Another Year, Another Pile of Misleading Statistics From the Recording Industry
Written by Ernesto on January 26, 2008The IFPI recently published their latest digital music report. Amongst their claims “illegal downloading” outperforms legal downloading by a ratio of 20:1, and that because of this, the recording industry has lost US$3.7 billion. Picking apart these ideas reveal that they may be very misleading.
The very idea that music sales are declining seems to leave record companies scratching their heads. They can’t understand why people who once paid $20 for an album are no longer willing. The industry seems to think that music should be valued similar to movies. Is an album, which costs little to produce, really worth the same as a movie, which costs a fortune, often 200x more, to produce? DVDs and music CDs are often very similarly priced.
The press releases put out by the recording industry focus solely on piracy for declining sales, while in reality there are so many reasons. Most have been covered so many times by the media and academics, but we’ll re-iterate a few here.
The Decline in Music Sales
The CD format has now been around for over 25 years. Back-catalogues have been re-released on the medium and consumers lapped it up, replacing their analogue copies of music they own. However, there’s only so many back-catalogues to buy, leaving consumers either only purchasing new music or none at all. A decline in CD sales is an indication of saturation in a market where innovation is lacking. There’s also only so many “best of’s”, “greatest hits” and other compilation albums consumers are going to buy before thinking “I already own three copies of most of these songs, why would I buy another one?”
Format-shifting, the art of moving from one medium to another is on the rise. In the past consumers have moved their collection of music to different formats, usually because of quality improvements and convenience, and paid for the privilege. Now it seems consumers don’t think they should have pay to move their collection of music to their computers and media players, and especially not pay to receive an inferior quality copy of something they already own. It just doesn’t make sense. “Illegally downloading” seems logical. Digital copies of music, which were until recently usually DRM crippled, and are still poor quality in relation to CDs, are simply unattractive.
The thought also never seems to occur to the music industry that perhaps Avril Lavigne, Utada Hikaru, Rihanna, T-Pain and Akon (the artists behind the top 5 digital downloads in 2007) are simply unattractive to the public. How much manufactured pop can society take?
The Problems With P2P Statistics
There is no doubt that piracy is on the rise. This in in part due to the aforementioned, overpriced, inferior or non-existing alternatives. This aside, it is absolutely ridiculous to compare downloads with actual sales. Let’s sum up a few of the reasons.
Firstly, just because someone chooses to download music via P2P doesn’t mean they’re doing it illegally. The recording industry has stated numerous times that it will not sue people for format-shifting, whereby consumers would want a digital copy of music they physically own. Why go to the hassle of copying a CD you own to your PC/media player, when someone else out there has done it for you? There’s a lot to consider when digitizing music from CD, though the one-click approaches of programs like iTunes would let you believe otherwise. Indeed their exists numerous guides on how to best digitize music you own, most notably jiGGafellz’ guide.
Secondly, do these numbers include the antics of MediaDefender? They flood P2P networks with fake files, which unsuspecting users will often download. How many fake files does someone download before managing to get a genuine copy? Even when they have a real copy, how many times before they get one in a high enough quality to suit them?
Thirdly, what about those who download with the sole intention of improving their share ratio on private sites? Sites like OiNK were notorious for users downloading popular releases with no intention of listening to them, just to try and better their ratio. Similarly, users often download entire albums just to listen to one track. While BitTorrent clients have the ability to do selective downloading, broadband connections are becoming so fast that users don’t feel the need to. Other P2P networks where albums might be shared in archives such as .zip, .rar or .tar remove the ability to selective download.
Fourthly, a great deal of people seem obsessed with discographies. They would download an artist’s entire back catalogue of music just because they like collecting, often without listening to it.
A New Business Model?
The million dollar question of course is, what should the recording industry do? We know that there is no straightforward answer to this question, but we speculated about some of the options before. The Internet has changed the way people interact with music. Sites like OiNK made is easy to find and share virtually every piece of music ever produced. Services like last.fm on their turn made it easy to discover new artists, and interact with other fans.
The Internet and filesharing technologies make it possible to make production (of the copies) and distribution costs disappear, yet the prices still don’t change. Why? Because they cling onto their old business models.
