July 31, 2007
Illegal Music Downloads Continue to Rise
By Tom Ryan
According to a new report by the U.K.’s Entertainment Media Research, unauthorized music downloading is at an all-time high as a growing band of consumers are unconcerned about being prosecuted.
The report, which polled 1,700 consumers, showed 43 percent claimed they are illegally downloading tracks, rising from 36 percent last year and 40 percent in 2005. Those worried about being sued due to downloading dropped to 33 percent from 42 percent in 2006. Nearly one in five – or 18 percent – planned to illegally download more music, up from 8 percent in 2006.
The survey also showed the growth rate in legal music downloading is slowing. Over the last 12 months the total number of people legally downloading music rose to 58 percent, up 16 percent on last year. Between 2005 and 2006 the rate of increase was 40 percent. Nearly a quarter of legal downloaders admitted that they had not legally downloaded a track for at least six months.
The report says one reason for the worsening piracy trend was that fear of legal action has eased as memories of a number of high-profile piracy prosecutions have faded.
Another was that legal downloads are seen as too expensive, particularly as prices of CDs at stores have fallen. Of those surveyed, 84 percent agreed that older digital downloads should be cheaper and 48 percent claimed they would be prepared to pay more for newly released tracks.
A final reason was digital rights management technology that prevents consumers from burning or sharing music. Sixty-eight percent said that single-track downloads were only worth purchasing if DRM-free, lending support to EMI’s recent decision to release tracks DRM-free in April 2007.
On the bright side, the survey found that social networking sites are driving interest in new and old artists. More than half of the respondents use social networking sites such as Bebo and MySpace to discover new music. And almost a fifth of social network users said such discoveries had a “big/massive impact” on the way they bought music and 30 percent claim they “regularly/occasionally” buy CDs or downloads of music that they discovered on a social networking site.
“Social networks are fundamentally changing the way we discover, purchase and use music,” Russell Hart, chief executive of Entertainment Media Research, told the U.K.’s Telegraph. “The dynamics of democratization, word of mouth recommendation and instant purchase challenge the established order and offer huge opportunities to forward-thinking businesses.”
Moreover, the report concludes that in order to prevent piracy, the record industry should tap into the social aspect by making it easier to discover and buy music over the internet.
John Enser, head of music at law firm Olswang, told the Guardian: “As illegal downloading hits an all-time high and consumers’ fear of prosecution falls, the music industry must look for more ways to encourage the public to download music legally.”
Britain’s music industry association, BPI, responded, claiming that new business models would not lead to success but instead argued for better protection against piracy.
“Industry cannot do it alone,” a spokesman told the Guardian. “ISPs as gatekeepers, and government as legislators, must also play an active role in tackling copyright theft if the U.K. is to thrive as a knowledge economy.”
Discussion Questions: Do you think tapping into the social aspect of the internet can help solve music piracy and revive record sales? What impact do you think the availability of DRM-free downloads will have on how music is bought and sold?
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The social aspect of the internet has warmly embraced illegal music file sharing. Tapping into it will only underscore this relationship which will never go away. It is, after all, part of the fabric of the social aspect of the internet.
Internet use for social purposes seems to have some unwritten rules or truisms that defy modification. Digital files will always be exchanged freely. Blogs and other forums are usually negative. Users compete for attention on their sites and on services like YouTube by being as outrageous as possible. And, sex sells.
The decades-long free exchange of music and movie files established a benchmark. Borrowing on their moral authority, music companies are now trying to erase that benchmark. However, their supposed moral authority is based on business needs, which are transparently not in the best interests of users. The music companies’ moral authority was eroded a long time ago when they forced customers to buy fourteen songs on an album to get the two songs they really wanted, in spite of the fact that technology existed which allowed them to sell songs by the each.
At this point, NOTHING can stop illegal downloading. It’s too big to police. And even if you could…does the music industry really want to start a war against the people who consume its music?
The truth is, the music industry is facing what almost all internet content providers face–the problem of free content. All kinds of publishers are under more and more pressure to offer content for free. Print publishers worry, for example, about all content consumption transitioning online. The good news is that for some big publishers, advertisers are spending more online than in print. The bad news is that online CPMs don’t match those in offline media. Why? Because online is measurable. Everyone knows: There’s a lot of bloat in traditional media. Remember that 50-per-cent of ad dollars that you waste? And technology is really good a wringing inefficiencies out of systems and processes.
