This is an excerpt of an essay I just wrote about the RIAA. It really sucks because I was really lazy, but I figured that those who are interested can steal from me if they want to.
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If there is one thing that is undisputed in the current debates about globalisation, it is that transnational corporations (TNCs) play a significant role in the daily lives of people around the world: the hours they work, the food they eat, the papers they read, the television they watch, the music they listen to and even their political opinions. TNCs have increased in number, but, most significantly, they have increased in size, and this has prompted widespread calls for their role to be carefully scrutinised, and held more accountable by local governments. Massive conglomerates are forming every day between media companies, software companies, resource companies, and many others, forming giant corporations that spread across industries, giving these extremely wealthy companies unprecedented resources and influence in the global market. But exactly how much of the scathing criticism is warranted? Is it simply a matter of corporations being the “bad guys” in the global economy, or is it more complex? In this paper I will attempt to outline the complexity of the ?TNCs? debate (and broader issues of globalization) with a case study of the Recording Industry Association of America and its recent attempts to thwart peer-to-peer file sharing.
The Recording Industry Association of America (RIAA) is, according to their website , a “trade group that represents the U.S. recording industry. Its mission is to foster a business and legal climate that supports and promotes our members’ creative and financial vitality. Its members are the record companies that comprise the most vibrant national music industry in the world”. Most notably, the members of the RIAA consist of what was known as the “Big Five”: EMI, Universal Music, Time Warner, Sony Music Entertainment., and BMG (Bertelsmann Music Group), but has since become the “Big Four” since the merger between BMG And Sony in August 2004 . According to the RIAA website, this “Big Four”, “manufacture and/or distribute approximately 90% of all legitimate sound recordings produced and sold in the United States?. The RIAA represents the interests of four of the biggest TNCs in the global media.
With the emergence of new compression technologies, faster internet connections, and inexpensive (CD & DVD burning) hardware in recent years, a tremendous controversy has been created about the future legitimacy of traditional music companies. People who utilize and advocate peer-to-peer (P2P) software often argue that the “Big Four” are threatened by file sharing, and that their exploitation of artists and consumers is about to (rightly) come to an end. File sharing has effectively made it possible for independent artists to gain bigger fan bases and bypass the traditional means, and artists that have traditionally relied on record deals to distribute their music to fans can now, effectively, manage their own production, marketing, distribution and expenses. The RIAA contends that unregulated file-swapping is “piracy”, and “robs artists”, and has rigorously campaigned to enforce this view on P2P users.
How does this apply to transnational corporations? Firstly, the RIAA is a perfect example of a set of TNCs that are attempting to enforce their world view on governments. It appears, however, that they are, at best, only mildly successful at getting this point across. Secondly, it appears that the emergence of new technology, in this case P2P, has resulted in a struggle over who owns it. This struggle, which is being played out before our eyes, can have two outcomes: that the RIAA successfully eradicate ?piracy?, or that consumers will no longer see the RIAA (collectively) as a viable source of entertainment, bypass the traditional markets and start to interact with artists on a new level. Finally, through the RIAA example, I hope to show that whilst the future may be painted as grim, and to the benefit of transnational corporations, this is not necessarily the case. However, cultural imperialism may play a role in shifting people?s opinions about ?piracy? in the long run, which does indicate that the RIAA may have some impact on newer technologies.
Steve Chan (International Relations in Perspective (1984) p270) defines transnational corporations as “enterprises whose business activities and assets extend beyond the boundaries of one state. They usually have their headquarters in one of the developed countries and operate branches or subsidiaries in six or more foreign countries”. More often than not, this means that there are Head Offices in the Global North (predominantly United States and Europe), where administrative decisions and marketing are carried through, with branches in the Global South, where manufacturing and other labour-intensive work is carried out — either in factories, or by sub-contractors. Kegley (World Politics: Trends and Transformations (1997) p191) states that by the mid-1990?s, “more than 38,500 multinational corporations world-wide with more than 250,000 foreign affiliates generated $5.2 trillion in global sales.? In 1998, according to Held et al (Global Transformations (1999) p236) there were 53,000 multinational corporations, with 450,000 subsidiaries, with $9.5 trillion in global sales. In a matter of 3 years, TNCs had nearly doubled their operations and their profits. In 1999, there were more than 63,000 TNCs with 700,000 subsidiaries (United Nations: World Investment Report 2000). This shows that TNC activity is constantly expanding. The report also mentioned that cross-border mergers were more significant than ever. In the case of the corporations that are represented by the RIAA, the movement of the ?Big Five? to the ?Big Four? represents a significant shift that is consistent with TNCs worldwide.
Advocates of globalisation argue that multinational corporations increase the overall production of goods at the most efficient price. In a free market with perfect competition, this is the case, however, as transnational corporations increase their overall size and absorb their competitors, oligopolies, and even monopolies are created, whereby supply can be controlled and prices — therefore profits — can be regulated, often at the expense of quality. The RIAA collectively produces 90% of the music that is produced and distributed worldwide, effectively creating an entertainment cartel. For musicians and songwriters, to effectively reach as many people as they can, need to sign record deals with a major label, which, given their stranglehold on the industry, often means that the RIAA determine not only the selling price of the final product, but often exercise creative control as well. It could be argued that the RIAA has been exploitative in its treatment of artists in the past .
Extending from this, a major criticism of the emergence of transnational corporations is that they use their size, wealth and, in the case of the RIAA, political visibility, to manipulate national governments to their point of view. On the surface, this may appear to be correct, as the mainstream media is littered with articles against filesharing, warning people that they could be sued , including the now-notorious case of 12 year old Brianna LaHara, who lived in public housing and settled with the RIAA for $2000USD. In the United States, the RIAA have aggressively lobbied congressmen, firstly to ensure the implementation of the Digital Millennium Copyright Act (1998), and to support not only the criminalisation of ordinary citizens under the RIAA?s definition of ?piracy?, but to garner further support in their litigation of people that engage in filesharing. As a result, in 2000 and 2001, it appeared as though the RIAA were having some success with this when they successfully sued Napster, Mp3.com and Audiogalaxy , as well as an initial ruling that Verizon Internet were to provide the details of a customer that used Kazaa to download ?illegal? files.
Despite these initial wins, are there really major implications for government autonomy and individual freedoms? In April 2003, Verizon internet managed to overturn the initial ruling in December 2003, despite support from the US Justice Department . The court ruled that the recording industry cannot force Internet Service Providers to identify subscribers swapping music online. This was a tremendous setback for the RIAA, and as a result, the RIAA is currently naming as defendants in their lawsuits “John Doe”, identified only with their ISP addresses. This has had limited success. Recently, the RIAA have attempted to write warning letters to ISPs about ?infringers?, attempting to get ISPs to disconnect people based on their Service Agreements. This has had very little success, with ISPs in countries all over the world refusing to comply. In the US, NetCoalition have been vocal in their opposition to this strategy . In Australia, a number of large ISPs have refused to comply with RIAA action without subpoenas from the Federal Police, and in a landmark ruling from the Dutch High Court, the distribution of P2P software was not considered a breach of Copyright . The trend in recent years seems to indicate that, irrespective of political lobbying and backing, when tested in the courts, the RIAA appears to be having only minimal success in the eradication of piracy.
(If you want to read more, email me. Its probably not too ethical to post a whole essay here. Not that its that great, but I did get a Disctinction for it.)