RIAA vs The Economy

You don't understand... by Anonymous Coward · 2003-05-20 11:18 · Score: 5, Interesting

I would assert, however that it does make the case in cold, hard numbers that the RIAA's claim of digital piracy ravaging their sales must be taken with a rather large grain of salt.

You don't understand, the economy went down so quickly, it was like the equivalent of going out of business 5-6 times.

all relative by Horny+Smurf · 2003-05-20 11:22 · Score: 3, Interesting

Compared to some companies (VA LINUX, I'm looking at you!), The RIAA's numbers are stellar.

This just in... by swordboy · 2003-05-20 11:23 · Score: 2, Interesting

EMI sales down 11 percent,.

The loss is largem but it is driven by ClearCrap, not by piracy...

--

Life is the leading cause of death in America.

Entertainment vs. economy by Merovign · 2003-05-20 11:26 · Score: 5, Interesting

I wonder what the historical relationship between the economy and low-end entertainment (movies, CDs, similar) is? Is the entertainment industry recession-resistant? I know during the 1929 depression it wasn't, but since then?

I'm no fan of stealing, but hard times is certainly an excuse people use (should I say justification?).

I keep hoping that some well-run online song-for-song "rights buying" project comes up, maybe subscribing to a whole catalog? Verification is a problem, but I personally would pay a moderate amount for downloadable music, especially on a song-by-song basis.

I recognize both the interests of the artists and the argument that the industry rips off both the artist and the customer.

I suppose this is going to be another long, drawn-out social drama, especially with politicians involved.

Re:Entertainment vs. economy by The+Cydonian · 2003-05-20 13:03 · Score: 3, Interesting

I wonder what the historical relationship between the economy and low-end entertainment (movies, CDs, similar) is? Is the entertainment industry recession-resistant? I know during the 1929 depression it wasn't, but since then?

At work, so a quick comment:- As I've pointed out before on this site, RIAA's own research over the last 60 or so years (includes the Great Depression), suggests that demand for their products ebbs towards the end of the recession. Haven't seen the site so far, but if it says that music sales (as opposed to growth in music sales) is decreasing, then it is a good thing.

--
More than mere navel gazing.

Piracy sometimes HELPS economic development by Ryu2 · 2003-05-20 11:34 · Score: 5, Interesting

I'm a frequent traveller to various countries in Asia for both business and personal trips, and I frequently encounter vendors of pirated movies, music, and software, and partook in buying their wares (warez?). Now, if one wanted to take a moral absolute, all of us should really be branded as hypocrites... But is piracy totally evil, without justification? Just like Communism, for example, a lot of people in the West seem to have a one-sided, black and white viewpoint of something which is a complicated issue.

As an example, look at many countries in East Asia -- piracy, for all its evils, helps build a base of demand for your products and fuels the sales of hardware, without which your stuff is useless anyhow.

What do I mean? There needs to be a established base of music listeners/movie viewers/software users and owners of hardware, like CD players, etc first. Without evil piracy, sales of PCs/CD/DVD players in Asia would have been much less than what it is now, and most people would not have heard of most Western software movies or music, if they had not been ubiquitously available.

So, in developing countries like China, piracy, by fueling a demand that would not have otherwise been there, and ensuring a base of owners with appropriate hardware, lays the foundation for a consumer base. Then, as economic conditions improve, companies move in there, leverage those customers and sell legit products while adding value (better manufacturing quality, etc.) at locally-affordable prices (this is a key point -- no one in any part of the world will pay the equivalent of a week's salary for a CD, for example). Look at places like Japan and Korea that are considered "developed" now. Of course, there's still some piracy in those places -- you can't eradicate it completely, but because you have these people now clamoring for music/movies/software, you now have a thriving music industry and market, both for local artists and for foreign corporations. As a country moves from developing to developed, so will piracy gradually decrease, if companies first build off the existing base of consumers which have been created by pirated material, and market to them (through the selling points of higher quality, etc.) rather than alienating or antagonizing them.

And of course, many times, piracy is the only option, if a company doesn't release their product there. One corollary and positive effect of it has been movie studios, for instance, releasing movies nearly simultaneously worldwide, whereas in the past, in Asia, one would often have to wait for months for a release, if it was to be released at all. In being a stimulus to create buzz and hype -- and ultimately, demand for more -- in countries where the American media juggernaut hasn't reached yet, piracy has been wonderfully successful in this regard.

