COMMENT The record labels would have you believe they've been victimised by music pirates and downloaders. But Martin Brampton reveals the other side of their story...
Have you been shedding tears for the music industry? These embattled companies have been struggling to secure their rightful revenues against a disgraceful surge in thieving by web surfers. At least that is what they would have us believe.
Yet the whole basis of their argument is flawed. It typically rests on two claims. First, the total amount spent on recorded music has sometimes dropped sharply. Second, surveys indicate that a significant number of people download music via the internet. Both of these claims are true but neither can be taken at face value.
Sharp drops in revenue from recorded music have frequently coincided with a reduction in the number of new releases. At the same time, the revenue per release has usually increased. Record companies maintain that only a small minority of recordings are actually profitable. It seems that the companies have been more careful about what to release. If they are good at picking winners, then total profit can increase, even while gross revenue is reduced.
And the surveys that show large numbers of people are downloading music have rarely asked a further critical question - are the downloads pirate copies or are they downloads of the very large amount of material that is now offered on the internet for free? Clearly these two kinds of download should not be lumped together.
The entertainment industry suffered occasional setbacks long before recording became an issue. When the Hollywood studios relied for too long on the generation of stars that included Clark Gable and Bette Davis, they lost touch with a rising generation. The result was a sharp decline in cinema-going. On what grounds does the music industry assume that declining gross sales are not connected with the material that is on offer?
Another consideration is the behaviour of retailers. Over recent years, the DVD has become a popular item and gives shops better margins than music. Naturally, shelf space has been switched from CD to DVD.
Few people make detailed budget plans for their spending but it is clear that only so much money will be spent on entertainment. There are many different competing choices as to how that cash can be spent. No natural law determines that some particular portion of it must go to the music industry. Indeed, with new alternatives arising all the time, it is perhaps surprising that music sales have held up as well as they have.
Discussing purchases of cheap copies of proprietary software in last week's column, one reader quite correctly pointed out that many of the buyers are simply not in the market for full price versions. If pirated versions are not available, then the low-budget buyers will turn to free or low priced products. The same is almost certainly true of music.
A curious angle on all this is the morality of copying. One might expect to find different attitudes in the Christian music sector, which in the US is larger than classical and jazz put together. Yet research indicates that some buyers feel a moral compulsion to copy the music as widely as possible in pursuit of evangelical aims. Others believe that making free copies for friends is just as important a principle as protecting copyright. In fact, copying in this sector is much the same issue as elsewhere.
Paradoxically, one of the sharpest declines in the sale of recorded music occurred just after the RIAA had the original Napster shut down.
We seem to be left with two issues. One is that we are being presented with a picture that does not reflect reality. The other is that people's behaviour is hard to predict and even harder to control. Perhaps the music industry should talk less about piracy and more about how it can create products that people will want to buy.
Editor's note: Martin is scheduled to give a keynote address on certification in the IT industry at the Software Development Conference 2005 in New Zealand and Australia this March. For more information, visit the conference website.
Comments
There are 14 comments. Join the discussion
1. Andy Neale
What it really boils down to is that the Music industry is losing the rights to distribution, and with it the income that it has always had a monopoly on. The internet gives musicians alternative ways to distribute their products...Thats what the Record companies don't like.
2. JerryK
If they charged a fair price for downloads, instead of something far too near the shop price, many many more people would buy online. It costs almost nothing to distribute electronically, yet prices are comparable with those of a CD track. They have had to manufacture nothing and ship nothing (there's an ecological issue here, too) yet the price remains high. Ten pence (UK) or 20 cents (US) per track would probably yield enormous profits. Potential customers would be delighted to end the risk of also downloading spyware or worse. Also, if the music industry had led the download process instead of griping about it, the situation may never have arisen.
3. Kevin Fletcher
One day perhaps the Music Industry will wake up and smell the roses. It is sadly deluding itself if it imagines that much of the downloaded material would ever have materialised into sales. On the contrary, if it were not for the ability to download freely, the "try before you buy" approach, I contend that far LESS sales would be made. I further contend that it is an absolute fundamental right for people to have the widest possible choice of music, art and other cultural necessities available to them.
Naturally, if the Artist objected to having their work in the Public Forum, then there would need to be a mechanism to allow this - but the control should not, ever, be in the hands of the distributors - in this case the gluttonous record companies.
4. anonymous
Record companies, and the multi-millionaire artists, have had it their own way for far too long.
Why, for example, didn't the MMC examine why I couldn't choose which label I wanted to buy 'The Beatles' 45's on? If I could I would have chosen Polydor as their vinyl pressings knocked EMI's into a cocked-hat. But I had no choice; the record companies saw to that.
I also hate record shops. You get barged from pillar to post whilst having your brain fried by some 'in da house' garbage aimed at you at a level which can boil water. Online purchasing is far more pleasant.
Purchasing online has another advantage. If I want one track I can have it. Not the one I want, two mediocre ones, and eight crap ones added to justify the £double-digit price tag. Perhaps the days of the ubiquitous 'album' are truly numbered...?
5. anonymous
I do not and will never support organisations ripping off CD's etc for gain. However, the odd favourite song, that perhaps is no longer available in shops and has no been stocked for years, does not break the bank of any Music Company. Neither will it effect their sales as much as they would have you believe.
Does the record industry cry foul when they rip off new artists? You can bet they don't!