Today, the average consumer buys approximately 3/5 CDs a year. Let’s say the labels make $25 a year per consumer. Now, what if the record labels decided to make their entire collection available online, and charge people $2.50 a month for a subscription. This way they could easily double their revenue. New business models will emerge, and I’m pretty sure piracy will pretty much cease to exist. The record industry can even outsource the distribution to online music services, who can even offer the music for free if they come up with other revenue streams to compensate the $2.50 a month per user. I’m just thinking out loud here, but there are tons of possibilities.
So, stop complaining about biased statistics, go back to work and do what you’re supposed to… distribute music to the fans!
Previously: Torrent’Em, a Flashy BitTorrent Search Engine
Next: Scientology Hackers Ask Pirates To Join Their War
59 Responses (Add yours or TrackBack)
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We’re smart enough to know the problems and how to fix them, but fortunately we’re smart enough not to touch the current industry with a 10 foot pole.
i wouldnt compare music to movies … you buy a cd and you usually have it, movies have their first run in cinema, then they come out on dvd, then they get bough by tv stations, all of those make a lot of money on commercial successful (read:good) movies …
but still, a very true article …
Comparing music on cd’s to movies on dvd’s is quite an unfair comparison in revenue production costs.
The music industry will do anything to get the public’s attention about music piracy.
They claim they lose billions of dollars a year and want sympathy because of illegal sharing. They want the government to step in and help handle illegal sharing because their tactics are not doing well.
Sorry music industry but people are fed up with buying an album with only a couple of good songs. Times have changed. Change your business practices and work with the consumers. You give us what we want and will show you the money. Jellybaby time!!!
Yes, the content industry has to wake up and find new ways. Yes, it is using shock and awe / f.u.d. to f*ck us all up- but….
____
Although I sympathize with your general opinion on filesharing and misleading information by the content industry, there are some points I’d like to talk about:
> Digital copies of music [...] are simply unattractive.
Pirated music is nothing else that “Digital copies”.
> The thought also never seems to occur to the music industry that [...] the artists behind the top 5 digital downloads [...] are simply unattractive to the public.
If so many people download those songs, why are they unattractive to the public? Aren’t the people (or the majority of people) the public? Or is it just the music industry downloading those songs? Ot are they lying about downloads? Am I missing something here?
> How much manufactured pop can society take?
Hehe, right. Casting-Show-Suck-Pop sucks. But Pop(ular) music will always exist. It’s a part of popular culture and there will always be “customers”, even when they don’t have to pay money anymore.
> Why go to the hassle of copying a CD you own to your PC/media player, when someone else out there has done it for you?
Sometimes I actually do something like this, in case my CD is scratched or something. But, under the circumstances, I also think about the unnessecairy “risk” connected to downloading (and by that uploading) copyrighted stuff, that I already own! It’s not comparable to something I want that I don’t have, where there’s an actual reason.
To make a long story short. I think that albums that are downloaded, just because it’s more comfortable to share than ripping ones own CD, account to less then 1% of “music downloads”.
> Indeed their exists numerous guides on how to best digitize music you own…
You encourage people to do more backups for personal use. Noble. :)
> Secondly, do these numbers include the antics of MediaDefender? They flood P2P networks with fake files [...]
Good point. But by selective downloaing I never (never) stumbled upon a fake.
> Thirdly, what about those who download with the sole intention of improving their share ratio on private sites?
A noble thing for the filesharer and the community. The uploader would have never bought the album. But what about the downloading person? He might have bought a copy of Crippy Crapp. The sole purpose of ratio-pimping does not justify anything.
> Fourthly, a great deal of people seem obsessed with discographies.
Wouldn’t (some of) those fans have bought an entire CD collection? Or at least parts of it, according to ones own budget? Collectors, you know…
> A New Business Model?
Correct.
Pirated music is nothing else THAN “Digital copies”.
ahh yes Jiggafellas guide is the best out there :)
A sorta Reader’s Digested version of why things are going downhill:
1. Crappy artists. No innovation in the Top 10 anymore (Hell, in ANY “popular” music). Dare I mention… Spice Girls reforming? I think you see the point.
2. Radio sucks. See aforementioned reason why it sucks. ::COUGH::ClearChannel::COUGH::
3. RIAA = Corp. mentality = Greed
’nuff said. (Also see aforementioned reason).
