(This article originally appeared on ArtistsHouseMusic.org.)

It’s a bad time to a major record label. First, eMarketer is out with a report predicting that worldwide spending on music will decrease from $31.8 billion in 2006 to $26.2 billion in 2011, a decrease of nearly 20 percent.

In comments made at the GSMA Mobile Asia Congress on November 14, 2007, Edgar Bronfman, CEO of Warner Music Group acknowledged the current state of the industry:

“We used to fool ourselves. We used to think our content was perfect just exactly as it was. We expected our business would remain blissfully unaffected even as the world of interactivity, constant connection and file sharing was exploding. And of course we were wrong. How were we wrong? By standing still or moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find and as a result of course, consumers won.”

Now there’s word that EMI, one of the four major record labels, is considering a significant cut in funding to the RIAA and it’s European counterpart the IFPI. According to the IFPI each of the four major labels contributes $132.3 million annually to fund the RIAA, IFPI, and other trade groups. This money over the last decade has largely been used to fund anti-piracy measures. A slash in funding would signal a major change in strategy. To date the RIAA and IFPI have sued more than 18,000 people for copyright infringement. If EMI were to slash their funding in a non-trivial way, other labels may follow indicating a distaste for suing file sharers. Though so far that hasn’t stopped lobbyists from advocating tougher copyright laws.

Legally, there’s plenty of bad news for music consumers in Switzerland, Canada, and France. The NY Times reported last week that a new program in France aims to shut off Internet access to repeat offenders of unauthorized file sharing. In October, Switzerland signed a version of the DMCA into law to comply with international treaties. Among other things, it makes making a copywritten work available on a p2p network punishable by up to a year in jail, criminalizes DRM circumvention devices (like a Sharpie?), and mandates a levy on blank media. Ouch. Canada has drawn more notice with their own version of the DMCA, which is due for debate as soon as this week in the House of Commons. The legislation, like Switzerland’s, is being created to bring Canada into compliance with the WIPO treaty signed in 1997. This law, if it passes, would completely abolish Fair Use in Canada. As one blogger puts it : “No parody exception. No time shifting exception. No device shifting exception. No expanded backup provision. Nothing.”

However, by the time these laws take effect and the first suits are brought, it may very well be too late.

Universal and EMI – two of the big four are experimenting with non-DRM formats. Despite non-DRM formats outselling DRM formats 4 to 1 according to UK online music retailer 7 Digital, according to data from Nielsen SoundScan aggregate sales have remained steady since the introduction of the major DRM-free stores in May. For an industry that’s down 11% in the first half of the year, this isn’t good news. There seems to be little latent demand for DRM-free music, though future sales reports from the Amazon store will shed additional light on this topic. What seems to be happening is that consumers are moving from buying a CD to buying a single song. If competing with free wasn’t already bad enough, now labels have to figure out how to increase single sales to compensate for the loss of album sales.

And what do you get if you’re willing to tempt the RIAA legal fairy? If you’re using The Pirate Bay, you’re experience just got a lot nicer. In addition to your normal assortment of torrents, there’s now a “show detailed artist info” link with artist picture, tour dates, streaming music by last.fm, a list of the artist’s other album, complete with links to available torrents, and links to similar artists.

It’s all enough for Eric Garland, CEO of BigChampagne, a market research company that focuses on digital media and whose clients include major record labels to acknowledge, “These are ailing businesses on their last legs”.

Indeed.