Many Groups,particulary from the 60's and 70's, have publicly said how they were paid a lot less than they were valued. I also recall, no so long ago, watching an interview of certain person when he admitts on TV how he chased and eventualy signed up a duet. He ended saying he got them very cheap,for just a few thousand, knowing they were worth Millions. Yes it is good business on one side, but is it good for the group? The industry itself is far from white in many cases.
CD's have also been over priced here in the U.K. for some while. No complaint again from them here.
6. Scott Kerry Guthrie
As a performing songwriter, I do understand the need for copyright protection and catalogue protection. However, this should all serve as a wakeup call for the record companies. Regardless of their reluctance to actually pioneer a new form of music or a new format (I am old enought to remember the fuss they made about cassette recorders, then DAT, then CD's, then DVD's, and now direct downloads), the music lovers of the world will find a way to get what they want.
The population of the world increases daily; hence, the market for music increases as well. Are these companies really so shortsighted that they can't admit there is room in the world for more diversity? Who cares if Lindsey Lohan or Hillary Duff is going to be the next Brittany Spears? Brittany Spears is a rather low level of musicianship to aspire to.
Certainly no one I know cares about it, and I know a lot of people. What we all want to know is who will be the next Janis Joplin? Whoever she turns out to be, you can bet she won't start her career with any of the mega-corporations that pass for record companies these days.
I salute the true independent record companies and distributors out there. Take advantage of MP3.com and I-tunes and Napster. Start a revolution! I want to know who will have the first Gold album strictly from Internet sales. And then Platinum...
7. Ali Partovi
In response to Scott Guthrie's post above ("Start a revolution! I want to know who will have the first Gold album strictly from Internet sales. And then Platinum...") you might be interested in following what we're doing at GarageBand.com.
GarageBand.com is a community where over 130,000 bands review and rate each other's music. The best-rated songs rise up the charts and are eligible for radio programming on a growing network of radio partners (mostly internet and college radio stations).
In the past few months we've begun an effort to actually break new artists over the internet -- essentially, music by the people for the people. Our top-rated artist, Geoff Byrd, is doing extremely well thanks to these efforts -- he has been on the cover of Billboard Magazine and his song, "Silver Plated," is already one of the most-played songs on all internet radio. See his music at http://www.garageband.com/artist/geoffbyrd.
8. Walter Starck
In an era when recorded music came only in the form of disks and tapes the recording companies provided the essential service of manufacturing, packaging, distributing and promoting the product. Technology now obviates the need for all but promotion and the record companies are simply trying to use the force of law to preserve a monopoly based on obsolete technology.
Until the companies provide convenient downloads at a price reflecting the savings effected by the new technology and accept lesser profits commensurate with their reduced role, large numbers of people will continue to avail themselves of free copies. Repeated experience shows that whenever
artifically inflated prices are maintained by legal means black markets develop.
Current copyright laws are not in the public interest and bad law results in disrespect for law. Music is only one facet of the problem. The fundamental aim of protecting and encouraging creativity by a limited period of exclusivity has been distorted into a tool for ongoing legally sactioned monopoly and extortion. As such it is becoming an increasing impediment to innovation, free markets and open competition.
The time is overdue for a fundamental review and revision of intellectual property law.
9. MusicMan
Well said Walter! A lot of talk on this subject is all about who is being put out of pocket by illegal downloads and the morality and ways in which this will stop. Is this all that music is about? Money?.
I am a DJ and "budding" producer in an underground dance music scene called "Drum and Bass". Record sales in this scene mostly come from wannabe DJ's of which there are a substantial amount.
I myself have had to turn to downloading new tunes for free to keep myself at the forefront of the music as I cannot afford the £5 a record expense at the moment!
Now here’s the flipside to the argument....I use a "Kazaa" like program to download music. On this I talk to others online who are either downloading from me or im uploading from them. I regularly talk to a man in San Francisco who downloads from me. Without the ability to freely download music, he would have never found the love for DnB that he has. His friends had never heard of it, but they have now as he makes them listen to it!
The point is that the ability to download music freely around the world spreads music around the world which enables a much larger audience and breeds new producers, new musical influences and pushes the music forward keeping it fresh and vibrant. This also aids records sales in other countries which previously may have been non-existent.
10. Mark SPLINTER
been saying it for five years now, someday soon the oil tanker will start to turn.... exciting times :)
11. MajorThreat
After years and years of ripping-off both artists and consumers these morons attracted the public attention on who they really are. After years and years to promote only junk such as Britney they have what they deserve. I think the sudent drop after Napster was due to boycott. I warned them that I will personaly boycott if they put Napster out of business. Napster went out of business and since then I am getting my recorded music form indies not RIAA members and opposed to the sue them all strategy.
12. Shawn Seyk
Martin,
I applaud you. We all need to speak more about the other "great lie". NPD conducted a research study last year and found some interesting things. Most compelling was that out of the top 10 reasons, people are not buying CDs anymore - not one of the top 5 were due to an "illegal" activity ( p2p, cd ripping, etc.) Also note that a comparison of revenue is inaccurate, as the avg. price of a CD released by a major label went from $17.48 to $13.76 (over a 20% reduction).
thanks again for spreading the word
evo-music.net (launching Indie-pendence day 2005)
13. David Howe
As someone who used to purchase 80-100 CD's per year (and have over 1500), my reasons for doing so are simply that there is less music that I like being released and of that being released many times a CD is 3 good ones and the rest junk...so...being able to buy by the track is a good solution in my opinion...the companies have only themselves to blaim. Consumers don't like being robbed anymore than anyone else.
14. anonymous
Napster has heard you and just introduced a $14.95 monthly fee for unlimited downloads.