The RIAA have loosed another volley against the filesharing contingent that they believe are bleeding the profitability out of the music industry. The arguments are pretty solid: those who choose to download music illegally instead of paying for it through legal physical and digital channels are not enjoying the fruits of the people working in the industry without contributing to their livelihood. Bad people, right? Not proper music fans, right? Theft is insupportable, but there are questions of degree to be considered… From the RIAA’s press release:
According to SoundScan, the top 10 albums in 2009 sold a total of 21 million copies, and the top 10 tracks totaled 36 million paid downloads. But the top 10 albums in 1999 totaled 55 million in sales. Even with digital track sales factored in, those top sellers fell by more than 50%. In the last 10 years, the major record labels’ direct employment in the United States fell from about 25,000 people in 1999 to less than 10,000 today – a drastic reduction of over 60% in people who enable the creation and development of new music.
In the music industry, it takes the investment of many peoples’ money, effort, and time to create the songs and albums we all get to choose from and enjoy. Since most acts never even reach the breakeven point in sales, music labels need to operate like venture capitalists and count on the successes to subsidize the continued development of many artists and releases that may never break out of the red. And it’s easy to ignore the harm being done when you’re only stealing one copy.
Stealing music is wrong. This is undeniable, but there is something about what the RIAA say – it’s easy for a punter to ignore the criminality of nicking one album at a time ‘just to hear it’, and so the solution to the problem has to be slightly more nuanced than cutting off the consumer’s internet connection, or suing individuals for vast damages in high profile cases. Legal, profitable channels of consumption have got to compete directly with the illegal, risky, but free-to-consume-unless-you-get-caught methods like filesharing and illegal streaming.
Picking on individuals makes the recording industry look like the aggressor rather than the victim, which they are not; they’re just trying to safeguard their sources of income, and their jobs. It’s hard to think of Edgar Bronfman’s kids going hungry, or Puff Daddy having to sell his jet to make the mortgage payments, but there are real people doing good work whose livelihoods are on the line. That said, progress is inevitable (see the video at the tail of the post), and the music industry has got to roll with the punches and capitalise on the massive innovation that’s happening in the digital sector if it is to thrive as it has in the past.
Another thing to consider is how much this piracy actually costs the industry. If the pirates couldn’t get hold of the music easily and for free, would they bother getting hold of it at all? Does the money not spent on records all get spent on eyepatches, stuffed parrots and WOW subscriptions, or does some of it come back to the music industry in other ways? Concert revenues are certainly up over the last few years, and some artists are making money against the trend of decline by using clever andnon-traditionalmarketing methods, selling coolphysicalproducts, and using new outlets like Spotify and eMusic (to whom RouteNote will happily distribute your music, by the way) to boost waning physical revenues. Is it better then, for the industry to put a death-grip on sometime pirates who may also be gig-goers and box-set-buyers, and look backwards at the fantastic success they had with physical formats, or to look forward to an era when everything is digital and try to maximise it’s readiness and thus it’s profitability? Perhaps we’ll see things go full circle, and recorded music sales will tail off completely as we all go back to being regular concert goers, just like in the 1800’s…
The IFPI have released their report on the digital music market in 2009, a mixture of summary, opinion and statistics covering general developments in the online media market over the last year. Some highlights include interviews with the CEO’s of Spotify and the newly launched Sky Music, and some top line stats on the growth of the music market and it’s struggle with online piracy.
Global digital music trade revenues reach US$4.2 billion, up 12% in 2009
400 services licensed worldwide by music companies with ISPs, mobile and other partners
New figures show local music collapsing in major markets as piracy bites into releases, sales and investment in France, Spain and Brazil
One of the more striking graphs they’ve published illustrates just how big a pie the music market remains, second only to the computer games industry in terms of digital revenues. Perhaps the music market could take cues from the games industry, which has two distinct models of revenue generation – premium products for sale with heavy DRM protection (facilitated by the increasing online elements of gaming) and free, ad supported casual gaming sites providing access to less spectacular, but almost unlimited content.
An important trial regarding the illegal online distribution of music in the States has reached the next stage of the argument – there’s no longer much discussion about the fact that duplicating music over the net without rights holders permissions is illegal. Inevitable, perhaps, but certainly a clear violation of intellectual property law. What’s now being put into question is the appropriateness of the massive damages that are being sought by the record labels from individual file sharers.
In 2007, Jammie Thomas was sentenced to pay damages of $222,000 for 24 counts of infringement ($9,250 per infringement). Later, a retrial was granted, and in June 2009 a jury returned a similar decision, but with increased damages of $1.92 million ($80,000 per infringement). In July last year, Boston Student Joel Tenenbaum was also found to be willfully infringing, and a jury awarded damages of $675,000 ($22,500 per infringement). These vast sums were awarded by the American courts as ‘punitive’ damages – fines intended to deter others from repeating the criminal behaviour rather than as a straight like-for-like compensation for the actual, direct cost of the criminal action.
