Sherman helps RIAA lighten up

Music org builds consensus with tech firms to protect copyrights

Cary Sherman, CEO of the Recording Industry Assn. of America, speaks in precise words. His white hair and emphatic delivery lend him an aura of seriousness. So when Sherman showed up in June to speak to the Personal Democracy Forum, a group of politically savvy techies not exactly enamored of the entertainment industry’s so-called “copyright cabal,” everyone was prepared for a lecture.

Instead, among the images he projected onscreen during his presentation was a cute ball of fur, with a sign just below that read, “Every time you illegally download an MP3, the RIAA kills a kitten.”

After laughs, Sherman turned serious and said to the audience, “The bottom line message I want to tell all of you is that the music industry has totally transformed the way it does business.” In fact, the RIAA chief believes a major thrust of the immediate future in fighting piracy is in voluntary agreements rather than congressional action.

There was a time, not too long ago, however, when it was hard to fathom anyone at the RIAA joking about anything remotely connected to piracy. CD music sales were plummeting, the industry was constricting and, it seemed, the biggest drivers of the next big hit were peer-to-peer websites trafficking in pirated songs.

But Sherman’s message in June was that the RIAA is past all that, that it understands the need for new business models, and that it is full-throttle into the digital age, even down to plans to incorporate streaming data as part of its Gold and Platinum awards program. Among other things, Sherman was among the leaders in an effort to streamline the way publishers license music and establish royalty rates for digital startups, opening a new avenue for the growth of subscription services and other business models.

Which made the Hollywood lobbys all the more shell-shocked earlier this year when its effort to secure passage of tough new anti-piracy legislation, the Stop Online Piracy Act, blew up in their faces. Internet firms, online activists and consumer groups not only halted the legislation, they made their cause a household one, spurring unprecedented online protests that also left showbiz supporters on Capitol Hill jittery about future digital legislation. Sherman expressed frustration in the New York Times, writing in an op-ed that “the hyperbolic mistruths, presented on the home pages of some of the world’s most popular websites, amounted to an abuse of trust and a misuse of power.”

While there is still some bitterness among the showbiz lobbies over how SOPA played out, the tone has shifted to one of conciliation.

“We can look at a piece of legislation, and think that it’s perfectly balanced, and the standards are very high … and a tech company can look at exactly the same piece of legislation and think how a court could construe this in a way that would hurt tech companies’ normal business model,” Sherman said in a recent interview. “And it isn’t as though one is right and one is wrong. They are just looking at the same words through a different prism.”

Sherman doubts that even after the presidential election it is likely that there will be a drive for a revised piece of legislation. Rather, he is among the biggest champions of voluntary agreements, including one that he played a central role in crafting between the showbiz lobbies and major Internet providers.

The result will be a system of “Copyright Alerts,” expected to be rolled out later this year, in which Internet users who access pirated music, movies and other content will get warnings from their Internet providers. The first messages will be educational, but after the fifth or sixth warning, such repeat users who access pirated content will face a penalty, including the prospect that their service will be slowed.

It took years for all sides to hash out the plan: What started in December, 2008, was ultimately unveiled in July, 2011, as showbiz sought a robust regime of warnings, and Internet firms worried about liability. The spectacle of SOPA has raised speculation that Internet providers were skittish over the plan, even with a system in place for users to be able to appeal when they get a warning or face having their Internet speed slowed.

But Sherman denies that is the reason for the delay.

“Nobody retreated at all from what they agreed to,” he said. “But it was clear that everybody wanted to make sure we did it right. And certainly when we are betting on voluntary agreements as the way forward, we have every interest in making sure we are doing this right, and it is going to be received as an effective and consumer friendly initiative.”

Sherman was among the champions of one of the more surprising moves of the org that will oversee the Copyright Alerts — the Center for Copyright Information — appointing to its advisory board not only reps from entertainment and Internet firms, but also Gigi Sohn, co-founder of Public Knowledge; and Jerry Berman, founder of the Center for Democracy and Technology. It is hard to overstate how often the two orgs are at odds with record labels and studios. Even when SOPA was a little-watched, arcane piece of legislation slowly wending its way through Congress, those orgs were vocal critics.

Sohn says that Sherman has brought “a more moderate tone” to the RIAA.

