The Recording Industry Association of America recently released its latest doomsday report on how online bootlegging is endangering the offline biz. According to the study, compact disc sales dropped by seven percent during the first half of this year, accounting for $284 million in losses. Pollsters blamed the "striking connection" between people who download music online rather than buy it in a store.

Once again, this is only part of the story, but let's say at least one thing in the defense of the recording industry: There's no question that many people who hear the new Vines single suck down "Get Free" for nada. It's really is ludicrous for the free music posse to argue anymore that digital downloads boost sales. Just ask yourself -- or your friends -- how many more CDs you or they have bought in the post-Napster epoch and you'll get down to the nitty gritty. But -- and this is a big but -- it is just as ludicrous for the industry to purport that the peer-to-peer networks (Kazaa, Morpheus, Gnutella, etc.) -- or the Internet itself -- are to blame. If the record labels had the gonads, they'd go after the bootleggers, not the Napsters of the world. The fact is file-trading networks are not illegal. And the songs on the networks are not illegal. What's illegal is the act of trading copyright-protected songs -- online, offline -- or in a Mickey D's parking lot, for that matter.

Why is this distinction important? Because file-trading networks are wonderful innovations. They truly represent power to the people. They connect like-minded individuals from around the world. They spawn communities. They enable someone seeking information to tap the resources of others in essentially real time. And they're applications go way beyond music. Imagine a peer-to-peer network devoted to cancer patients seeking healthcare information. It's only a matter of time.

The problem with the industry blaming the Internet is that it makes the labels seem out of touch, and, undoubtedly, only inspires consumers to steal more. And just think about how much free PR the industry has given the people behind Morpheus and Kazaa. Furthermore, there are many reasons for declining sales -- like, um, the worst American economic climate in years. And the decline of pop music -- from Michael Jackson to Britney Spears -- certainly hasn't helped either. The industry should take the same advice being doled out to Jackson and Spears: Take a vacation, lay low, rethink, then come back bigger and better than ever.

It's time to drop the dogmatism and get creative given the new rules of the new economy. The labels don't own the music anymore, but that doesn't mean they're irrelevant. By coming up with the next evolution of products -- such as new albums released on DVD (with video included) or even DVD-Audio -- they can surely convince consumers to fork over their milk money again.

DAVID KUSHNER
(September 16, 2002)