P2P Not to Blame for Content Industry Failures Says EU
A new study commissioned by the European Union has finally proven what many have suspected all along: internet users don't want to pay for content. Period. And nothing is going to change their minds. The report finds, in a surprising contradiction to what industry executives have been spouting for ages, consumers' behavior has nothing to do with the peer-to-peer technology (P2P) that has given rise to all-you-can-eat systems for free downloads of copyrighted content. In fact, many people claim that they wouldn't pay for online content even if all other free options were taken away. This finding has dramatic implications for the future of business, and not just in the entertainment industry, either. If people won't pay for content, how will companies survive?
The answer to this question is simple, but the actual solutions are hard. It's clear that new business models are needed when it comes to online content, but what should these new models look like? How should they work? No one really seems to know yet.
Who Pays, Who Doesn't
The European Commission's Digital Competitiveness Report (PDF) is a comprehensive annual resource which looks at everything from broadband penetration to use of social networks and more. One of the chapters in the latest report, published earlier this month, deals specifically with online entertainment.
In this chapter, the EU study reports on the state of the online entertainment industry, revealing factoids like "less than 5% of Europeans have paid for online content in the last three months."
The most interesting results from the report, though, are not the details about who pays, but about who doesn't. Among the non-payers, factors like lower prices would convince about 30% to pay while things like better quality, wider choice, better availability, and others would convince between 15-20%. Yet one figure stands out: only around 20% of online users would pay for online content if all the other free options suddenly disappeared.
Peer-to-Peer File Sharing Not to Blame, Says EU
The impact of this finding didn't escape the notice of the EU researchers, who go on to point out that this seems to mean, contrary to what industry execs say, illegal copying is not to blame:
"...the low percentage of individuals that consider the possible lack of freely available online content as a reason for paying, calls into question the argument put forward by representatives of the content industry that European consumers will in the long term suffer from a lack of commercial availability of high quality content if the current model of audiovisual content distribution, based on illegal copying, is not curved."
Instead, what seems to be happening is that people pay for their internet connection and then gorge themselves on the abundant free content that's available online. Because there's so much out there which costs nothing at all - from web news to streaming video to software applications - internet users tend to balk at the idea of actually having to pull out their wallets to make a purchase. It's the internet itself that has led us down this path to a place where old monetization models simply no longer apply.
What's the Answer?
The report goes on to look at the business models of all sorts of content sites in detail including online news/newspapers, video, movies, music, and online games. While the ways consumers access these different types of content may vary (RSS for reading news, streaming videos, downloading music), the findings are relatively consistent across the board. With only a few exceptions (Apple's iTunes Store, music-based games like Guitar Hero, etc.), many of the current business models are not sustainable.
So what's the answer? There isn't really a good one just yet. Many businesses try "freemium" models which convert power users to paying users. Other sites try sustaining themselves on online ads (which is difficult to do in a down economy). But the best ideas for new business models may very well be the ones that haven't even been thought up yet. The only question is whether or not they'll be discovered in time before more content-producing industries fail.
Image credits - used freely thanks to the Internet and Creative Commons: downloading, flickr user Arenamontanus; I love P2P, flickr user Brocco Lee; p2p logo, flickr user jatop
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I will not pay for content per se, I will pay for convenience (Spotify is one example).
p2p is really a good thing
have a try on emule search engine
http://emule.synthasite.com
I have to say "Bullshit". Period.
What people say they will do and actually do are two different things. Let's see what happens when there is no p2p anymore. (if that day will ever come)
@Robert you don't need p2p to download free music. All p2p does is make it more convenient.
Great post Sarah, what can I say... Viva Europa ;-)
If no one pays for content, there will be no content.
Ever wonder why European music sucks so bad, why some coutries that are particularly anti-copyright, countries like the Netherlands and Denmark, don't produce any music at all?
Get out of your parents' basement. Get a life. Get a job. Pay for what you download or don't download it, because that's stealing.
I pray for sanity to prevail. Enforce copyright laws now or abolish them altoghether.
@Daniel: Wow, that's not horribly ethnocentric of you at all to say. How interesting that you pray for sanity.
