March 25, 2011 | By Julie Samuels

It’s Time for the Recording Industry to Stop Blaming "Piracy" and Start Finding A New Way

As many — EFF included — have been saying for years, filesharing is not the reason that the recording industry has fallen on hard financial times. In fact, the recording industry’s complaints that the sky is falling really only apply to the recording industry, and not musicians and the fans, who have seen increased music purchases, increased artist salaries, and the availability of more music than ever before. And now two new reports further debunk the recording industry's myth.

First, the London School of Economics released a paper finding that while filesharing may explain some of the decline in sales of physical copies of recorded music, the decline “should be explained by a combination of factors such as changing patterns in music consumption, decreasing disposable household incomes for leisure products and increasing sales of digital content through online platforms.” And even if the sales of recorded music are down, there is an important distinction to draw: the recording industry may be hurting, but the music industry is thriving. For example, the LSE paper points out that in the UK in 2009, the revenues from live music shows outperformed recorded music sales.

We’ve also seen more and more artists making a go of it on their own. Rebecca Black, a 13-year-old, is reportedly netting nearly $25,000 a week from digital downloads of her hit song, "Friday." The band OK Go famously made a name for itself by self-producing widely popular music videos and then leaving a big record label that failed to “recognize the basic mechanics of the Internet” by attempting to prohibit embedding of the band's video content. As the lead singer noted, "[c]urbing the viral spread of videos isn't benefiting the company’s bottom line, or the music it's there to support." Even bands with record deals are finding different ways to make money. For example, the popular band the Black Keys makes 85% of its money from live shows.

Another recent study, this one by the Social Science Research Council, delves into international aspects of "piracy," especially in emerging markets, and finds unauthorized filesharing in some developing economies has actually created opportunities for media companies to come up with innovative business models that allow legal and widespread access to media goods. For example, in India, "where large domestic film and music industries dominate the national market, [large media companies] set prices to attract mass audiences, and in some cases compete directly with pirate distribution." The impact of this cannot be understated: in many of these emerging markets, the new business models are improving legal access to music and art that was previously unaffordable for many people.

The SSRC report also points out that, despite the content industry’s dire predictions, the media business is still thriving: "Software, DVD, and box office revenues in most middle-income countries have risen in the past decade — in some cases dramatically. Sales of CDs have fallen, but the overall music business, including performance, has grown."

Despite these realities, the policy debate continues to focus on enforcement and "strengthening intellectual property," which, SSRC rightly points out, is incredibly counterproductive and comes at a high social cost. Instead of discussing ways to make sure artists get paid for their work and fans have access to media goods, time and energy is wasted debating how to continue an enforcement policy that has failed to actually curb unauthorized filesharing.

We are encouraged to see studies like these that challenge policy makers to shift the tone of the debate to a more productive conversation about how to innovate and use new technologies to benefit artists and their fans. Because the bottom line is this: those who find ways to capitalize on new technologies will be the ones to succeed going forward.


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