The Bigger Picture: How Music Piracy Actually Affects the Industry (Final Paper)

Brittany Tedesco

Final Paper

Writing & Communications

May 7, 2012

The Bigger Picture: How Music Piracy Actually Affects the Industry

There is a line in the movie, “It’s Kind of a Funny Story,” where the main character Craig asks Noelle, “Do you like music?” to which she responds, “Do you like breathing?” The answer to this question is obvious; everyone loves music, but it’s so hard to choose when it comes down to your favorite genre of music, favorite artist, favorite song, etc. There are so many different types of music and artsists out there. Music is a vague topic, and when you try to narrow it down to just one favorite song or artist, it’s usually way too hard.

This might explain why music piracy is so common. It is actually “the greatest threat facing the music industry worldwide today” (Chiou, Huang and Lee). We want to be able download new music without having to contemplate if it’s worth the ninety-nine cents. No one wants to pay the amount of money their entire itunes library would have costed if they hadn’t downloaded their music illegally, or have to worry about copyright laws just because they quoted their favorite artist in a Facebook status. Considering majority of what I post on Facebook or Twitter or Tumblr is related to music, whether it’s lyrics to a song or a picture of one of my favorite artists, I agree with Cory Doctorow as he says, “it would shutter every message board, Twitter, social networking service, blog, and mailing list in a second” (The Real Cost of Free).

My research on music piracy will mostly be focused on the effects it has on artists and sales in the music industry. However, there are many other aspects of this issue to be taken into consideration when deciding if music piracy is actually right or wrong, or somewhere in between, and there are many prospective resolutions to this “issue” for example through services such at Youtube, Pandora, Spotify, etc. While there are some solutions to this issue, we must keep in mind the ways that this issue will still continue to affect the entire media industry.

First, we must observe who is stealing music and why. Majority of people who download music illegally are young college students. “Young people form a significant portion of the music fan base, and online music copying and sharing is rampant among students” (Bhattacharjee, Gopal, and Sanders). This information might seem obvious because college students do not have money to waste, and music is an extremely important part of their lives. “Females and older individuals (as opposed to younger college students) pirate less, and individuals with an ethical disposition tend to pirate less” (Bhattacharjee, Gopal, and Sanders).

This has been going on for years, as it became easier in the days of cheap cassette tapes, and increasingly becomes easier as technology advances even more. “The global music industry was quite successful during the 1990s,” as the International Federation of the Phonographic Industry (IFPI) recorded that album sales grew from $24.1 billion to $38.6 billion in the United States over this decade” (Zentner). However, in 2000, global sales dropped 5%, in 2001 they dropped 8.8%, and in 2002 dropped 7.1%, bringing the US down to $30.9 billion. This change occurred due to music sharing. Napster was created in 1999, and immediately became popular, as it provided the work of many artists for free. A company known as Mediametrix, which provides internet rankings and measurements, stated that “Napster was the fastest software adoption in history” (Zentner). No wonder Napster became popular so quickly. Not only was it offering music for free, but it also ran fast. We can still see this today, as downloading music illegally becomes easier and easier as our technology increases with faster internet connections. “Rapid advances in Internet connectivity and digital compression technologies have dramatically increased online sharing of digitized material, raising issues of intellectual property rights and lost sales” (Bhattacharjee, Gopal, and Sanders). “The phenomenon of sharing music files online has been accelerated by various software packages and increasing Internet connection speeds. With decreasing data storage cost and higher bandwidth, users are able to send large collections of music via email” (Bhattacharjee, Gopal, and Sanders). Furthermore, as technology increases, it is easier to share other media files as well. “TV and movie industry has already felt the pressure, and it is only a matter of better compression technology and increased bandwidth before full-length movies are shared the same way as music files” (Bhattacharjee, Gopal, and Sanders). This leads us to the idea that “as copying software becomes easier (hence convenient), the willingness to purchase decreases. Hence as more music becomes available online (network effect), and as more consumers upgrade to high-speed connections (technology effect), the offered price should decrease from current levels to positively impact a user’s buying decision” (Bhattacharjee, Gopal, and Sanders).

This easy access, however, poses a threat to consumers, “as there is no way to monitor poor manufacturing or toxic ingredients” (Rutter and Bryce). Children are able to access “what may be regarded as potentially harmful media content” whether it is music, films, games, etc. (Rutter and Bryce). This proves that this is not only an economic problem, but a social problem as well. “These issues suggest that regardless of one’s position on the ethics of copyright, patent or brand legislation, regulation and attempts to control counterfeiting, this activity has significant social as well as economic importance. However, the majority of research on counterfeiting has focused primarily on its economic, legal and technological aspects. As such, while the above contextualises the international markets and economic consequences of counterfeit goods, it is important to recognise that this, and research on counterfeiting in general, is primarily production and market orientated” (Rutter and Bryce).

