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
|
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.
=^_~=
In my country the biggest problem is that a single new game costs like 10% of your monthly payment. That's a fucking lot. When games become cheaper I usually buy then (if I liked it). I prefer to have legal and original stuffs cuz it's a good feeling, but sometimes we just can't.
And also: yeh support artists and programmers and everyone who produced something valuable, but everything between these people and the consumers are UNNECESSARY. Thanks to the internet. It's just that they don't wanna disappear. Not like they can stop the inevitable...
The biggest concern for me buying an entire album online is the garbage in the album. I like the music, but it is not worth it for me to buy a $10 album for 2 or 3 songs. I consider, and have bought, albums that had music I liked entirely. I don't want to pay for the junk I don't want.
Buying singles could be a solution, but also, the artist does not always choose the songs I want.
When we buy a game, or music, the sad thing is that we are not paying to the actual providers. When you buy a $50 game, it is not an even split between everyone that worked in that project. You usually pay 50% for the brand name, then the higher ups. The developers are not usually paid a percentage of the revenue. For music artists, they do get paid, but that number is insignificant.
I buy my stuff when I want to pay for what they give. I don't want to pay for a game's multiplayer when I'm not going to play it, unless it really WOWs me. And not a lot of games do that nowadays. Those that do are still beyond an average person's budget.
When we buy a music player, we are paying a lot of money. On top of that, we have to fill that 16gb or 80gb. No one wants to pay even more on top of a $300 investment.
Maybe in a few generations, people will look back on us and say how we ruined it for them. Or maybe, someone will find a way to satisfy the consumer and the creator.
If you give people a taste of freedom, they're not going to settle when you try to charge them for it.
p2p makes it easier to distribute for independent artists. the record companies are afraid of the decentralization that this brings with it.the record companies like telling YOU what YOU should enjoy and keep the talent pool rather shallow. they put Britney spears on a pedestal. p2p gives the same amount of time to independents that it gives to others without promoters getting in the way. you see the talent rise to the top when this happens.
I personally am one of the ones that they are talking about. I do not buy entertainment luxury items. I never have. I never will. p2p still allows me to enjoy myself. I am not depriving anyone else from having it. as a creator i would be pleased that someone who never had access to my material before now has access to it. if it is any good, and if in the future i change my mind and start spending then the names of the products and companies from my p2p days will stick and i will be more likely to buy them.
I am a student and don't have the money to buy luxury items, p2p is amazing from a vendors point of view because through it they can reach me with advertising where i usually wouldn't be reached.
if i have a positive experience with p2p content then when i do buy i will seek out the positive stuff.
i am an artist and I would prefer my my work to sit in a free to the public gallery where anyone can enjoy it rather than in some millionaires vault.
Before, a content developer could create a poor product and market it as better than it is. The consumer would see the nice shiny package and buy it. It would then turn out to be a waste of the consumer's money. NET RESULT: Developer greed/need determining the market - preservable economy.
Currently, developers create any content. The consumer gets to open any packages he's interested in. Precious few are determined to be worth spending money on. NET RESULT: Consumer apathy/accolade determines the market - unsustainable market.
It is true that paying for Broadband is akin to buying a radio, or TV. Everything or anything that you can 'tune to' on the internet can be viewed as being 'broadcast.' It is up to developers to re-tune their business practices to this model if they wish to make money.
Despite a realization of the evolving marketplace, I still think we have an obligation to smooth the transition. If the developer side of the market collapses en masse, rater than transition, we will be without content for some time, and some draconian measure may be put in place to stem the tide, or resurrect development.
We should pay for content that we really like as often as we are able, it makes it clear that we really do want to reward developers for good work. In addition, and this is something I really recommend we practice, one should not spread the word about 'freely' available (not free to use) content. If someone doesn't already know how or where to get this, DON'T TEACH or ENABLE him/her, and don't provide it for them. Recommend they pay for it, or avoid it. And certainly don't sell any content acquired this way. We really should put ourselves in the place of a small developer with an idea for a software title, taking the resources to develop this and then release it for sale - what results would you want for your effort?
Looking at things like VALVE, and WOW, there are already clear signs that the market is transitioning, and should in fact do well. Small and independent developers are unlikely do as well right now.
One possibility is to integrate a cashless financial system. Unique downloads of a title are converted into some as yet undefined unit of worth, and this unit of worth is totaled to give the value of the title. That title value is considered to be attractive to, for instance, advertisers who can market products digitally and elsewhere. Certainly this could work for games. It works for television and radio now, doesn't it?