The amount of lost revenue from a stolen CD is pretty easy to calculate; the shop you take it from loses out on the sticker price, but if that CD is then made available to share over the net, who is responsible for the thousands of copies that may arise on people’s computers? Each individual that makes a copy can (at a stretch) be said to have stolen a product of the same value as the CD, but is the uploader responsible for the actions of the other offenders? Granted, if no-one uploaded the music, you’d be forced to go and buy it if you wanted to listen (assuming it’s not on Spotify or Last.FM of course), but the uploader of a track doesn’t actually make those thousands of copies; they just make it possible for them to be made. A slim distinction perhaps, but an important one; it could be (and is being) argued that ISP’s and torrent tracking/sharing websites are equally complicit in these piratical crimes. If this is the case, is it right to bring down the hammer of justice so hard on the single individuals that are caught and prosecuted? A lottery of punishment that victimises the few for the crimes of the many doesn’t seem a just way of combatting piracy…
Part of the motion that Tenenbaum’s lawyer’s have filed with the District Court of Massachussets, quotes a precedent from the US Supreme Court; “few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process.” Compensatory damages being the direct making-up-for-loss costs, and punitive damages the deterrent. To fall in line with that Supreme Court ruling, the direct damage Tenenbaum caused would have to be the equivalent of stealing $75,000 worth of music (at a 9x multiplier), and Jammie Thomas would have had to have left the record shop with $213,000 worth of CD’s in his backpack! Whatever the result of the retrial request, it seems somewhat academic in the specific case, as I can’t imagine a student can lay his hands on $675,000 to pay the damages.
As we published in this post, that’s certainly the standpoint of Swedish artist, Magnus Uggla and the Lady might well feel the same, based on the information in this post, saying that she was only paid a pittance by the Swedish performing rights society for a huge number of plays on the music streaming service Spotify:
According to a report today, Lady Gaga’s track “Poker Face” was one of the most popular tracks during a five month period on Spotify and was played more than a million times. So how much money does she get paid by STIM (the Swedish Performing Rights Society) for this massive achievement?
SEK 1150 – that’s around $167 or roughly 113 Euros.
But that’s not quite the whole story… The performing rights contribution splits out to $0.000167 a play, but so what? Lady G (or more likely her record label) will also be being paid directly by Spotify with a flat fee per play (a couple of pennies per track) and a chunk of the service’s ad revenue. Lady Gaga’s direct revenues from that many streams will be in the five figure $USD range, and the performing rights system probably does more to support their own bureaucratic infrastructure than it contributes towards paying her a sensible wage. It would be interesting to know exactly what proportion of their receipts is paid to artists, and what is spent on running the society, as well as why the PRS collects a fee for every track played on services like Spotify, even those of tracks by non-PRS-members.
Lily Allen has previously complained on Twitter “@citricsquid did you know the major own hold massive stakes in Spotify, and earn advertising revenue at yet another loss to the artist”that she’s not seeing any of the revenue from her Spotify plays, but this is likely to be because the majors have all bought shares in Spotify, and are both giving them an easy ride on the music licensing fees and taking their own substantial cut of anything that comes back. Lily Allen would do well to have a little faith in Spotify, given her well publicised feelingsagainst file sharing.
Of course, this diminished revenue wouldn’t be a problem if she’d signed her music up for digital distribution to with someone like RouteNote, who get the full per track rate, and only take 10% on the back end.
That said, the decision of the majors to support Spotify and other streaming services is a pragmatic one; if it is really the case that freemium services are reducing piracy and providing a way for labels to ‘monetize’ their catalogues online then it makes sense for the majors to be in on the ground floor and take advantage of future success, especially since they’re looking such ghastlyfinancials [pg. 33 for the headlines] in the face. Right, now that’s sorted we can all go back to wondering whether or not the Lady is a trap…
Im sure by now everyone is sick of hearing about Lily Allen and her outburst about music piracy. Im really hoping that someone apart from a musician who clearly doesnt know the industry speaks out on the music piracy topic, but in the mean time I came across a great song from UK singer songwriter Dan Bull.
[EDIT] We’ve mentioned Dan Bull before on this blog, and his other nostalgia inducing track ‘Generation Gaming’: if this raises a smile you might want to go and check out our favourite gaming blog Wire Ninja
The RIAA have loosed another volley against the filesharing contingent that they believe are bleeding the profitability out of the music industry. The arguments are pretty solid: those who choose to download music illegally instead of paying for it through legal physical and digital channels are not enjoying the fruits of the people working in the industry without contributing to their livelihood. Bad people, right? Not proper music fans, right? Theft is insupportable, but there are questions of degree to be considered… From the RIAA’s press release:
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