Essentially, the blunt, hard, truth in much of the developing world is this: without piracy, you would not have had that base of potential consumers to begin with. It's a win/win situation, for the people, for the hardware makers, and ultimately (while it may take time) for the software and content makers as well. Sadly, the myopic vision of most of the corporations fail to grasp this fact.

--
There's 10 types of people in this world, those who understand binary and those who don't.

Re:In conclusion... by OWJones · 2003-05-20 11:41 · Score: 5, Interesting

I don't think my numbers are wrong. I think they paint a relatively accurate picture. However since I'm not a professional statistician, I figured it would be better to put this up front so people wouldn't accuse me of being a fraud. :)

-jdm

CD sales and concert attendance both down by Animats · 2003-05-20 11:45 · Score: 5, Interesting

That's not a very good analysis. The subject deserves a better one.

First, CD sales and concert attendance are both down. That's an indication of a problem other than CDs.

Second, rather than looking at music alone, look at overall retail sales of prerecorded entertainment media. This includes videos, music, and games, but not downloaded content. The same outlets that used to carry mostly music now sell DVDs and games, all of which now come on very similar disks. The same players often play all three types of content. There's no longer a big distinction between "videos", "music", and "games".

Third, it's worth looking at discretionary income of people in the RIAA's demographic. If that's down, one would expect their sales to decline.

Fourth, the consolidation of radio station ownership has resulted in major changes in the way music is promoted. That effect has been inadequately analyzed. Clear Channel is quite open about the fact their business is selling ads, not music.

Given that, the suprising thing is that CD sales are only down 8%. Car sales for 2002, for example, were about 13% below car sales in 2001.

Re:CD sales and concert attendance both down by OWJones · 2003-05-20 11:53 · Score: 4, Interesting

That's not a very good analysis. The subject deserves a better one.

I agree completely. But no one had done anything of the sort, so I figured I'd give it a shot. If you can do better, please do. Hard numbers are much better than wild claims. :)

-jdm
Re:CD sales and concert attendance both down by interstellar_donkey · 2003-05-20 13:19 · Score: 3, Interesting

I think you've touched on something there that's right on. Personally, I think CD sales would be down regardless of the economy, and regardless of online file swapping.

First, CD sales and concert attendance are both down. That's an indication of a problem other than CDs. . . . exactly, which has a lot to do with Fourth, the consolidation of radio station ownership has resulted in major changes in the way music is promoted. That effect has been inadequately analyzed. Clear Channel is quite open about the fact their business is selling ads, not music.

I would argue that it's not just the consolidation of radio stations, but the entire way music is discovered, packaged and promoted. Music is a business, and the larger a business gets, the more they will focus on profit.

The current process of "launching" bands resulting from the increasing commercialization of the music industry has become an expensive investment. No longer can an A&R scout use his better judgment, hear a band he finds 'good', throw them in the studio to cut a few tracks and put them on the radio to see if they stick.

Instead he faces a well defined marketing procedure that starts in the millions of dollars, and is faced with the question of "Will this band sell?" instead of "Is this band any good?" while that question of "Will this band sell?" is increasingly being answered by businessmen who have little to do with music.

So more and more over the last 10 years, that process of discovery, packaging and promoting has become boilerplate. The end result (and this is arguable), is that music has just become more bland.

For quick proof of this, note the explosion of specialty radio stations catering to very specific sub-genres of dated material like "Classic Rock" or "All 80s". Again, this is arguable, but personally this seems to be more of a reaction of people just not liking what's being produced these days. Or at least they are finding older, more familiar tracks a better alternative to the new stuff.

Of course, I'm not a music insider, and my opinions are simply based on my own impressions of the music industry. I mean, somebody has to actually go out and buy this crap that is played on the radio. Otherwise the RIAA would be gone over night. So it's easy to assume that at least somebody has to like it. But what I'm afraid of is the average consumer makes his music buying decisions based on targeted marketing and perceived impressions of bands rather then his own actual tastes.

And I believe this ultimately is the reason the RIAA is so scared of file sharing: That eventually a globally connected peer group on the Internet will supersede the music marketing machine in influence over buying practices.