Games could be developed with built in advertising - which would likely see Advertisers developing their own game content. A developer could on the basis of his last games 'download worth', receive payments from advertisers for product placement in expansions packs etc, advertising that need not be intrusive - in opening credits, side bars in game HUD, in game world, character outfits, Advert Intermissions, etc.
Music could use a similar principle, but to attract concert and show creators. A percentage of downloads (figured out through statistical analysis) would be a good indicator of concert ticket sales. The artist could collect money from the organizers based on the downloads in expectation of a concert profit.
We would suffer some loss of immersion in our games for example, and it's just a possibility I've hardly considered, BUT, if isn't some way to pay developers for their work, their will be no content.
It is the "mainstream" half-baked crap that will suffer most from "piracy". I mean, the industry was already under stress from competition from TV. People don't mind watching crappy shows and listening to repetitive music, even if they are highly degraded by compression in mp3 or mp4 files. No audiophile would listen to a symphony compressed in an mp3 file! So, you see, crappy products are (finally) getting a payment close to its true value. Full knowledge about the worth of the product has reached the market.
The music and video industry should:
1st) Stop whining about "piracy";
2nd) Get rid of the "piracy" lawyers;
3rd) Hire market specialists, to do serious research on the market;
4th) Dramatically increase the appeal value of the product
5th) Put it on the market following the lead from "American Idol"
I'm surprised no one mentioned that without P2P there would be an enourmous decrease in MP3 player sales. Apple was resurrected by high Ipod sales, so in a sense they profited off of P2P. Without loads of free music who would need 32G of space? Not to mention a decrease in need for computer space as well.
From a capitalistic / free market point of view they should just let the companies burn because they are not keeping up. From a socialist point of view, if you cap salaries of artists and music label higher-ups songs would probably cost a lot less anyways.
From a democratic point of view...is there even a poll that asks the population what they believe? The poll at my high school showed 99% for file-sharing, so for those of us in democratic states in about 30 years they would have to legalize it anyways based on majority?
Hypocrisy is saying that any time anyone listens a "pirated" song, the recording industry loose a sale. May I remind that the consumer decides to buy a product or service based solely on the ratio use value / cost of ownership. If the so called piracy is removed as an option, consumers will still be making buying decisions based on that ratio. Internet availability may lower the cost of ownership, but all the people that started to download solely because of the low price tag will never buy a CD. The use value of the product hasn't changed a bit, and is still lower than the price of a CD.
On the other hand, copyright and patent laws, as they are, create monopolies for any given copyrighted or patented product. There better be a sound economic reason for allowing monopolies, because they have a long history of working against a healthy market economy. The French and American revolutions were, in part, motivated by the awkwardness of an economy strangled by the crown and the guilds.
In fact, the RIAA is an acting guild. Technically, the RIAA is similar to the european guilds from 1100 on. From wikipedia:
"Not all city economies were controlled by guilds; some cities were "free". Where guilds were in control they shaped labour, production and trade
...
The guild was at the center of European handicraft organization into the sixteenth century. In France, a resurgence of the guilds in the second half of the seventeenth century is symptomatic of the monarchy's concerns to impose unity, control production and reap the benefits of transparent structure in the shape of more efficient taxation.
...
The guilds were identified with organizations enjoying certain privileges (letters patent), usually issued by the king or state and overseen by local town business authorities (some kind of chamber of commerce). These were the predecessors of the modern patent and trademark system."
Among other things, I say: “Quite a few p2pnet stories are lifted whole and re-published elsewhere. Sometimes the people who are re-running them say where they got them, and sometimes they don’t. But since most of the time I’m simply trying to pass information on, that’s cool and I don’t lose sleep over it.”One other thing: my approach is completely different from TF’s. We may have a post on the same event or happening, but 9.999 times out of 10, my stories are totally different in every way from TF’s.
Sharing and file piracy is a double edged sword. People say "Oh we need to preview the song before we buy it!" There are sites created by many music distributors/artists that let you hear a portion of the song or even the whole song in reduced quality. Granted they all don't do that, which is stupid, but if this is an option why steal the file? You preview the file or album, you like it, go buy the file/album.
People complain "Oh buying single songs is more expensive than buying the album!" same thing is buying in bulk, it is cheaper.
People complain "Oh this song is not worth such and such!" Then don't buy it, if it isn't worth what it is being sold to you, then you don't enjoy it enough to listen to it.