“He’s more willing to listen, less ‘my way or the highway,’ ” she says. “He’s been around for a long time. He knows what will work and what will not work. He appreciated that I put my neck out there and gave (the advisory board) credibility it otherwise would not have had.”

Sohn thinks there’s good reason for an RIAA shift in strategy. “They went through their mass disruption, and now they are in a position where they are growing again. The worst is over for them. They are not facing death anymore.”

Rep. Anna Eshoo (D-Calif.), who also opposed SOPA, says of Sherman: “It seems to me that there are some people who look in the rearview mirror and think they see the future. I think Mr. Sherman looks forward to the future and helps to shape it.”

Last year, the RIAA reported that overall music shipments had their first gain since 2004, up 0.2% to just over $7 billion. CDs continued their downward spiral, but gains were made across all digital categories including downloads and subscription services.

Still, revenues are half what they were when Sherman first joined the RIAA as general counsel in 1997.

A 1968 graduate of Cornell and Harvard Law School in 1971, and an amateur musician, he spent 26 years as an intellectual property lawyer at the Washington law firm of Arnold & Porter, working as outside counsel for the RIAA and developing a specialty in reconciling copyright law and new technology.

At the time he started at the RIAA, the industry was flourishing. MP3s were being introduced, but they were viewed as just another new technology that had come along, like cassettes, to which the industry would have to adjust.

“We had no idea what a sea change that would be,” Sherman says. “This was nothing like anything that had happened before. I came (from) a different environment, and lived through the growing realization that things (would) never be the same.”

Sherman doesn’t agree that the industry was just too slow to respond, describing the huge complexities involved.

“There was no mechanism for licensing publishing works for streaming services at the time,’ he says. “All of that stuff had to be invented from scratch. Artists deals had to be renegotiated one by one. Courts had to interpret these things, let alone (the industry) develop a system to actually deliver a quality recording to a consumer in a consumer-friendly way. I believe no matter what the industry, it would have been (challenged tremendously by) the requirements of that digital transition.”

Perhaps nothing was more polarizing than when the RIAA sued individual P2P file sharers, in expensive legal battles that probably did more to harden opinion against the trade association, even though there was plenty of friction with the RIAA’s early pursuit of peer-to-peer services. When Sherman’s predecessor, Mitch Bainwol, started on the job in 2003, around the time the individual lawsuits were being filed, he received a death threat.

The strategy for suing individuals was abandoned in 2008, but the aftereffects linger across technology blogs, which, despite Sherman’s appearance at PDF, remain skeptical that the org is doing anything other than trying to protect its own business model. Many artists are reluctant to take a prominent role in speaking out against piracy, fearing blowback and the controversy it can create.

Sherman, who had been appointed president of the RIAA in 2001, says that there was a positive that came out of the lawsuits — that they “delinked the growth in broadband from the growth in peer to peer.” In other words, it at least stemmed the tide of piracy for a bit.

“It educated people that P2P, as it was being abused at the time, was actually engaging in illegal activity, and people didn’t know that before then,” Sherman says. “It was incredibly effective as an education tool at the time. I am glad that we are past that now, and we can be focusing on better ways of reaching consumers on these issues.”

Moreover, the experience of SOPA put into stark relief that, when it comes to piracy, even carefully crafted PSA campaigns and other initiatives can’t compete with a digital culture that is used to getting something for nothing. A sign of progress for Sherman is that the Internet providers, once often adversaries, are now working with them on the Copyright Alerts and other efforts to stem piracy.

“You know, these things don’t happen overnight,” he says. “You didn’t stop people from smoking overnight. You didn’t stop people from littering overnight. These were long-term cultural changes, and I think we are going to see a lot of that when it comes to online culture.”

At Bainwol’s farewell reception a year ago, Sherman gave his former boss a humorous sendoff with a sendup of “There Is Nothing Like a Dame” from “South Pacific.”

According to the Washington Post, a sample of lyrics went like this:

“I don’t know why he tired of the music label gig.

Perhaps it was the grandmothers we threw into the brig.

It may have been the bloggers, they never could be pleased.

Perhaps it was the death threats — from our member companies.”

Today, it’s a bit easier for the RIAA to laugh about the bad old days.