New and Old RIAA CEOs Agree: “We’re Beating Piracy”

Mitch Bainwol held the position of chairman and CEO of the Recording Industry Association of America for eight years but will now take up a new role in the automotive business. His successor will be current RIAA president Cary Sherman, who sounds remarkably upbeat on the issue of defeating online piracy, something that has eluded the recording industry group for more than a decade.

“It’s my time to say so long. I will miss you guys,” wrote outgoing RIAA CEO Mitch Bainwol in his farewell email to colleagues.

“It’s a bittersweet moment for me. On the one hand, I’m thrilled about my new gig. I’ll be running the leading trade group for the automobile manufacturing industry. Like music, cars are pretty cool. I also truly believe that this sector, like music yet for different reasons, is central to our economy and way of life.

“And I’m ready for a new adventure. A leadership challenge in such a significant industry was too compelling to resist.”

As former politician Bainwol heads off to become CEO of the Alliance of Automobile Manufacturers on September 1st, the same day will see him replaced at the RIAA by lawyer and current president of ten years standing, Cary Sherman.

Separately, both say that 2011 will go down as an important year for the RIAA, a turning point in their decade-long fight against online piracy.

“LimeWire is shut down and while some users are migrating to Frostwire and other illegal options, more are not,” continued Bainwol, a sentiment echoed and actually enhanced by Sherman in an interview with Am Law Daily.

“We actually feel the shutdown of LimeWire has made a difference in the health of our marketplace. It’s really quite amazing,” said Sherman. “The shutdown of LimeWire occurred in October 2010 and digital sales improved for the first time in a very long time in November. And since then, we’ve had better digital sales over the prior year consistently.”

Sherman says that while other possible explanations have been explored for this increase, he believes that most people are acknowledging that LimeWire’s closure made a bigger difference than anticipated.

“More people than we expected, once they felt that LimeWire wasn’t going to serve their needs, went to the legitimate marketplace than to another illegal source,” Sherman added.

In his farewell letter, Bainwol quoted some of the RIAA’s stats.

“The number of Americans engaged in illegal music consumption fell from roughly 30 million in May of 2010 to about 24 million in May of this year, a noteworthy 20% reduction,” he said. ” The battle isn’t over, but finally, we have momentum and we are winning.”

Even sales of digital albums are doing well – up by almost 20% – while the fall in physical sales is not as bad as expected at just 5%.

“Net net, finally, we’re up 4%,” says Bainwol.

Unsurprisingly, both Sherman and Bainwol believe that last month’s “Copyright Alerts” agreement with the United States’ leading ISPs will prove to be a turning point.

“We have made profound progress, as a community, in the fight to make the Internet a place of order rather than chaos, where legitimate players work together to encourage legal activity and suppress illegal activity. The recent deal with the ISPs, negotiated so ably by Cary, Steve and Vicky, is perhaps the most vivid example,” says Bainwol.

Sherman believes that cooperation between the content industries and ISPs, and the relationships between ISPs and their subscribers are built on economics. Hardcore pirates, he implies, represent the 5% of ISP subscribers eating up much of the available bandwidth and therefore potentially reducing the legitimate Internet experiences of the majority.

ISPs, he says, will have to continue with massive infrastructure investment to support enormous growth in legitimate online streaming. That will only be hampered by additional illicit content uptake.

“Do they really want huge amounts of illegal activity on top of that? They have an interest in making sure that the growth of the Internet is based on legitimate commerce,” says Sherman.

Interestingly, while acknowledging that a hardcore will got to “amazing lengths” to get free music, Sherman belives that the majority of file-sharers are casual, and all they need is a gentle reminder that their behavior is not anonymous (read: a warning letter from their ISP) and they will begin to turn to legitimate sources.

Going forward, both outgoing and incoming CEO’s praise the anti-piracy partnerships the RIAA is forging with payment processors such as PayPal and Mastercard. Sherman also hints at their future legal strategy.

“We choose our litigation strategies very carefully to try and make the most of our budget,” he explains. “We basically look to where the law needs clarification, so that the rules of the road online are clear and protect creators.”

One area that has never been tested in a US court is the legality of torrent sites, which may be why that with the LimeWire case out-of-the-way the RIAA has filed lawsuits to discover the identities of the individuals behind Bitsnoop.com, Limetorrents.com and Monova.org.

So, as Bainwol leaves with Grokster, KaZaa and Limewire’s deaths under his belt, Sherman steps into his shoes. Already the similarities in their approaches and reasoning are marked.

Meet the new boss…..

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