How the RIAA Works

It wasn't all that long ago that listening to music meant buying a vinyl recording, laying it on a spinning turntable and dropping a needle into its grooves. Then came compact discs, first available in 1982, which used a digital, not analog, method of recording and reproducing sound [source: Beschizza]. Having music in a digital format made it easy to create a perfect -- and perfectly free -- copy of a recording, with no loss of quality. The RIAA saw that counterfeit CDs could carve a big hole in members' profits.

Then, iTunes and other online music stores came along. Downloads rapidly began to compete with physical recordings in terms of sales. In 2010, as many digital downloads were sold as physical recordings [source: RIAA]. Today, more than 11 million licensed digital recordings can be had at the click of a mouse button. What's more, a single hit can generate everything from DVDs to mobile downloads to ringtones.

The RIAA has tried to keep up with all these dizzying changes. They pull together statistics to track sales in the various formats -- including CDs, cassettes and mp3 downloads -- by units and value. For example, in 2011, 1.3 billion digital downloads of singles were sold for $1.5 billion, while 241 million CDs were sold for $3.1 billion [source: RIAA]. The RIAA also conducts special studies about things like the economic impact of the music business, and its databases closely track trends in various genres of music.

As technology has changed, the RIAA has collaborated with other groups to create standards for music recordings, including the following [source: RIAA]:

Another more recent addition to the RIAA to-do list is overseeing streaming music services. Internet services like Pandora and Spotify pass on music to customers in a form that they can listen to but not copy. These companies pay a royalty for every song they use. Radio stations of course offer a similar service, but pay a much lower royalty. It's up to the RIAA to negotiate with the streaming companies and work out a fair level of compensation [source: Sisario].

In addition to these routine matters, the RIAA has had to grapple with one modern-day issue that poses a threat to the very existence of the industry: music piracy.

Burning a CD from your computer is ridiculously easy. It also could be illegal. Digital recording has made counterfeiting and sharing technically simple, but only the owner of the copyright can legally make a copy. Any other copying falls into the sometimes murky territory of music piracy.

As the RIAA readily points out, the penalties for stealing copyrighted material are no joke. Even if you don't pirate copies for commercial purposes, making an unauthorized copy means you could spend five years in the slammer and pay a $250,000 fine. You could also be the target of a civil suit, with penalties starting at $750 per song [source: RIAA].

If that sounds serious, it's because piracy is a life-or-death issue for the record industry. Today, only 37 percent of all music is obtained legally; the rest is stolen. Record companies and artists lose an estimated $12.5 billion a year to copyright theft. Since 1999, music sales have plummeted 53 percent, diving from $14.6 billion in 1999 to $7.0 billion in 2011. From 2004 to 2009, music pirates downloaded something like 30 billion songs illegally, a blow to the industry that has cost 70,000 Americans their jobs. The RIAA compiles statistics like these to emphasize the gravity of the situation [source: RIAA].

And these financial losses hurt more than just the corporations. Musicians, the very folks that fans idolize, lose the income to which their talent entitles them. When record companies are deprived of revenues, they don't have the money to invest in new talent. Performers who might have made it big never get the chance.

Who are the culprits in music piracy? Here are a few of the actions that constitute theft:

Enough people have broken the rules that the RIAA has taken action to protect the industry.

Seeing the piracy problem developing, the RIAA supported the enforcement of the No Electronic Theft (NET) legislation that was passed back in 1997. The law made theft of copyrighted material a crime even if no commercial use was intended. That put music fans on notice, buy many continued to think that sharing music or burning CDs was OK.

Napster, which debuted in 1999, raised the problem to a new level. A so-called peer-to-peer (P2P) service, Napster let users upload and download music, copyright or no copyright. At its peak, Napster gave its 25 million users access to 80 million songs, most of them stolen [source: CNBC]. The RIAA sued in December 1999, and Napster eventually went bankrupt.

But music fans were hooked on free music, and the RIAA found itself in a game of Whac-A-Mole. Napster was followed by similar services: Aimster and AudioGalaxy, then LimeWire, Morpheus, eDonkey and BitTorrent. The RIAA joined in cases against two of these services, Grokster and Streamcast, in 2003. This litigation reached the U.S. Supreme Court, which ruled in June 2005 that anyone promoting copyright theft can be held responsible. The RIAA sued Kazaa, another popular P2P network, in 2006. That service no longer exists, but efforts to skirt the law continued. A suit against the file-sharing service LimeWire in 2010 was another RIAA victory.

The RIAA stirred up the music world even more when it began to file other lawsuits against individuals. Starting in 2003, the RIAA sued more than 30,000 people [source: Kravets]. Most, including 12-year-old Brianna LaHara, settled out of court, but had to pay several thousand dollars for uploading or downloading copyrighted music. A few went to trial, lost and were hit with large judgments.

