4) The record companies must win the consumers, not the legal battles.

While the record companies may have won their battles in the courts, they've definitely lost the battle in the media and the public eye. The RIAA and the major labels have been painted as greedy, uncooperative, and monopolistic old-economy companies (all true, really) who just sit back and watch the cash roll in. They don't want things to change; really, who would, in their position? Why work with new companies and technologies when they already control the market?

Napster underestimated the power of the RIAA and the labels (they have a lot of money, folks; and the harsh truth is, (s)he with the most money wins). They control all the music from the past century; everything from the Backstreet Boys to The Beatles to "Happy Birthday" (Ever notice that "Happy Birthday" is hardly ever performed in film? That's because the film company would have to pay royalties on it.). They know how to flex their muscle, and have been doing it for years.

However, the labels underestimated Napster's power with the media and the public. Consumers love Napster, whether they're using it to sample music, steal music, or distribute music. And because the labels sued them and effectively terminated the service, those people now detest the labels. The truth and rumours have surfaced about price fixing (the major labels are being sued by 28 states for this), contracts, the actual cost of CD's, and more - tarnishing the image of the once-proud record companies to a state where it'll take a very long time for them to restore its lustre.

In order to survive, the labels will have to win back the hearts of the public. How can they do this? Support new technology. Not necessarily Napster (we all know that won't happen), but understand that P2P is here to stay, and so is digital music. In the same way that new economy companies must work with the labels, and not against them, the labels must work with the consumers. Don't force proprietary technologies, exorbitant fees, or poor usability on consumers.

Give up on SDMI (Secure Digital Music Initiative) and DRM (Digital Rights Management). Whatever system the RIAA comes up with, I guarantee it can be cracked. When the SDMI people released their prototypes to the hacking & cracking community last September, challenging them to hack it - and offering a $10,000 reward for any successes - all systems put forward were compromised within a week. When they put forth their next efforts, the same will be true; nothing's bulletproof. I hear industry people say all the time that "The new technology is foolproof" or "We can make it inpenetrable". It's not, and you can't.

And forget about the idea of encoding into an audio file limitations on copying or playback. If I've got the file, I can copy it. If I can hear the audio, I can copy it, unless they're embedding copy protection all the way down to my speakers - which they'll never touch. Even if they can somehow lock up my computer so I can't manipulate the data, I can always run the output from my sound card into the input of another card, and make a perfect digital copy. Secure digital music will never exist, and their attempts to implement it do nothing but annoy their customers. The record companies and the RIAA need to wake up to this fact, and start thinking of other solutions - and they do exist.

Next: 5) The artists aren't the bad guys.

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