Music Piracy: can't beat 'em, join 'em

March 8, 2011
For the last decade, the music industry has labeled illegal file sharing as the wrongdoing that has deprived them of their profits, but what is wrong is the Music industry’s failure to adapt to the ever changing market. For the last decade music labels have persecuted both individuals and music downloading hosts for providing, using, and enjoying free music. Instead of developing new strategies to keep their hold on the market, record labels have poured millions of dollars into court cases in order to receive compensation money. The music industry has been blinded by their loss in revenue, and has failed to see the great treasures in the mines of Peer-to-Peer sharing. Unauthorized illegal downloading is indeed theft, but it is a crime that is nearly impossible to control, instead of stubbornly maintaining the same market strategies, it is time for the music industry to forge a new market plan which will make illegal downloading unappealing to consumers- this is the only way this issue can be resolved. Music piracy has had both negative and positive effects on the music industry, however record labels have merely focused on the negative aspects, they should redirect their energy to the positive aspects of online downloading to benefit everybody involved.

With the onset of the 21st century and the increased popularity of the internet, the first signs of music piracy became apparent. Napster among the first and most popular MP3 sharing services granted users unlimited access to its rich music database. Napster became a cultural phenomenon, attracted 25 million users at its peak, and offered approximately 80 million songs. After lawsuits from Sony and numerous other record labels, Napster was forced into bankruptcy and was shut down on accounts of copyright infringement. However, this was not a big hit to online piracy, with the new found popularity and improvements in P2P technology, countless new sites popped up. A major blow to the music industry came in 2002 as “Music sales slumped by more than 15% in the second quarter of 2002, as music fans chose to download free singles from the web rather than spend their money in store” (Berg 1). As album sales continued to decrease and the popularity of music piracy increased, record labels began taking individuals to court in an attempt to halt this trend. “The RIAA has sued about 2000 individuals to date- file sharing is more popular than ever.” (Espejo 2). The effectiveness of this method is questionable as financially murdering 2000 harmless individuals among millions of “pirates” worldwide will obviously have minimal effects.

“Federal law provides severe civil and criminal penalties for the unauthorized reproduction, distribution, rental or digital transmission of copy righted sound recordings. (Title 17, United States Code, Sections 501 and 506) Music recordings are categorized as intellectual property, the unauthorized reproduction and distribution of this copy righted material is morally and ethically wrong.” (Torr 5) Court case after court case has come to the same verdict: music piracy is theft! Illegal file sharing takes place without the authorization of artists; every time someone clicks the “download” button, and artist is robbed of his/her creative work and property. Every time someone downloads a song for free, that individual is stealing copyrighted work from a musician, who is in turn plundered of his/her income. “The RIAA and other organizations representing the music industry blame online file sharing for the 26% fall in global CD sales that occurred between 1999 and 2003.” (Torr 5). These enormous losses have been continuous over the last decade and have severely crippled the music industry. With this loss in profit are they not only deprived of the money artists, recording technicians, and retailers so vigorously work for, but it also reduces the capital record labels are able to invest into future recordings. Smaller profits make it less profitable for musicians to spend a lot of energy and money on studio time, recording equipment, and plain out creativity, thus directly harming everybody. Musicians not only lose part of their income, but also recognition and reward for their hard work. Consumers on the other hand might have to experience lower quality music as the use of high-end recording equipment loses its appeal. In order to meet this loss in profit, labels have raised the prices of concert tickets to make up for their dwindling profits , the money consumers saved pirating is now spend on more expensive event tickets and accessories.
Evidence for the loss decreasing number of album sales is represented in the graph below, up to 2001 the sales of albums continued to increase, a change is evident in 2001 as it is the peak of album sales, and the trend began to steadily decrease. 2001 saw the popular rise of online downloading services and that is when people in great numbers began to get their music for free, as online downloading became more popular, sales decreased. It is clear that there is a clear relationship between the increasing popularity of online downloading and decreased album sales.