4. Loudness War. Again rehashing and frelling up what was already good.
Hmmm…. There seems to be a pattern here…
Live in the underground, where TRUE innovation lives and things are done the way they USE to be. For the LOVE of the music, not for the $$$.
End Of Line
@4 (”1024″)
Commercially available digital copies are unattractive.
“Popular” = a large number but small percentage of humanity / music lovers.
“Popular”/beloved by masses = good.
“Popular”/manufactured = bad.
Ripping CDs: “It’s not comparable to something I want that I don’t have.”
If you don’t have computerized/mp3 player access to it, you don’t (entirely) have it. If its scratched, you may as well not have it at all.
Few don’t “selectively download”; none remain unburned, however.
“He might have bought a copy of Crippy Crapp.” Might. If its good, then probably will. When it falls to a reasonable price.
“Wouldn’t (some of) those fans have bought an entire CD collection?”
No. They care more about ownership-rights than usage-rights, and are unwilling to pay for both.
I love to hear responsible dialogue, and far more often than not, the devil’s advocate makes us realize important (and interesting!) positions we haven’t even considered; however, I think that usually, the position is best served in morally grey areas where the best path remains unknown, than in experimentally confirmed areas, where criticism, while always good, is far better applied elsewhere.
avril lavigne et al, the top five digital downloads, aren’t the top five digital downloads because they are “unattractive to the public”.
Holy contradiction, give your head a shake.
More lies and damned lies, and nothing more from the MAFiAA.
Their narrow explaination for the collapse of the retail CD market completely ignores the rise of alternate media (DVDs) and growth of other retail products (cel phones, ring tones, pdas, mp3 players, online mp3 sales) all taking aim at the same limited youth revenue stream. They also always choose to ignore how changes in the retail market (Wal-Mart is now the largest retailer of CDs in North America) have directly effect sales — Wal-Mart carries very little back-catalogue items, the source of the the lion’s share of total retail CD sales throughout the 1990s and early 2000s. But the MAFiAA knows it’s all the fault of those damned pirates… sure, sure…
@ Ernesto;
can you back up the statement that (typically, for most bands vs. most movies etc) an album costs 1/200 as much to create as a film?
Because if that is true!!!
I think this article understates the affect that illegal digital music sharing has on CD sales. The great thing about piracy is that it DOES hurt them. That’s one of it’s perks.
They are almost dead folks!
The last december sale were 21% down from laat year. No business can stand that. EMI already laid off over 2k people in January and SOny/BMG, Vivendi Universal Time Warner are going to do the same soon.
EMI is droping the IFPI because they can not aford them and they are contemplating ever to drop the RIAA CRIAA and so forth too or to merge all of them into a smaller international organization. If this hapen it is doubful that this organization with a lot of less mean will be able to afford their grandiose psychopatic scheme of suing their best customers and corruplting our governements.
It is time for those that got riped off by the RIAA to band together in a class action lawsuit to recover your money. Soon the money will be gone. Of course you can try to sue the executives of the RIAA or the executives of what will be left of the music companies. Some of them like Sony and Time Warner possess also a movie division still doing ok. You could go after that too. Sony also have an electronic division not doing to well because of the criminal and anticonsumer activity of the music division though.
Meanwhile:
CONTINUE THE BOYCOTT!
This is the “coup de Grace” in progress as I write this!
Fith: We are boycotting and we will continue to boycott until all these parasites are deads.
“The million dollar question of course is, what should the recording industry do?”
Ths question is easy: Die of course! Deu!
Hey, you know how we talk about what (hypothetical) dickwads the music execs + recording companies are?
Check this out: “The record industry is careering towards meltdown. A good thing too, says Simon Napier-Bell, after 40 years of working with its most notorious moguls.”
http://observer.guardian.co.uk/omm/story/0,,2241544,00.html
Its an article in the British paperabout this guy who started in the British independent industry in the 1960’s, before the Beatles, and has known almost every president of the Big Four (Brit and Am) since then; some of the best quotes:
“Artists were never the product; the product was discs - 10 cents’ worth of vinyl selling for $10 - 10,000 per cent profit - the highest mark-up in all of retail marketing.”
