, and even multichannel surround, Ryan said. Despite 2004’s strong growth potential, the prevalence of incompatible compression formats will be “the bane of everyone’s existence” this year, Ryan said. “It’s a market segmentation that’s difficult for a consumer to understand because if I buy a CD, it plays on any CD player.”