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Heads up RIAA (Recording Industry Association of America): those music dollars skittering away in all directions probably have very little to do with online file trading. That was the message last week as members of two important trade organizations challenged the conventional RIAA view that blames peer-to-peer networks for the record industry's third dismal year in a row.

In a rousing call to reason, 32-time Grammy nominee John Snyder, who is also president of Artist House Records and a board member of NARAS (National Academy of Recorded Arts and Sciences), issued a lengthy statement encouraging NARAS to take on the RIAA's attacks on file sharing and forge a leadership role to help turn the music business around.

Snyder's view is that, contrary to the RIAA's assertions, MP3 file trading is one of the few proven methods that actually generates sales. He lists several examples, including the circumstances around the frequently cited "most downloaded album of all time," The Eminem Show. Snyder reports, "It was downloaded so heavily that Interscope took the unusual step of releasing the album a week early due to the rampant on-line sharing of tracks from the album. Fast-forward to the end of 2002, and The Eminem Show is the best-selling album of the year. This seems to indicate the opposite of what the RIAA would have you believe. When people share MP3s, more music is sold, not less."

While Australia's equivalent to the RIAA, the Australian Recording Industry Association (ARIA), still cites CD burning and downloading as possible contributors to a negative year, the organization joins the growing chorus acknowledging the role of economic conditions as well as "emerging competition from new leisure products such as DVD video and continuing competition from mobile technologies and computer games."

ARIA's Stephen Peach says that mobile phones and gaming systems have become expensive rivals to the music industry's important teenage market, stating, "I think it's important to recognize that there are other legitimate commercial pressures." NARAS's Snyder couldn't agree more: "There are five or six new and growing ways for people to spend their entertainment dollar." Snyder adds that "price is [also] a major reason for the decline in CD sales."

The plethora of spending choices and high CD prices has led some to go further and suggest that the damage should have been far worse. As Dan Bricklin pointed out several months ago, in light of the evidence, file trading is one of the few factors that may have prevented the RIAA from having to report far worse sales declines in recent years.

Snyder says he is also particularly miffed that the RIAA has decided to "criminalize" an entire generation of downloaders instead of focusing their attentions on real piracy, in the form of counterfeit CDs. He notes with irony that, as Forrester Research has found, MP3 file trading leads to an increase in CD purchases. But a growing percentage of those CDs are now counterfeit.

Fighting the downloading impulse is wrong, concludes Snyder. "People want what they want and they have made their choices. They will still buy CDs, but they want to download music. The failure of the music business to provide a comparable alternative to peer-to-peer networks is the most logical explanation for the 'illegal' downloading of music. And rather than address the problem by examining their own behavior, the music companies declare the consumer to be their enemy; support intrusive, overreaching legislation; and act precisely against their best interests."

Snyder wants to turn this approach around. "Music companies are more egregious in their abuse of consumers than the movie companies. Consumers don't hate movie companies, but they do hate record companies. The question is, why is this happening and what is going to be done about it?"