Last month the Times Online published an interesting graph plotting the various revenue figures over the last 5 years, as reported by the UK music industry themselves. The data clearly shows how the distribution of music industry income has shifted over time. Music labels earn less from recorded music today than they did five years ago, while artists have seen a huge increase in revenues from live performances.

In part inspired by the Times Online article, Swedish researchers came up with similar calculations for the Swedish music industry, which reached a very similar conclusion. Since Napster and later Limewire and BitTorrent gained an audience of hundreds of millions of people, less revenue was made from album and single sales.

For the people who actually perform on stage the outcome is entirely different though. Revenue for musicians actually went up through increased income from live gigs, perhaps thanks to piracy which offers an easy tool to discover new music. Please note, however, that no causal relationship between illegal filesharing and music revenues has been researched.

What is crystal clear from the data, though, is that the revenue streams within in industry are quickly changing. This hugely benefits the musicians who now get a much bigger share of the proverbial pie than a decade ago. Much of this shift can be attributed to the increased income from live performances which nearly doubled to 774 million Swedish Kroner in 2008.

The income figures for the music industry as a whole are less positive though. The overall revenue for the music business has remained pretty much the same since 2000, and that’s just the raw number without an inflation correction.

TorrentFreak contacted Daniel Johansson, researcher at the Royal Institute of Technology, who carried out the research together with his colleague Markus Larsson. Johansson told us that he’s not a supporter of theories suggesting that illegal downloading benefits musicians.

“I can not say anything about how filesharing has influenced the figures, since that is not part of the study,” Johansson told TorrentFreak. “Everyone seems to make the assumption that file sharing is ‘good’ for artists because of this, I disagree,” adding that he cannot back this up with data.

Nevertheless, some have argued that illegal downloading makes it easier to discover new artists, which may indeed boost the number of concert visits, explaining the study’s findings. Another explanation could simply be that the tickets for live gigs have doubled since 2000, while the attendance didn’t increase or decrease.

Whatever the reasons, musicians are doing better now than at the beginning of the decade, despite or in spite of piracy.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

So why do pirates buy more music? The simplest explanation for this finding might be that people who are not interested in music don’t have the need to pirate or buy it. I have to agree that it’s not the the sexiest, most controversial or inspiring answer, but it does tell us something about the core of the piracy ‘problem’.

The real reason is in fact very simple. The true music enthusiasts simply want to consume, sample and discover as much new music as they possibly can, and the most straightforward and convenient way to do this is through file-sharing networks. Music pirates are just regular consumers really, and they love music just as much as anyone else.

Although I personally believe that the ability to sample music through file-sharing has a positive effect on music sales, much of the correlation between piracy and sales is simply caused by a third factor – a passion for music. This is one of the main reasons why most users of music oriented BitTorrent sites love an initiative such as Spotify where they have access to one of the largest music libraries online.

Although piracy can breed consumers, it’s generally happens the other way around. The Internet has freed music and the music labels’ greed and abuse of copyright is the only barrier that stands between the artists and millions of potential fans. Creative business models where consumers have instant access to unprotected and high quality music are the future.

The labels of course fail to see this all too obvious connection and continue to exploit their acquired (copy)rights.They would rather pump yet more millions into overpaid pro-copyright lobbyists and expensive lawyers trying to keep their outdated business model alive – the model where the artist gets 1 to 10% of the total music sales while the labels are filling their pockets. No wonder the passionate music fans flee to BitTorrent.

What we can learn from the studies is that true music fans buy and pirate more music. The labels are fighting against those who generate a large chunk – perhaps even the largest – of their yearly revenue. The labels should understand that piracy is merely a signal that they are on the wrong track.

The Internet makes it possible to offer unlimited access to music cheaply with virtually no production and distribution costs. Unlimited access is exactly what most consumers want. It’s an opportunity not a threat.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.