Many of the targets of the suits didn't even know they were breaking the law. Some thought that, by paying a subscription fee to a P2P service, they were legally entitled to use it to share digital tunes. Regardless of whether ignorance of the law was a valid excuse, RIAA officials said they were trying to raise awareness of music piracy and slow the theft of copyrighted material. They pointed out that before the suits began, only 35 percent of people knew that sharing copyrighted music from unauthorized sources was illegal [source: RIAA].

Heated charges were hurled at the RIAA. Was the association unfairly targeting a few uninformed music fans? Were the penalties it sought unjust? One woman was fined $222,000 for uploading songs to the Internet [source: Sandoval]. A single mother faced a $500,000 judgment [source: EFF.org]. In the face of mounting criticism, the RIAA stopped filing most lawsuits against individuals in 2008.

In the past few years, legal music sales have increased and the percentage of users illegally sharing tunes has dropped, but piracy remains a huge problem. It has become even easier to copy music as high-capacity DVD discs, flash drives and external hard drives have made transferring thousands of songs a breeze. Digital storage lockers and anonymous file sharing services have opened new avenues for piracy. However, the RIAA has begun to focus on education rather than litigation to try to stem the tide.

Having gotten the attention of potential music pirates with its lawsuits, the RIAA moved on to ballyhoo the benefits of legal music. The group has worked to highlight the importance of music in terms of economy, jobs and culture.

Most music lovers understand that stealing is wrong and that artists deserve to be compensated. They're less clear about what's legal and what's not -- when does ripping a CD mean ripping off a musician? An important goal of the RIAA is to teach fans about what constitutes piracy and how they can avoid straying into illegal activity.

Since young people are a huge part of the music market, the RIAA targets its education programs toward kids in schools. The group pushes its "Music Rules!" curriculum for third to eighth graders. The program teaches young people to respect intellectual property rights of all kinds, including those of musicians. The RIAA also puts out a brochure that explains the serious consequences of breaking the law by committing piracy. It provides speakers and encourages debate about the issue.

The RIAA has also focused efforts on colleges, where file sharing and other forms of music piracy are common. Today, colleges are required by law to have plans in place to minimize piracy, and the RIAA sends notices to schools when their computer networks are used to download large quantities of copyrighted material from the Internet.

Also, understanding that the content of music song lyrics – which can be downright scandalous -- can be a serious concern for parents, the RIAA initiated its Parental Advisory Label in 1985. Working with the National Parent Teacher Association, the group came up with standards that alert parents to sexually explicit lyrics, strong language and references to violence on albums. The Advisory Label is a tool that parents can use to guide children for whom such material would be inappropriate.

One of the goals of issuing the advisory labels was to head off censorship. The RIAA stands up for artists' rights to creative expression, free from arbitrary standards. A musician or record company, aware of the Parental Advisory Label, may decide to change a song's lyrics, but the decision is up to them.

Aside from all of these education efforts, probably the best-known program run by the RIAA is the Gold and Platinum Record awards, which recognize the most popular music of the day.

R&B/hip-hop artist Akon once said "Going Platinum makes me feel, certified. I'm a legitimate artist" [source: RIAA]. It's the RIAA that tracks and certifies record sales for the purpose of awarding coveted Gold and Platinum awards.

The idea actually goes back to 1942, when band leader Glenn Miller was awarded an informal "gold" record by his label, RCA, for selling a million copies of "Chattanooga Choo Choo" [source: RIAA]. In 1958, the RIAA established an official Gold Record program, making the designation a trademark. Perry Como's "Catch a Falling Star" was the first Gold single. Since then, more than 8,000 recordings by artists ranging from Aretha Franklin to Shania Twain have received Gold certification. Possessing a Gold Record has become a coveted achievement for musical artists.

The criteria for the awards have grown more complicated over the years [source: RIAA]:

Record companies that think they've earned Gold have to request and pay for an audit by an accounting firm hired by the RIAA. The auditors count up the sales of CDs, vinyl records and cassettes through stores, record clubs, mail order houses and Internet fulfillment.

New forms of music have meant new awards. Music videos were honored with Gold and Platinum awards beginning in 1981. In 2001, special Oro and Platino awards were created to honor top selling Spanish language recordings, signifying sales of 100,000 and 200,000 records, respectively. An award for digital singles releases got its start in 2004. And in 2006, the RIAA added a Gold award for top-selling ringtones as music went mobile [source: RIAA].

The vitality of the Gold and Platinum Program, with some albums reaching Gold status within a month of issue, indicates that in spite of its problems, the music industry, as represented by the RIAA, is still alive and kicking.