While this is definitely a very important issue, it is one that is nearly impossible to resolve. No matter how hard the industry tries to prevent this easy-access, there are just way too many lawsuits for them to be able to handle. However, if one does get caught, they may suffer some extremely serious consequences. Fear of facing these consequences are one of the few reasons people may not want to download illegally. “The two primary groups that police the downloading of music and movies are the Recording Industry Association of America (RIAA) and the Motion Picture Association of America (MPAA).  These two groups constantly monitor downloads and websites for copyright violation. They tend to pay close attention to colleges and universities.   When they see that a song or movie has been downloaded illegally, they notify the school who then takes steps to internally identify the person who downloaded the file.  There can be serious legal and financial ramifications to illegal downloading” (Webster University). Also according to Webster University, because the distribution of copyright materials is against the law, those found guilty may be penalized with up to five years in jail, fines and charges up to $150,000 per file, and along with other charges brought against the culprit, the copyrighter can file suit possibly resulting in legal damages and fees that must be paid. Some examples of recent cases include, “a 25-year-old college student must pay $675,000 — or $22,500 for each of the 30 songs he was found liable of infringing” and “a single mother, was fined $80,000 for each of 24 songs, resulting in a total of $1,920,000, almost 2 million dollars” (Webster University). While these punishments are very scary, and definitely not worth the crime, there is no possible way for every single person who copyrights to be charged– it is too popular of a “crime”. “Never mind that there’s 29 hours of video uploaded to YouTube every minute, that there aren’t enough lawyers in all the world to undertake such a review, and that throttling the videos (by charging uploaders for legal review, for example) would put practically every person who finds in YouTube the opportunity for personal and creative expression out of business” (Doctorow).

Napster was also faced with serious consequences causing it to be very short-lived. It was shut down in February 2001, after the Recording Music of America (RIAA) “filed a motion against Napster in the U.S. District Court of San Francisco for ‘engaging in or enabling, facilitating or assisting others in the copying, downloading, uploading, transmission, or distribution of copyrighted musical work or sound recordings protected by copyright or state law without the express permission of the rights owners’ (US District Court, 2000)” (Zentner). This was not the end of music sharing though, as similar companies were still going strong. “After the shut-down of Napster, illegitimate music online can be found globally on P2P file-sharing services such as KaZaA, Groekster, iMesh, and Gnutella. These services are distributed without charge and allow users to download licensed and unlicensed files, including music, movies, games and software” (Zentner). In 2003, KaZaA held “the new record of most downloaded software with more than 230 million users worldwide” proving that putting an end to music sharing would not end easily (Zentner). This also foreshadowed that the music industry would not be the only one to suffer because of piracy. “Other digital copyrighted goods, such as movies, software, games, books, etc, are also being pirated” (Zentner).

Being that it IS illegal, it is obviously wrong to some extent, at least morally, but is it really that bad of a crime? It’s not like we’re killing anybody, but it is stealing nonetheless, and it has led to huge losses in sales for the music industry. “A study in 2000 reported 14% of Internet users had downloaded music for free. This number has grown rapidly, and online music sharing has been estimated to result in annual sales losses of $3.1 billion by 2005 for the music industry” (Bhattacharjee, Gopal, and Sanders). We also must realize that music is not the only thing being stolen. “Other digitized goods (movies, photographs, published articles, for example) are increasingly shared as technology improves” (Bhattacharjee, Gopal, and Sanders).

By definition, piracy is “the unauthorized reproduction or use of a copyrighted book, recording, television program, patented invention, trademarked product, etc.” (Dictionary.com). While we are in fact committing this crime of stealing music, it is not like we are reproducing it as our own, or selling it for a profit. For the most part, people are only downloading music illegally for their own enjoyment. We aren’t trying to make money off of someone else’s copyrighted materials. So if we were taking someone else’s property and selling it for our own profit, we would definitely be in the wrong, but this isn’t typically the case. We are just listening.