CMPs will eventually rise online. Also, online content producers have to get much wiser about the products they offer to advertisers. Most online publishers offer only the most rudimentary advertising options, not taking advantage at all of the data and targeting capabilities of the internet.
Music publishers would do well to look at other online content producers and learn. At least for the short term, (1) People will expect a certain amount of content for free, (2) They will pay for premium content if it has perceivable value (newness), (3) Advertisers will help pay the bills, but are looking for inventory and innovative ad products.
I think there’s significant opportunity for sales to increase through social networks, though the money changing hands is going to be redistributed, both in terms of the artists who sell music and the people who benefit from those sales. You can also think about the opportunity in terms of total music sales, which can include things like ringtones as well as downloads or CDs sold. Artists who take an active role in marketing themselves and who are clever about it will benefit more than they would have under the traditional system.
For the traditional system may have helped to get some artists exposure, and to sell their albums, yet whether the artists have ever seen or will see any money from those sales is a different issue. As it has been, even what might seem from the outside to be a really successful album or hit song doesn’t enable musicians to quit their day jobs. Many have to work in other aspects of the music industry to make money from it at all.
And are we forgetting about bootlegging? It’s always existed, and continues to. I can walk into a CD store this morning and find releases that aren’t legitimate or in any way connected to a band’s label or to a band itself.
I’m convinced that the world is quickly flipping on its head on this one. Piracy of digital media is so pervasive that conventional business models no longer work and will never work again.
The implications are staggering. Mass market stars and their entourage must find other ways to fuel their economic engines. I, for one, suggest they cut back on their expenses. It might be time to do a little belt tightening.
Meanwhile, digital media holds great promise for the niche markets. For example, I’m a great lover of straight ahead jazz. My wife loves classical ballet. With digital media, we are each am in touch with several great artists via email and on their websites. The less established players are on MySpace. The established players have their own sites. They let us know where they are performing and when they have some new tracks or video. The new tracks by the way are what they want to perform, not what some producer thinks will sell.
When we buy direct from them, we’re cutting out dozens of middle men from the conventional distribution system. But we’re very happy with the arrangement. And the artists, for the most part, like this new revolutionary revenue stream.
What is the next step? Performing artists should be selling subscriptions.
Isn’t it ironic? Everyone seems to forget that the original Napster was, first and foremost, a social network. In introducing the whole concept of peer-to-peer connections, it was the first meaningful social network on the Internet. The music industry squashed it like a bug, destroyed all the wonderful value that it could have created for them, and now it may be too late to recapture it.
Music customers are rightfully skeptical that the industry is willing to do things that are truly in the customers’ best interest. This is why a total outsider (Steve Jobs), with no vested interest in the industry, was able to capture everyone’s attention (and dollars).
I’m afraid that this kind of pattern will continue well into the future. The industry will squander opportunities while outsiders (including those who run unauthorized file sharing networks) will reap all the rewards….
DRM-free downloading will not improve paid music industry sales. Any price is higher than free. Most businesses can’t compete effectively against free. The music business will continue to suffer profit problems until it can control copying. The large players are consolidating, and more consolidation brings the industry closer to a unanimous single standard that can prevent free sharing (legal or otherwise). It’s easier to get unanimity from a small group than a larger, more diverse group.
Imagine the book business if public libraries delivered their inventory to your door in 60 seconds, 24 hours a day, 7 days a week, free. Yes, there would be some book stores left. But how many?
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The social aspect of the internet has warmly embraced illegal music file sharing. Tapping into it will only underscore this relationship which will never go away. It is, after all, part of the fabric of the social aspect of the internet.
Internet use for social purposes seems to have some unwritten rules or truisms that defy modification. Digital files will always be exchanged freely. Blogs and other forums are usually negative. Users compete for attention on their sites and on services like YouTube by being as outrageous as possible. And, sex sells.
The decades-long free exchange of music and movie files established a benchmark. Borrowing on their moral authority, music companies are now trying to erase that benchmark. However, their supposed moral authority is based on business needs, which are transparently not in the best interests of users. The music companies’ moral authority was eroded a long time ago when they forced customers to buy fourteen songs on an album to get the two songs they really wanted, in spite of the fact that technology existed which allowed them to sell songs by the each.