Also, the price of this comment is $5. If you are downloading the bytes representing it without paying me, you have stolen from me.
Posted by: plankhead.com
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August 13, 2009 11:48 AM
"less than 5% of Europeans have paid for online content in the last three months" and in the youngest age group "this figure is twice as high."
-- Doesn't that mean the opposite, that younger cohorts are MORE willing to pay?
Q dub: that's right, and the accompanying graph makes it clear (http://ec.europa.eu/information_society/eeurope/i2010/docs/annual_report/2009/sec_2009_1103.pdf page 58). And willingness to pay is about the same among younger and older people. The biggest factor which would persuade people to pay is competitiveness with offline content prices, which I can agree with - why should I pay eight pounds for an album from iTunes when I can buy a CD of the same album for five?
It's not clear to me either whether the figures for "I have not paid for audiovisual content" mean people who have downloaded content and not paid for it, or people who have not downloaded content at all, or a mixture of both.
on this subject i have found myself wondering if the issue is one of aparent double billing.
first one pay for access with isp, then one is told to pay for content at provider.
what if the content bill was added to the isp bill?
If paying online was more convenient, more secure, I'm sure people would pay more.
Here in France, we have a service something called "Internet+". Several major ISPs take part in it, and what it does is it allows a company to charge money to a customer's ISP bill.
Say you go to a website, and you want to get access to a pay-for newspaper page. The newspaper displays a standard Internet+ page. If the customer agrees to pay, they get access to the page, the money is billed on the ISP bill next month, and then the content provider gets the money from the ISP.
Simple and secure. But it doesn't work with every provider, and basically it really sucks when you're a developper.
Daniel says "European music sucks so bad". Easy to say that when you are a complete ignorant of the music we do here.
"If no one pays for content, there will be no content" We have tons of fantastic music under copyleft licenses and there still are musicians making a living of it.
In Spain we have 3 times more live concerts comparing with 3-4 years ago and we pay for them of course.
Music is very alive, music industry not and I give a damm for them.
We love real music, no mercadotechnia goods.
@Q Dub: correct (and edited) - that was a misinterpretation on my part
paying or not paying...well if you put a good product out, people will buy it ,is just harder now becuz the consumer can get a deep peek at your product before buying and big corporations are having a hard time fooling consumers....on the other hand, many artists are now famous and have been discovered by putting their work online for free...p2p is a double edged sword
hmmmmm Music as games and other means of entertaiment is a matter of taste....for me "American" music stinks, i prefer European music 1000%...electronic,hip hop and all variations of metal....is a matter of taste :)
Doesn't really tell us anything that wasn't common sense to begin with. They pirate because they dont have the money or dont want to part with it. Taking away their source for getting these files certainly isn't going to make them start paying for it. Removing P2P certainly wouldn't stop people from finding ways to pirate programs. Where there's a will, there's a way. As long as it exists on a computer, it will be hacked and it will be pirated.
we're going to see the fall of capitalism and socialism in every form of economic doctrine. the internet just accelerates the sharing mentality without profit or reward.
I do not agree that all of this downloading is the world trying to "share" everything. It is what it is. It's like money lying on the ground: someone is going to pick it up--p2p just makes taking what we want a little easier.
I do agree, depending on the circumstance, downloading a product we may have been interested in gives us an insight that we were not privy to before. A lot of businesses rely on dissembling to sell their product, and now that has been taken away. Or, the content provider using the classic tactic of baiting you in with promises only to force you to pay more for the things you thought you would be entitled to. People are tired of these tactics used to make more profit. It's one thing to run a business and provide a fair price for services rendered, it's another to impose one's own greed on others.