“Recently, the Wall Street Journal investigated the industry and concluded that ‘for all the 21st-century glitz that surrounds it, the popular music business is distinctly medieval in character: the last form of indentured servitude.’”
“In 1966 I came into a business that was alive with excitement and optimism. I was one of a select group - the young managers, like Brian Epstein, Andrew Loog Oldham and Kit Lambert - who had taken over the UK’s new pop groups - the Beatles, the Rolling Stones, the Who, the Kinks, the Yardbirds, the Animals. We young managers were on fire. We hustled, and we were free.
…Despite enormous differences between us, we found one thing in common. We all saw our principal job as going to war with the record company.”
“None of these companies had been set up first and foremost for music; they made records for extra profit. It was a wonderful trick they’d learnt. They bought vinyl cheaply; added a label, a song and a sleeve and sold it expensively.”
This is pure gold!!!
http://observer.guardian.co.uk/omm/story/0,,2241544,00.html
I think it’s true that people are not buying CDs because we can easily download it. But I think they’ve already taken it as a reality. One wrong step towards this “New business model” and they’ll all drown together. I mean think about it. Whichever model comes about, as long as pirating continues they won’t make money no matter what business model surface. They’ll eventually all drown and die. I mean music is not a movie where you can actually enjoy in a theater. Face the reality, the time has come for music “industry” to end.
I’ve read the parts of the report.
They are obviously misrepresenting statistics as well as making most of them up.
Just think of a basic credibility criteria: vested interest, to lie.
They obviously are not credible.
Their pirated track numbers have been estimated by monkeys pressing random numbers.
Oh, and the funniest thing… they talked about how dangerous it might be to download pirated files, since they’d be full of spyware.
I see the opposite, ROFL. All those rootkits from these idiots and shit :D
I’ve never seen a file with spyware or shit inside a music album.
DIE dinosaurs… DIE painfully!
Piracy kills the movie industry, not the music industry. But I don’t care!
Now have a good day and seed like hell. :)
Ahh this is purely an attempt to spread ridiculous propaganda to overshadow the fact they are ripping us off in the stores. I still gladly buy a ton of cd’s and dvd’s. However, when I buy a movie I know what the hell I am buying. Its a movie and it plays on my dvd and blue ray. When I buy an album its in iffy business. You might get one song, and if you are lil wayne you put out twenty albums every few months of mix tapes to leech off your fans dedication. I find torrent to be one of the best ways to choose if you want to buy an album or not, and it only boosts an artists popularity. The dirty south would never have been as popular as it is today had people not shared the mix tapes online. So please folks just laugh and give them a tissue. Its basically the RIAA’s way of saying we can’t buy any more islands, so please start paying more than blue rays for a britney spears cd.
[quote comment="272636"]Piracy kills the movie industry, not the music industry. But I don’t care!
Now have a good day and seed like hell. :)[/quote]
and buy tons of blanks from companies whose qualities will last ten times longer than those cheap heaps we are forced to pay thirty bucks for in the store.
THE MOST IMPORTANT POINT IS MISSED!!!Just because people download DOES NOT mean they are willing to pay for it.for example…my personal policy is i download any movie or tv show i want to watch that does not air in the UK in the same week it does elsewhere in the world (US mainly). There is NO REASON WHATSOEVER for me to have to wait 2 weeks,a month…2 months to see or hear something that could have been released here at the same time so i refuse to wait….i am not second rate i dont like being treated like it.
another reason is i would be willing to download 20 rap albums to find 1 i really like but i would not buy 20 to find one i like! CD albums should cost no more then £3-£5 brand new and DVD movies no more then £5..blue ray £8. That is fair!Instead i will just keep getting it for free until the companies charge the price i am willing to pay…supply and demand!!!!!
And finally,i make a little note on my n95 everytime i hear or see one of those dumb ass “knock off nigel” or “mpaa” stupid adverts, that reminds me to share for 1 extra hour that day for every crap advert…the more money you greedy companies waste…the more you will lose!
Most of todays music is crap anyway.. not even worth a single piece of coin. So why spend money on crap ? Did those IFPI retards think about this ? I download an album and if I like it, i Go out and buy it..
Haha, this is so true for me. I fill HD’s like a mofo with stuff I will never listen to, just so I can have it. I have to have all the MP3’s!
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