We are also usually listening to a low-quality version of the song, as we notice, “The online download process itself leads to files becoming corrupted or to incomplete downloads, further deteriorating audio quality” (Bhattacharjee, Gopal, and Sanders). The old cliché is true, “You get what you pay for.” If someone is fine with this bad quality, why not just let us have it for free? People tend to believe the quality of the audio of their illegal downloads is just as good as it would be on a CD, showing that “users have become accustomed to and now accept this level of quality” (Bhattacharjee, Gopal, and Sanders)

At least when we download music illegally, we are able to do whatever we want those tracks. Servives such as iTunes bodyguard their files with Digital Rights Management (DRM). This software limits what downloaders can do with their computer files. “Buy a song from Apple’s iTunes Media Store, for example, and you can copy the file to five computers but no more. That’s because the song comes with Apple’s DRM software, FairPlay, baked in, and FairPlay has its own ideas about what is and isn’t fair. Most people don’t even notice DRM–who puts their music on five different computers anyway?–but there’s something annoyingly unfair about FairPlay even in the abstract. You paid for the music. Who is Apple to tell you where you can and can’t stick it?” (Grossman). This is not always a problem though, as some companies, such as Amazon, “will sell all-nude, plain-vanilla MP3 files stripped of any DRM” (Grossman).

By listening to their music, aren’t we helping artists in the long run? In the discussion of music piracy, it is always about the pirates vs. the artists. People believe that artists do not want us to steal their music, because they made it, they deserve the money for it. And I can agree that I would not want to steal money from these hard-working artists. However, it is actually the labels who are behind the anti-piracy legislation, and personally, I have much less of a concern about denying them of my money because it’s not their work we are stealing. According to Musician Digital Royalties, a musician’s share of the record company’s revenue is only 15% from iTunes downloads. “Proponents—consumers and some artists—argue that many consumers download music to sample and subsequently purchase a CD if they like the music, hence it provides an effective advertising channel. It also benefits recording companies by helping new artists to become known at little cost to the companies themselves. Opponents—in particular the recording industry and some other artists—argue that it undermines sales. Their fundamental concern is that piracy threatens the business of artists, composers, and producers” (Bhattacharjee, Gopal, and Sanders). So in the long-run, the artist’s are not the ones getting ripped off by us stealing their songs, rather this easy-access to their music is making them more known, as we notice that “sharing digitized music can serve a useful marketing function” (Bhattacharjee, Gopal, and Sanders). When artists share their music for free, if we like it, we are going to go in for more. This is especially helpful for artists who are less known than someone such as Lady Gaga because “a user is willing to pay more for a CD with a known song than for one with an unheard song. This is natural, considering the speculative risk of buying unheard music” (Bhattacharjee, Gopal, and Sanders). Grossman puts it perfectly as he writes, “To be clear: most of us really are criminals. Almost everybody owns a little stolen music. But a little piracy can be a good thing. Sure, O.K., I ripped the audio of the Shins’ Phantom Limb off a YouTube video. But on the strength of that minor copyright atrocity, I legally bought two complete Shins albums and shelled out for a Shins concert. The legit market feeds off the black market. Music execs just need to figure out how to live with that. (And count themselves lucky. When it comes to movies, consumers actually do act like hardened criminals. The real pirate war is being fought in Hollywood.)”

Overall, stealing music has it’s wrongs and rights, and it depends on your own personal ethics and priorities whether you believe downloading illegally is worth it or not, but knowing the facts behind illegal dowloading definitely helps shape those beliefs. Regardless whether or not you believe it is okay, there can always be a happy-medium. For example, the copyleft movement is become more popular amongst artists. “The premise of the movement is that an artist can ‘copyleft’ his/her work, and the work can be freely used by any other artist that wishes to borrow elements from that work.  If a work is borrowed from, the artist who borrowed from that work must give credit to the original artist and must copyleft their work as well. This new movement could revolutionize the music industry” (Krueger). Artists of all different genres are beginning to join this movement because “The legal battles with Napster embodied the goals of the big record lables.  Music is an industry, not an art form.  Paley and the creators of Copyleft are working to counter that concept.  They believe in the concept that an artists works are their gift to society, and not a product used for monetary gain” (Krueger).

Another example is through free music services such as Spotify or Pandora. “Since 2009 the numbers of people who download music illegally has decreased by more than 25 percent, and over the last year alone it dropped by 9 percent. The data further suggests that this downward trend is caused by the availability of improved legal services such as Spotify” (TorrentFreak). A survey proved the popularity of these new streaming servives as “More than 40 percent of the participants in the survey now use a music streaming service, compared to less than 10 percent who say they download music legally” (TorrentFreak). While music piracy is obviously still a concern for the music industry, the problem can continue to decrease if we can improve on our alternatives to illegal downloading. “When Spotify opened up to the public early 2009, it took only three months before the number of Spotify users had outgrown the number of music pirates. In the months after that the number of downloaders continued to decline while Spotify expanded its user base” (TorrentFreak).