The value of all these objects we freely download has been greatly diminished and we have a new perspective on what we consider worth our money. I personally am trying to get out of the habit of downloading things I would really be willing to buy, but its an effort. We as downloaders have to be willing to turn this phenomenon into an opportunity to voice our thoughts on the real value of digital goods (or any sort of media) and not just take it because it's there. If we don't turn this into something to fight old businesses models back with, then we are no better than common thieves.
the question is why are we paying for thing in the first place. why do we make every thing free, i make music and dont care if dont get one $$$ from it, as long as people get a good kick out of it! p2p is one of the best things so far, fuck corporate scum that want to make money... and yes i am a person that still buys albums
Robert> Excellent observation. It seems though that there will never be a sustainable business model for digital content. Commercials can be skipped or stripped, and tracking individuals' downloading behaviour is a questionable practice (thank goodness). Like many people, I'm desenstized enough to not have any problem downloading e.g. copyrighted tv shows and movies. Strangely, this des not apply to music, which I'm compelled to purchase..
dobbes> Turning a profit makes one "corporate scum", eh? That is completely ridiculous and unreasonable. Then I guess not paying for public transport is OK too, since those subways and buses and trains were headed in whatever direction they were going *anyway*. Restaurants should only charge for the precise amount of foods, gas and electricity used up. And please don't compare your hobbying around with artists trying to earn a living. Even their record labels need cold hard cash to promote material and attract talent. Having said that, many major ones have really screwed up with 'copy-protecting' CDs. That's a whole new topic, though.
@7 Daniel:
"Ever wonder why European music sucks so bad, why some coutries that are particularly anti-copyright, countries like the Netherlands and Denmark, don't produce any music at all?"
Ever wonder why you're misinformed and don't know anything?
The Netherlands practically invented trance music, and the amount of electronic music (the most popular kind of music in the world outside of the U.S., with A State of Trance with Armin van Buuren, a dutchman, being the most listened to radio show in the world) is astounding. Trance, Progressive, and House sell out arenas of thousands of people, DJs share, remix, and mix and play their music in clubs, at events, in podcasts, and on radio shows, but over the air and online. You can download mixes online usually, and most music is freely available, I have yet to see Armada send a C&D to at least two online podcasts that offer music online, and Armin van Buuren, Above and Beyond, and various other artists offer their mixes for *free* online on, for instance, iTunes. You can listen to hundreds of trance tracks on trance labels' official YouTube channels, etc.
And these artists make money... They go to gigs, they commercialize their website, etc. They make a very good living while doing the thing they love - produce music and bring it to the fans.
Maybe in your world where music has to be a 3 minute single of several packed onto a CD, then yes, music from Europe sucks. However for me, who listens to maybe 50+ new tracks a month, music is something that flows from one track to the next with beautiful tunes, consists of truly artistic expression.
When I was listening to an episode of a mix show, the DJ said something that I would never hear on American radio -
Such and such producer completed his latest "project."
When I think of a track as a project, a work of art that a producer crafts with absolute attention. Tracks aren't released in albums. There are compilations, but the first place you hear the track is on a mix show or in a club. You eventually get compilations of the artists latest works released under the label they signed with - smaller labels usually owned by a DJ himself (Armada by Armin van Buuren, Pryda by Eric Prydz, etc.).
When I see a track on YouTube, the comments sometimes say "when will this track be released?" When a song in your definition of music begs a release date, please tell me.
Listeners of electronic dance music, boleric tunes, powerful anthems, gorgeous vocals, and powerful trance actually want to buy the music in full CD quality.
tl;dr: Change your way of thinking. Your ignorance is showing.
@myself 21-
Also Germany is a huge producer of trance, probably bigger than the Netherlands, with artists such as Cosmic Gate, Markus Schulz, etc.
Some mix shows -
A State of Trance - Armin van Buuren
Club Life - Tiesto
Trance Around the World - Above and Beyond
Global DJ Broadcast - Markus Schulz
Transitions - John Digweed
The Essential Mix - (Various Guest DJs; Radio One)
Corsten's Countdown - Ferry Corsten (a chart show, rather than a mix)
Top 10 - Marco V (monthly)
Search for some Trance, Progressive Trance, House, Progressive House, Electro House, or vocal trance, trance anthem...
It's great music. It's different, Daniel #7, but you seem to think it doesn't exist.
Star Trek V: The Voyage Home - Captain Kirk - "They still use currency?"
This may be a first step towards the Federation's system.
=^_~=