Why the Music Industry is Lying to You
According to TorrentFreak, the International Federation of the Phonographic Industry (IFPI) last week released their latest report, summing up the digital music landscape at the start of 2008. The IFPI claims in the report that for every legal music download, there are 20 illegal downloads taking place. Or in other words, illegal downloading is happening at a rate that is 20 times that of legal downloading. This, says the IFPI, lead to US$3.7 billion in industry losses. But there are some big holes in that claim.
I'm not going to argue that piracy doesn't causes losses for the industry -- I am very certain it does. But I do think that the recording industry is vastly overstating those losses and misleading the public. TorrentFreak lays out some of the reasons why illegal downloads should not be equated with lost sales.
- Not all P2P downloading is illegal. Some people may be downloading a digital copy of an album or single that they own, a practice called format-shifting that the recording industry has said they won't sue for (and theoretically exists within fair use guidelines).
- Do the numbers include fake MediaDefender files people are downloading? If a person downloads 5 fake tracks before finding the one they're looking for, is that 6 downloads or 1?
- Some people download solely to improve share ratio on BitTorrent sites, but don't actually have any desire for the files they're downloading.
- People are obsessed with discographies and might download an entire set of albums when they really only want one or two songs.
I would add that there is a fifth reason that TorrentFreak failed to mention, which is perhaps the most important reason why illegal downloads don't equate to lost sales. People download music they wouldn't pay for. Not all of the music people download from P2P networks is music that they would buy in stores or via legit download sites were the downloading option not available. Many times people download music that they hear in passing simply because they can, but not because they like it enough to buy it (in fact, it is precisely that they don't like it enough to buy it -- just enough to hear a few more times -- that they download via Kazaa or BitTorrent instead of pay for it).
In fact, I'd go so far as to guess that the majority of music people download via P2P networks is not music they would buy in stores. Further, a recent study showed that P2P downloading actually leads to more purchases of CDs in stores. We've set up a poll below to test that theory. For anyone who has ever downloaded music illegally via a P2P network, please respond to the anonymous poll below.
There was one thing the IFPI definitely got right in their annual report. "Progress in the digital music market is being hampered by lack of interoperability between services and devices," they wrote (emphasis mine), hinting that DRM that ties consumers to a specific devices or service is bad for the industry. This is something that consumers have long been aware of, and that the record labels are finally starting to catch on to.
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Also, remember that in most of Europe, downloading music via P2P is LEGAL, unless you sell that music afterwards or make money in some other way with it.
Downloading music in Europe for personal use, even if I do not own the record, is perfectly legal in many countries, so cannot be counted as "piracy", whether they like it or not.
Please be little more specific in that poll in this sentence "I actually did end up legally purchasing the music I downloaded illegally" - I did purchased _some_ of the music I have downloaded illegally, but it is relative small number of albums. So should I tick this one or not?
The reason people download via these sites, is because paying $1 for a song is to expensive when you take into consideration that if you purchase a CD at a store, you are getting the Artwork with a Case, the highest possible resolution and it still cost about $1 per son. If songs where available at high-resolution (320 kbps) and at $.50 each, then everyone would simply purchase the songs they wanted.
The same goes with these movie rentals. You can walk to your local rental and rent a DVD for $1.99, but now they expect us to rent for $2.99-$4.99 when they don't have to pay for the real estate or the DVD hardware.
Who are they kidding?
As long as they try to screw the user, the user will try to screw them!
Period, end of story.
I don't know if this is totally correct, but 70% of record companys benefits comes just from concerts, so album sales should represent just a 20% or something like that. The free distribution of music through internet has increased the influx of people on concerts. I think that what IFPI is really trying with this is to retain as long as possible that 20% because the future of music is free listening to it and then enjoy it live!
Josh,
Your last point is right on the mark. There's an awful lot of P2P happening by people who would never buy music otherwise. And I would also suggest that a good chunk of the music download is quickly deleted or ignored because it fails to resonate with the user. The upside for them is they don't have to pay $20 for something they don't like. Of course, the trick is getting people to pay for the things they do like.
I can not agree with the statement that people are downloading music they otherwise wouldn't buy! I'm not exactly sure about mentality of average american citizen when it comes to music knowledge but I most certainly think you are also forgetting a large population of people who love music and like discovering new quality music and people who are plain obsessed with it, and spend hundreds on it anyways, and use downloading as an easy access for preview.
Can you imagine how much time does it take to go to record shop, being forced to manually browse records only by alphabetical order (or worst - random), and being forced to stand (in line) while preview listening to them.. This whole experience is made for (musically) ignorant people, who listen to mainstream.
Audiophils and/or music lovers tend to download for researching purposes - to make sure the music is worth it's money, and than if it is we/they tend to buy it. And the best part of it, there is more time to listen, because the browsing is easier and takes way less time.
There are also 2 big issues not mentioned here. One is that all expenses for the record labels are proximately 1-2 € per record (recording, post-production, cover design, photo shooting etc included), but the average price for a single record is 16.7 €. And the second one is that majority of music industry is making and prefers the new age "superstar" business model with MTV prostitutes in every music video - claiming it sells music and on the other hand there are numerous great artists who don't wish to succumb demands for changing their music to what record labels think it is the best and get couple of ten percents for what is theirs so they sell and distribute their music on gigs and online.
Kind regards
The Music and Movie industries must understand that they are across a major transformation. The technological disruption brought by Internet and Mp3 requires a sharp disruption in their business model too.
I agree with some of the comments above on the right pricing for downloads. The post below gives some more light on the topic:
http://tech-talk.biz/2008/01/24/the-right-price-for-downloads-and-rentals/
very great surprise:
http://www.spymac.com/details/?2339829
We must pay for that we wants to get. But who must pay us for that they enforce us to listen(watch, feel)? :)
Posted by: uimehanika.pip.verisignlabs.com
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February 10, 2008 10:41 PM