When you can suddenly discover new bands from recommendations from those with similar tastes and preferences completely outside of the sanitized and tightly controlled world of the radio or chain record store, you're going to take them out of the loop all together. And consequently, their profits.

This hasn't happened . . . Yet. At least on a large scale. But eventually, hopefully in a few years, some band will rise out of relative obscurity to become a household name due to the power of massive word of mouth on the Internet. And they will do so outside of the "system".

I can't wait.

--
The Internet is generally stupid

Re:They just blame Digital Photography. by randyest · 2003-05-20 11:55 · Score: 5, Interesting

The war on pot started as a gift to DuPont to stop hemp from competing with their new product: plastic.

Relevant, interesting, and only slightly different from the way I understand it. I thought it was actually nylon. At least that's what I surmise from the excellently supported arguments in Jack Herer's The Emperor Wears No Clothes . Or, maybe you mean plastic fibers, which I suppose is what nylon really is? (Is it?)

Either way, the following excerpts are interesting examples of the inverse (converse?) of what this story is about: a company manipulating legilation to create a better market for an otherwise not-as-attractive product. Contrast this with the RIAA blaming market conditions (or technological advancement) for their lack of profits. Which is worse?

After the 1937 Marijuana Tax law, new DuPont "plastic fibers," under license since 1936 from the German company I.G. Farben (patent surrenders were part of Germany's World War I reparation payments to America), replaced natural hempen fibers. (Some 30% of I.G. Farben, under Hitler, was owned and financed by America's DuPont.) DuPont also introduced Nylon (invented in 1935) to the market after they'd patented it in 1938.

By using 100% hemp or mixing hemp with cotton, you will be able to pass on your shirts, pants and other clothing to your grandchildren. Intelligent spending could essentially replace the use of petrochemical synthetic fibers such as nylon and polyester with tougher, cheaper, cool, absorbent, breathing, biodegradable, natural fibers.

It's interesting to note that on April 29, 1937, two weeks after the Marihuana Tax Act was introduced, DuPont's foremost scientist, Wallace Hume Carothers, the inventor of nylon for DuPont, the world's number one organic chemist, committed suicide by drinking cyanide. Carothers was dead at age 41. . .

An almost unlimited tonnage of natural fiber and cellulose would have become available to the American farmer in 1937, the year DuPont patented nylon and the polluting wood-pulp paper sulfide process. All of hemp's potential value was lost.

Nylon fibers were developed between 1926-1937 by the noted Harvard chemist Wallace Carothers, working from German patents. These polyamides are long fibers based on observed natural products. Carothers, supplied with an open-ended research grant from DuPont, made a comprehensive study of natural cellulose fibers. He duplicated natural fibers in his labs and polyamides - long fibers of a specific chemical process - were developed. (Curiously, Wallace Carothers committed suicide one week after the House Ways and Means Committee, in April of 1937, had the hearings on cannabis and created the bill that would eventually outlaw hemp.)

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everything in moderation

Re:stealing become acceptable? by SirSlud · 2003-05-20 11:56 · Score: 2, Interesting

> Since when has stealing become acceptable?

Hundreds of millions of Napster/Kazaa/etc users seem to find it acceptable. Take into consideration how many people on this 6 billion person planet a) have a computer b) have internet, and then realize that MANY people find it accceptable.

Yes, its illegal. Hey, so is J-walking, but I'll bet you dont do that, right? And that, despite the fact that it'd be too easy to create a study showing how J-walking slows down traffic, which slows transportation, which slows commerce .... you anti-capitalist thief!

I'm sure you're perfect. You *never* do anything against the law!

--
"Old man yells at systemd"

Re:The situation's aren't comparable. by finkployd · 2003-05-20 12:06 · Score: 3, Interesting

Some people do not consider music to be property. I'm not saying I'm one of them but you have to admit that stealing and copyright violation are two completly different crimes. If I steal something from you you no longer have it, and have experienced a loss. If I copy something of yours we both have it, and you have lost nothing.

Finkployd

The history of music by iso · 2003-05-20 12:07 · Score: 4, Interesting

One thing I don't see mentioned very often is the very fact that music hasn't been illegal to copy for very long. Hell, in the grand scheme of things, recorded music hasn't been around for very long. The RIAA only exist because of what, historically, amounts to a "technological glitch." That is, the technology was available to make recordings of music available for sale, but copying of that music difficult. It wasn't until about the 1970s that music became illegal to copy, and recordings have only been around since the late 1880s. Music existed long before records, and it will exist long after records are gone.

