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Music piracy a growing problem? January 19, 2009

Posted by oktyabr in music business, music technology, opinions, personal, technology.
Tags: , , , ,


I wrote this as an answer to a thread (on a sim racing forum of all places!) concerning a story from the BBC about how music piracy was still an  ever growing problem.  I spent too much time thinking about and writing my response to have it buried in a forum so thought I would put it here too.  As always YOUR comments and opinions are welcome!

The original thread quoted a story apparantly from the BBC website (not verified yet) that had what I thought were some very astonishing figures!  Here is a sample:

Ninety-five per cent of music downloaded online is illegal, a report by the International Federation of the Phonographic Industry (IFPI) has said.

The global music trade body said this is its biggest challenge as artists and record companies miss out on payments.

There has, however, been a 25% rise since last year with downloads now accounting for a fifth of all recorded music sales.

What follows is my rather lengthy response (the sort of thing I do when mulling over a challenging problem with my first cup of coffee)…

Piracy has and always will exist to some extent. In the USA illegal music downloads are far below what they could have been (I’m old enough to remember when Napster was still illegal) but that is offset by home PCs becoming more common. 20 years ago almost no one had a computer in their home connected to the internet, not even super slow dialup! Today it seems like every 12 year old has a machine in their bedroom hooked up to broadband (at least mine does.)

The problem is a differential in two technologies… one, the technology used to market goods, and two the technology that enables piracy. Since piracy isn’t likely to stop simply because someone asks nicely it is better to find a new way to market the goods.

I don’t have the solution other than I try harder these days not to support a outdated technology (i.e., spending money on CDs and DVDs) preferring to simply support market structures that are not so influenced by the current trends in piracy. Remember, in the long run someone is paying for that margin of piracy and it’s not the artist! It’s the people that wonder why a CD costs $20 but they buy it anyway.

For example, for now at least, I only buy movies on Blueray. Sooner or later people will start pirating these too in the same sort of numbers as regular movies but for now the related technologies (HDMI, DRM, blueray rippers and burners and the bandwidth to easily move them) make piracy of BD movies, in BD format I might add, very difficult.

For music I support artists that give their music away freely. If I like it I’ll donate some money (much like how services like nogripracing, etc. exist), buy a CD I could download for free, or better yet see them live. Live music was the original way that musicians and bands made their money and I think the trend is going back that direction. There are several bands I know and like that give away their music for free and only ask that if you get the chance to hear them live you buy a ticket, which I continue to do.

Another rather novel trend is to buy the music on very high fidelity vinyl and then you get to download the whole album digitally as well, for free (see the Back to Black Vinyl campaign as an example). Of course I rarely bother even downloading the mp3 versions, maybe for a portable or something, because sound quality wise they simply cannot compare. Vinyl is almost impossible to copy accurately and rips are not economically viable either… with the amount of time and money that must be spent to make a copy of an audiophile vinyl recording you would have been better off buying a genuine version in the first place.

So we look to the future and the way that both technology and piracy (to a lesser extent) will transform the associated markets… Maybe moving part of the value to other than a digital media is part of the solution? Perhaps in the future the only CDs worth buying will be the authentic ones, autographed by the band? Autographs are still collected today and some are worth great money. Perhaps Metallica’s (only used as an example) next album will be only available on vinyl, and autographed at that? Maybe bands will start relying more on live concerts and touring (and maybe concerts on pay per view?) for the majority of their income and less on *high quality* music recordings? Perhaps 10 years from now we will all be listening to holographic minidiscs smaller than the palm of your hand that will be dirt cheap to buy but automatically erase themselves after one or two listens? Maybe most of the music that can be pirated will be only crappy 128 kbs MP3s??? Oh, wait… that’s how it is now

Maybe music, software and movies will all be downloadable but will require some sort of tiny, universal “dongle” to be played back? Guys that have experience with really high end (expensive) software know what I’m talking about.

In reality a good that can be marketed digitally will sooner or later be marketed digitally, almost exclusively. The days of the going to a physical “brick and mortar” store to buy a little plastic disc of music from a very limited selection, including lots of tracks you don’t even care about, wrapped in cellophane, are going the way of the horse drawn buggy because it is an economically antiquated and inefficient model.

Perhaps the future will be all kiosks that custom burn a CD of your favorite tracks for you very inexpensively but encode each track with your social security number, encoded dna or other digital signature so if “your” tracks start floating around on the internet they know who to send the bill to? Of course the same could work with internet download services too…

Piracy exists because either the pirates think the copyrighted work is too expensive to purchase in relation to how easy it is to steal, or because there is no other way to get it. I’ll confess, I’ve “illegally” downloaded a few tracks in the past but only of really obscure stuff that simply cannot be purchased any other way. The market is driven by supply and demand.  In my humble opinion if you make downloads so cheap that it’s just stupid to “steal” them, increase the selection so even really obscure stuff can be legally obtained by anyone, anywhere, and for the most part piracy of music, at least, will slowly evaporate.



1. rommeldak - January 20, 2009

Okt, I agree 100% with this statement: “pirates think the copyrighted work is too expensive to purchase in relation to how easy it is to steal.” And the latter is REALLY easy. So, piracy goes on.

My concern with the music industry–and I’m not an expert on this by any means–is that it is so easy to steal the music that the labels will have to rely on other means of generating revenue (as you imply with the autographs comment). What really worries me about that is that, under those circumstances, acts like Hannah Montana, the Jonas Brothers, High School Musical, etc. (I may have to wash my hands after typing those words!) will be the only profitable ones because they will generate lots of residual sales. There will be no point taking a risk on a small-time talent when the profit margin has been squeezed so much by piracy. Fringe artists never made much (I remember hearing Exene of X saying that, in their best year, they made about $30,000), and now they may be completely unprofitable.

On the flip side, perhaps the internet allows such acts to operate without the support of major record labels. In that case, maybe we’ll see the big labels move toward the Hannah Montanas while groups like The 88 make as much as the would have with a label while retaining more artistic freedom.

It reminds me of a phrase in economic analysis: creative destruction. It’s a couple of ideas strung together. First, real competition never comes from folks doing the same thing you are, it comes from a direction you didn’t expect. Railroads had far more to fear from airlines and interstate trucking than they did from other railroads. Second, their destruction was actually a creative process as a new technology created a new system from the ashes. Perhaps that’s what happening with music, but we’ll have to wait and see what emerges!

2. oktyabr - January 20, 2009

Thanks for your insight!

What has occurred to me, while reading your comment in regards to the “Hannah Montanas” labels being the only ones to generate revenue under a revised marketing plan, is that perhaps the ‘small time talent’, even now, has a sort of invulnerability to piracy brought on simply by their obscurity. In other words do you suppose there might be some sort of popularity threshold that corresponds to the largest labels with the best known acts also being the largest victims of piracy?

Of course ultimately I think it will come down to an artist’s true colors… there are those that do it (the way they do it) simply to try and get rich… and then there are the others that put the music first.

3. Jaysen - January 8, 2010

Interesting article. We at the Music Void definitely feel, though, that illegal download has become the number-1 killer for real artists. The sad truth is that if artists can’t make a living from their ‘art’ then there’s no doubt they will die out. http://bit.ly/4jFr51

oktyabr - January 8, 2010

Thank you for taking the time to read my article and to make a comment. It’s been a year since I wrote that so maybe the topic deserves a revisit. Would you mind if I quote you in a new article?

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