At this point, NOTHING can stop illegal downloading. It’s too big to police. And even if you could…does the music industry really want to start a war against the people who consume its music?
The truth is, the music industry is facing what almost all internet content providers face–the problem of free content. All kinds of publishers are under more and more pressure to offer content for free. Print publishers worry, for example, about all content consumption transitioning online. The good news is that for some big publishers, advertisers are spending more online than in print. The bad news is that online CPMs don’t match those in offline media. Why? Because online is measurable. Everyone knows: There’s a lot of bloat in traditional media. Remember that 50-per-cent of ad dollars that you waste? And technology is really good a wringing inefficiencies out of systems and processes.
CMPs will eventually rise online. Also, online content producers have to get much wiser about the products they offer to advertisers. Most online publishers offer only the most rudimentary advertising options, not taking advantage at all of the data and targeting capabilities of the internet.
Music publishers would do well to look at other online content producers and learn. At least for the short term, (1) People will expect a certain amount of content for free, (2) They will pay for premium content if it has perceivable value (newness), (3) Advertisers will help pay the bills, but are looking for inventory and innovative ad products.
I think there’s significant opportunity for sales to increase through social networks, though the money changing hands is going to be redistributed, both in terms of the artists who sell music and the people who benefit from those sales. You can also think about the opportunity in terms of total music sales, which can include things like ringtones as well as downloads or CDs sold. Artists who take an active role in marketing themselves and who are clever about it will benefit more than they would have under the traditional system.
For the traditional system may have helped to get some artists exposure, and to sell their albums, yet whether the artists have ever seen or will see any money from those sales is a different issue. As it has been, even what might seem from the outside to be a really successful album or hit song doesn’t enable musicians to quit their day jobs. Many have to work in other aspects of the music industry to make money from it at all.
And are we forgetting about bootlegging? It’s always existed, and continues to. I can walk into a CD store this morning and find releases that aren’t legitimate or in any way connected to a band’s label or to a band itself.
I’m convinced that the world is quickly flipping on its head on this one. Piracy of digital media is so pervasive that conventional business models no longer work and will never work again.
The implications are staggering. Mass market stars and their entourage must find other ways to fuel their economic engines. I, for one, suggest they cut back on their expenses. It might be time to do a little belt tightening.
Meanwhile, digital media holds great promise for the niche markets. For example, I’m a great lover of straight ahead jazz. My wife loves classical ballet. With digital media, we are each am in touch with several great artists via email and on their websites. The less established players are on MySpace. The established players have their own sites. They let us know where they are performing and when they have some new tracks or video. The new tracks by the way are what they want to perform, not what some producer thinks will sell.
When we buy direct from them, we’re cutting out dozens of middle men from the conventional distribution system. But we’re very happy with the arrangement. And the artists, for the most part, like this new revolutionary revenue stream.
What is the next step? Performing artists should be selling subscriptions.
Isn’t it ironic? Everyone seems to forget that the original Napster was, first and foremost, a social network. In introducing the whole concept of peer-to-peer connections, it was the first meaningful social network on the Internet. The music industry squashed it like a bug, destroyed all the wonderful value that it could have created for them, and now it may be too late to recapture it.
Music customers are rightfully skeptical that the industry is willing to do things that are truly in the customers’ best interest. This is why a total outsider (Steve Jobs), with no vested interest in the industry, was able to capture everyone’s attention (and dollars).
I’m afraid that this kind of pattern will continue well into the future. The industry will squander opportunities while outsiders (including those who run unauthorized file sharing networks) will reap all the rewards….
DRM-free downloading will not improve paid music industry sales. Any price is higher than free. Most businesses can’t compete effectively against free. The music business will continue to suffer profit problems until it can control copying. The large players are consolidating, and more consolidation brings the industry closer to a unanimous single standard that can prevent free sharing (legal or otherwise). It’s easier to get unanimity from a small group than a larger, more diverse group.
Imagine the book business if public libraries delivered their inventory to your door in 60 seconds, 24 hours a day, 7 days a week, free. Yes, there would be some book stores left. But how many?