Illegal peer to peer sharing has been underappreciated for the great technological advancement that it is. It has indeed changed the music industry; it has opened up new music to a worldwide audience and has given a helping hand to the countless aspiring musicians trying to make the big time. Contrary to popular belief, P2P sharing does not decrease music sales. A study by Professor Oberhelzer of the Harvard School of Business came to the following conclusion: “There was almost no relationship between the two [music piracy and decreased record sales]. The number of illegal music downloads continued to increase- but so did music sales” (Espejo 1) this study by the prestigious University of Harvard not only reassures the public of what many believed, but also argues for positive effects of P2P sharing. “Internet music piracy not only doesn’t hurt legitimate CD sales, it may even boost sales of some types of music” (Espejo 1). Hence there is no direct correlation between music piracy and losses in record sales; it is evident that illegal online downloading has been excessively blamed for the music industry’s decrease in profit. Looking at the bigger picture, and observing recent consumer trends across all markets, the recession of 2008 and changing consumer habits of digitalization are far more likely to have negatively affected the music industry.
P2P sharing promotes music sales in similar ways that the radio does, it exposes potential customers to popular music and presents the industry with a larger consumer basis. One might argue that record labels would not make a profit from this, since the user is likely to illegally download the entire album for no cost. However, this is once again untrue, “Research shows that a major segment of file sharers, or samplers, usually purchase an album on CD after downloading a few songs.” (Espejo 1). There you go, by providing P2P sharing services with copies of their songs, music labels make a profit from this sort of advertisement. P2P sharing has the potential to be an inexpensive advertisement method for the music industry, if the user downloads a few songs by an artist, likes the music enough, and becomes emotionally attached to the artist, he/she will decide to purchase the album. The method of P2P sharing as a sort of advertisement would be effective for all audiences; adults for example, don’t usually have the time and or patience to find new music, so by providing easy to use search methods that allow them to find songs by their favorite artists or music with similar styles, they are provided with music that they are likely to purchase. Adults in general have the money to spend on music, thus this easy method of music expansion would dramatically increase music sales. The exposure of music by music piracy is most influential on teenagers and young adults; this benefits the music industry as well as this age group. Teenagers tend to be rich in time and passion, but tend to lack money. The hype teenagers tend to create about their idols- in this case musicians, benefits everybody involved, artists receive their fame, record labels receive their money from increased sales, and teenagers receive good music. Teens and young adults may not have the money to buy every album, but they have the passion to spread the hottest new artists’ music to their friends, who might in turn purchase the artist’s newest CD. Teens tend to have the time to devoutly follow their idols, which in turn creates more publicity for the artist.
“81.87% of the music industry is controlled by 4 record labels; these are the labels that have the money to promote their artists through advertising, radio, and music videos. But most artists aren’t signed to these labels, but smaller independent labels that don’t have as much money as the major labels. As a result, most artists don’t get any radio play, they don’t have ads, and their videos are of low quality and are usually not shown on television.” (Reed 1) Music downloading gives these artists the chance to get noticed. Most people won’t spend their money on unknown music they are not sure they will like; free downloading allows users to experiment with lesser known musician. In this situation, both the unadvertised musician and customer win, the musician enjoys exposure they would not have had if their music had not been readily available online, and the user discovers potentially better and less-commercialized music. An example to this theory is the now brilliantly acclaimed rapper Kid Cudi, After Kid Cudi posted his mixtapes on a popular free mixtape downloading site, he was discovered by an employee of GOOD music, and was immediately signed on a two album contract. If Kid Cudi had not been able to spread his music through the internet, the Grammy-nominated rapper would never have had the opportunity to leave the profound footprint he has on the new school of hip-hop.
Third party companies such as Apple have taken the initiative to revolutionize the business, i-Tunes is now the biggest online retailer of music and allows consumers to legally enjoy digital music. I-Tunes started the trend of legal online distribution stores, and now Amazon, MSN, and Microsoft have their own. Prior to the widespread use of legal online music sales, consumers were forced to either download music illegally or spend long hours converting their CD’s into MP3 files. Third party companies have pioneered this method of music distribution, as record labels have largely sat back and complained about the ineffectiveness of their marketing. The market strategies of record labels have remained about the same for the last decades, however with the modernization of society by the internet this approach is simply outdated, “Great marketing is not possible if your understanding of the marketplace is based on a buying cycle of the 1960s, rather than the 2010s,” (Reed 1) . With a new and open minded approach, the music industry will be able to end piracy. Court cases, fines, and website shutdowns are not an effective way to haul consumer behavior By using new innovative steps to tap into the resources provided by P2P sharing and online downloading, the industry will adapt to current consumer behavior and change the market in a way that makes music piracy unappealing to the masses, the music business will see an end to red figures and once again flourish with the innovation and creativity, which distinguish it from most other markets. It is time to revolutionize the business.

Works Cited
Espejo, Roman: “Illegal Filesharing Enhances the Future of the Music Industry.” Detroit

Greenhaven Press, 2009. Opposing Viewpoints Resource Center, Gale (Web) 23 Jan
Espejo, Roman: “Illegal Filesharing Threatens the Future of the Music Industry.” Detroit

Greenhaven Press, 2009. Opposing Viewpoints Resource Center, Gale (Web) 23 Jan
“Music Unit Sales Analysis” Stop Music Theft. Wikidot, 01 May 2010. Web. 25 Jan 2011

Reed, David “Instant Music- Why the wait?” Marketing Week Online, 17 Jan 2011.
General One File. (Web) 24 Jan 2011
Torr, James. Internet Piracy. Farmington Hills, MI: Greenhaven Press, 2005.78. Print.

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