File sharing causes the prices of content to go up, plain and simple. P2P was cited to cause an "explosion of publicity for independent artists". Where is the explosion of music sales to make up for this? There is no explosion, music sales have been following a very steady tread. While this is not downwards, you need to think of all the new artists who should have gotten music sales as well but for some reason they are forgotten. Because these artists are not getting money (and a lot of the times they are signed on with bigger producers since selling that kind of product and marketing it takes lots of resources), the producer sees that not everyone is making the money they should.
It is similar to games, the developer of World of Goo did a test and offered to allow you to pay ANYTHING you wanted to acquire their game (including nothing!) and a whopping 98% of people did not pay for the game, even though it is an extremely highly rated and highly enjoyed game.
This is all a bunch of smoke and mirrors people. People do not want to pay for things, period. If they don't have to, they almost always won't. Why would you? There is zero reason if you got zero benefit from buying something to not take it for free instead. If you like having albums, then that is a benefit for you, to physically have the album, you like that so you will pay for it. If you feel guilty when you don't pay for something, that is a benefit for you, soothing your conscience. If you like perfect audio fidelity you will pay for it because you want non compressed awesome sounding music. These are all benefits that some people feel outweigh paying nothing for it, but not everyone.
TL;DR - Buying the music needs to have more benefits than stealing the music for free to convince people to pay for it, and all of the reasons people steal besides this are BS.
Has anybody here ever watched the show "MTV Cribs"?
Just Google "mtv cribs lil wayne" or any other American rapper. If you have never seen the show before, you will be amazed. This is what happens when the music industry is allowed to have monopoly. Sure there are many different big record labels, but it is obvious that they all agree with each other about prices. There is no real competition, except in attracting artists to a record label, but no competition regarding consumer prices. This is the reason why rappers like Lil Wayne, which are barely known internationally, can afford to buy so much shit. And don't forget that only a small part of the revenues actually reach the artists. So now they complain that they don't have enough money to buy a new limo because I downloaded his last album? After seeing that video I would definitely never ever buy a Lil Wayne CD. Why support Lil Wayne and his record company to buy a new limo with my hard earned cash.
The movie industry is the same. Only in the games industry there still is some fair competition in the PC Games sector, but the console games sector is already going down the drain.
I do want to support the artists I like, but the way it works right now I do not feel comfortable with. There is too much greed and we, the consumers, suffer from it. Too many people profit from music distribution, if every artist would distribute their music directly to online stores like i-tunes, the record labels would die out and the artist will be able to choose how much to sell his album for. That will create fair and healthy competition. What are the record companies good for anyway? History has shown that artists do not need advertising and promotion, good artists will emerge in any case if there is a platform for them to deliver their art to the public. And new emerging artists will have to start giving their music for free to get known, and if they are good then they deserve to earn a living from it, so they can sell it if people want it. In such a system I would have no problem to pay for the music or the movies I want.
Darwin said “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.” Maby we should turn off the internet to keep librarians at work, or make refrigerators illegal so people who sell ice can afford to send there kids to collage. Musicians and actors are over payed, bottom line. SCHOOL TEACHERS on the the other hand vastly under paid. Witch career is more important to humanity do you think? This whole debate has been propagated by a very rich and powerful industry. It should be illegal for a musician or and actor to make more money then a school teacher. I wonder how many big celebs would stick with it making that kind of money.
@Screwyoupal
Musicians are not all "overpayed" some, while on tour, have 3 - 4 dollars to a band of 5 people for food. The only money they make is from merchandise and ticket sales (when they sell them themselves) and some of that goes back to the venue, booking, and promoter.
I've been through this.
I know the life an unknown musician lives.
The known ones (who are the more likely to be downloaded ANYWAY) are the ones who get paid money REGARDLESS because of merchandising at random clothing stores and they get paid to go on tour and such.
The unknown ones are underpaid. The mainstream ones, are paid too much.
The current market is based entirely on Pay-What-You-Want.
Web comics and free-to-listen audio sites (Things like Songs to Wear Pants To) are able to generate income for their writers, but their product is free.
Radiohead, for example, put out a free album, and unless I'm mistaken, the band itself profitted more from that album than any other.
Sure, they're huge, and sure, the music was of solid quality, but the bottom line doesn't change: The total cost of ownership of the music was absolutely nothing, but the band still got their money (and their following shows were insta-sellouts and the like)
If you play your cards right, the quality of your music will enable you to make money, and as you go, you make arguably more out of doing it yourself.
All hail the internet.