These services offer music for free, and not to mention are completely legal as well. “Spotify makes it easier than ever to play and share music legally”(A world of music – Spotify). Spotify allows its listeners to save playlists and listen to music without ever even having to download the song, saving tons of space on your computer’s hard-drive, as well as saving all the time it would take to download each song. There is also a premium version of Spotify, which allows Spotify on your mobile phone, offline mode for playlists, no advertisements, and unlimited streaming of music, costing a monthly subscription service charge of only $9.99, (less than what you would be paying for only one album), and an unlimited version for only $4.99, which allows unlimited streaming of music and no advertisements. The free version still allows millions of tracks to be available to listen to instantly, however it features numerous advertisements to pay for this service for you. “Spotify provides instant access to whatever music you want, whenever and wherever you want it, through a simple, clean and quick to use platform via an ad-supported, free-to-the-user service and a paid subscription service” (A world of music – Spotify). This allows for “a legal and superior quality alternative to music piracy” (A world of music – Spotify). About 23 percent continue to pirate music, but this number is dwindling” (TorrentFreak). The IFPI believes that “despite the stranglehold the industry considers itself to be in, legitimate music services are starting to pay off” (BBC News). A BBC technology correspondant said, “The music industry finally believes it is making progress in the battle against web piracy with governments taking action and legal music services beginning to prove viable.” While these services may help the music industry to survive, there are still many issues to resolve, for example, how to get the music we stream onto our ipods and mp3 players. We also need to realize that other forms of media, such as movies and games, are continuing to suffer. We need to continue to look at this issue as a whole and determine how these issues will affect us if we do not find similar alternatives.  

Works Cited

Bhattacharjee, Sudip, Ram D. Gopal, and G. Lawrence Sanders. “Digital music and online sharing: software piracy 2.0?.” Communications of the ACM 1 July 2003: 107-111. Communications of the ACM. Web. 27 Apr. 2012.


 

BBC News. “BBC News – Online music piracy ‘destroys local music’.” BBC News – Home. N.p., 21 Jan. 2010. Web. 27 Apr. 2012. <http://news.bbc.co.uk/2/hi/8471290.stm&gt;.


 

Chiou, Jyh-Shen, Chien-yi Huang, and Hsin-hui Lee. “The Antecedents of Music Piracy Attitudes and Intentions.” Journal of Business Ethics 57.2 (2005): 161-174. Print.


 

Grossman, Lev. “The Battle Over Music Piracy – TIME.” Breaking News, Analysis, Politics, Blogs, News Photos, Video, Tech Reviews – TIME.com. Association for Computing Machinery, 24 May 2007. Web. 27 Apr. 2012. <http://www.time.com/time/magazine/article/0,9171,1625209,00.html&gt;.


 

“History journal explores music piracy, cultural impact of popular music, lynching, incarceration: IU News Room: Indiana University .” IU News Room: Indiana University . N.p., n.d. Web. 24 Apr. 2012. <http://newsinfo.iu.edu/news/page/normal/16967.html&gt;.


 

“How Much Do Music Artists Earn Online?.” Information Is Beautiful | Ideas, issues, knowledge, data – visualized!. N.p., 13 Apr. 2010. Web. 6 May 2012. <http://www.informationisbeautiful.net/2010/how-much-do-music-artists-earn-online/&gt;.


 

Krueger, Zachary. “New York artist works against copyright laws – Sioux Falls Music | Examiner.com.” Welcome to Examiner.com | Examiner.com. N.p., 13 Feb. 2012. Web. 27 Apr. 2012. <http://www.examiner.com/article/new-york-artist-works-against-copyright-laws&gt;.


 

Rutter, Jason, and Jo Bryce. “The Consumption of Counterfeit Goods .” Sociology . N.p., 3 Dec. 2008. Web. 24 Apr. 2012. <http://soc.sagepub.com/content/42/6/1146&gt;.


 

TorrentFreak. “Music Piracy Continues to Decline Thanks to Spotify | Torrent Freak.” TorrentFreak. N.p., 28 Sept. 2011. Web. 27 Apr. 2012. <torrentfreak.com/music-piracy-continues-to-decline-thanks-to-spotify-110928/>.


 

Webster University. “Webster University: Illegal Downloading.” Webster University. N.p., n.d. Web. 27 Apr. 2012. <http://www.webster.edu/technology/downloading.shtml#consequences&gt;.


 

Zentner, Alejandro. “Measuring the Effect of Online Music Piracy on Music Sales | Mendeley.” Free reference manager and PDF organizer | Mendeley. N.p., n.d. Web. 27 Apr. 2012. <http://www.mendeley.com/research/measuring-effect-online-music-piracy-music-sales/&gt;.

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