It’s long been known that the music industry faces uncertain times. Struggling to understand the digital market, never mind control the impact of the internet on music or even make the most of a new platform, labels and artists across the board are still picking their brains about which way to step forward, but wherever, they choose, they better move fast.
Announcing the results of their annual study on the music industry, the International Federation of the Phonographic Industry (IFPI) claim a huge 95% of downloaded music, is done so illegally. With 1.4bn songs legally purchased in 2008, worth just over £2.5bn, the IFPI claim more than 26bn music files traded hands illegally, causing a savage dent into the income of recording artists and labels alike.
While the high estimate of illegal downloads is unsurprising, it is difficult not to pick point with how the IFPI came to this figure. There is no doubt the IFPI have centred focus from their new report on these striking numbers, and for the casual onlooker they will easily draw a gasp, but when they have little data to back everything up, their strategy is a little gung-ho. Given the nature of the grey market, it is literally impossible to quantify activity over P2P networks such as BitTorrent, via websites like ThePirateBay, IRC chat programs and Usenet, never mind the new phenomenon of sharing on blogs and host sites such as RapidShare and YouSendIt. Validity of their figures aside, however, the overall point is still very important, if still drawing a blind eye to certain factors.
There’s no doubt artists and labels are missing out on crucial income, but the 95% claim would not directly channel into legal purchases if the illegal methods were not there. Frequently downloaders will access a song or an album merely because they can, because it is there ready on a website and all they have to do is click a simple link. The music may lie in their library untouched and unplayed until the day they have a clean-up and delete the unused files.
Further given the price of CDs, and the tightness within which the public’s spending has been restricted, with artists regularly churning out money-making, half-baked releases, listeners cannot afford to take the risk on a new disc, so they turn online and to the free, and yes, illegal, base online, where they can try anything they want at no cost. Websites such as the Hype Machine, a blog consolidator and search engine, enable users to find a vast array of music in a matter of minutes, enabling the causal user, confused by talk of BitTorrent, to get their hands on a track.
Should they then like what they hear, they may then be urged to buy the album, and more often than not, see the artist on tour. Sure, these related incomes from illegal downloading will not match the profit lost in the bigger picture, but it does not mean they should be overlooked, and are points with which the music industry should look to get a grip on the market.
Users have always said that they are willing to pay for content, assuming the price is right and the service meets their expectations. Illegal downloads have always offered content suitable for whatever hardware or software they use, something the likes of iTunes and other online stores have only just caught up on, though they are still doing something right.
Digital downloads rose 25% in 2008 from figures the year previous, and while CD sales expectedly fell, overall profit in the industry grew. But still they demand more.
If you quantify the illegal 95% of music downloads, it gives an astronomical figure of £48bn, though as we have discussed, a very big chunk of this would not materialise even if illegal methods were unavailable. The digital market and use of the internet is undoubtedly being greatly underused by labels and artists, hoping to push listeners down legal channels and there is a vast potential to improve their service appropriately. Industry heads are instead focussing their efforts on cutting illegal downloads by force, rather than coercing users onto their own turf.
With little success in taking individual users to court and suing the likes of a deceased grandmother for illegally downloading 13 hip hop track, the fight is being taken to the internet service providers (ISPs). Demanding that Governments the world over force new laws on ISPs that will impose sanctions on illegal downloaders, sending letters of warning and threatening to cut them off or simply by blocking the content, but where does this leave the ISPs?
Let’s say in a couple of years time the ISPs have stopped illegal downloading as users fear their punishments or access to distribution is stopped, the internet industry will severely suffer. As ISPs offer ever increasing speeds and the opportunity for unlimited bandwidth, who needs a 40mb/s fibre optic service to read emails and check the weather. Restrictions to websites such as RapidShare and use of BitTorrent networks would cause mass outcry, and is surely crossing some sort of legal boundary itself. Both may deal in illegally available content, but in equal measure, are used for general sharing of personal files and make up a bit function of the internet that cannot be lost.
Their industry is being hurt, yes, but this is driving labels to take unnecessarily high moral standpoints, and making demands that should seem ludicrous. With reports Universal take a small chunk of profit for each Microsoft Zune media player sold, record labels are increasingly taking the opinion they should all be making money from hardware sold. Of course, the music player market would be nothing without a vast industry of music to play on it, but likewise, without the opportunity to carry music around with you, CD sales would have boomed like they did back when the first players were introduced. Times are changing, but the music industry is undoubtedly stuck in the past.
Music, though, is not alone in feeling the pain of illegal downloads. Film studios have long been complaining of lost income, throwing out equally bloated figure of lost income due to online piracy. And while gaming has never been stronger, increasing home markets have filled the void left by a now defunct PC market.
The way forward should be for the music industry to beat illegal download networks at their own game. Not cut them off, as there will always be ways around restrictions, but offer services consumers are happy with and can get the most out of.
Initial feedback from the Nokia ‘Comes With Music’ all-you-can-eat download service is positive, taking an idea that has been running online for sometime, though never with full label backing, and offering unlimited download for an extra fee on top of the usual mobile contract.
There was talk of such in the iTunes store some time ago, but it never materialised, several majors now unhappy about how the income will be split and their share quantified, though their inability to strike a deal has cost them dearly, apparently £48bn’s worth.