One of the Big Four labels is apparently unhappy with its return on investment when it comes to funding industry trade groups such as the IFPI and RIAA. British label EMI, which was recently purchased by a private equity fund, is reportedly considering a significant cut to the amount of money it provides the trade groups on an annual basis.
According to figures seen by Reuters, each of the Big Four contributes approximately $132.3 million to fund the operations of the IFPI, RIAA, and other national recording industry trade groups. That money is used in part to fund the industry's antipiracy efforts—including the close to 30,000 file-sharing lawsuits filed by the record labels in the US alone.
The IFPI confirmed to Reuters that it was working through its annual budget-setting process, and "as one would expect in this market, there is a focus on efficiencies and savings." The IFPI wouldn't provide any details beyond that to Reuters, and neither it nor the RIAA has responded to Ars Technica's requests for comment.
With music revenues dropping with no end in sight, despite the increased popularity of online sales, all of the Big Four labels are being faced with tough budget choices. The industry has been quick to lay the blame for its tough economic times squarely at the feet of pirates, but there are other factors at work too. The industry's glacial adaptation to changing consumer expectations around how and where they listen to music has done a lot to hurt the labels, and consumers are less willing to buy CDs now that they can cherry pick their favorite tracks from the iTunes Store. Even retailers are crying out for an end to DRM.
Giving the music industry credit where credit is due, the labels have made some progress in the past year, especially when it comes to realizing how much consumers detest DRM. But one of the chief activities of the RIAA is coordinating the Big Four labels' legal campaign, and those thousands of lawsuits have done nothing but generate ill will from record fans, while costing the labels millions of dollars and doing little (if anything) to actually reduce the amount of file-sharing going on.
In fact, the RIAA freely admits that the legal campaign is a real money pit, and EMI's new ownership may be very leery of continuing to pour money down that particular rat hole. Should the other labels follow suit—and there's no indication that they will—it would, at the very least, force the RIAA to reexamine its commitment to its legal strategy.
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