So really, music existed for thousands of years. For a breif moment in time a technological inequality meant that recordings could be made, but not easily copied. Now, in a sense, technology is working itself out (removing the glitch) and music is back to the way it's been for thousands of years. Just because it's been this way since you were a kid doesn't mean it's been this way forever. The time for being able to charge for recordings is over.

I don't feel sorry for the RIAA--their time is up. The technological glitch is gone and music can get back to being music for music's sake. In the end people will look back at the time when people used to be able to charge for music and laugh. Paying money for nothing but a *recording* of music? What a silly concept.

Jason

other major factor by u19925 · 2003-05-20 12:07 · Score: 4, Interesting

other major factor affecting sales data of RIAA is that CDs are digital and it is the only digital product with no upgrade in 21 years! My 1985 CD is as good as new. So while in the past, people used to buy a new copy of the album to replace used one, it is no more necessary.

Also, many people who had vinyl, tape etc, replaced such things with CD. The replacement is largely complete. During the replacement period, people not only bought albums they didn't have, but also bought albums they had. Now, people only buy what they don't have.

To analyze the above points, the RIAA should publish data of sales of new CD albums only and see if there is any decline. My guess is that it is actually increasing. By means of new, I mean never published before.

The third major factor is legal copying. IANAL, but I think it is allowed by law to make duplicate copies of album for personal use. It was hard to make such copies for tape and impossible for vinyl, but this is trivial for CDs.

So, it is doubtful that piracy is the cause of declining RIAA sales.

Re:The situation's aren't comparable. by Anonymous Coward · 2003-05-20 12:07 · Score: 3, Interesting

That's because Digital Photographers aren't STEALING THEIR FILM AND CAMERAS.

HA HA good one. Maybe if you THINK for a minute you'll realize nobody is stealing the RIAA's master tapes either.

P2P is distributing the RIAA's member's works for free to anyone that requests them. You CANNOT compete with someone taking YOUR PRODUCT and giving it away for free.

Then why do people still by CDs? How come I can go to library any time yet I buy books? Why is the Apple store so successful? THINK man, a Capitalist is supposed to FIGURE OUT how to make money, not WHINE about how yesterday's market dried up. That's all the RIAA is doing, whining about the laws of physics. The Apple store is MILES ahead of any P2P system.. that means there was value to be added.. and Apple added it and charges for it.

It's not like Indie bands are giving their music away and thriving off of increased goodwill and concert attendance.

Do you know any indie bands?? If you release a CD on a small label, it takes maybe 2 years of constant sales before you see any royalties, but concerts pay off a lot sooner. That's why many indie bands tour so much. They work hard for their money.

People are taking the RIAA's property and giving it away for free without permission, there is no way around this fact, no matter HOW you try and justify it.

Exactly, as soon as the RIAA realizes this is a fact of life, a natural property of their product they CAN'T GET RID OF, they will figure out how to make more money.

Re:The situation's aren't comparable. by randyest · 2003-05-20 12:09 · Score: 4, Interesting

Good points and an excellent clarification, but I have to take issue with this:

You CANNOT compete with someone taking YOUR PRODUCT and giving it away for free.

Yes, you can, at least in this example. You can provide faster, more reliable, higher quality, verified products in a convenient medium chock full of value added aspects (music suggestions, news, special features, artwork, video, etc.) at a reasonable price.

I'm not saying it was or is incumbent on the RIAA to do so, but it certainly would have behooved them to do so rather than try to kill the distribution channel altogether and maintain the status quo. Being legal, and having a huge head start on content, they could have swamped the P2P's into usenet-binaries-like obscurity instead of helping thrust them into the mainstream by failing to fill the huge, obvious vacuum that Napster trickled into before it was shut down and replaced by more slippery P2P's like Kazaalite. Now it's too late.

Opportunity only knocks once (if at all).

--
everything in moderation

Re:The situation's aren't comparable. by mgoff · 2003-05-20 12:36 · Score: 2, Interesting

Some people do not consider music to be property. I'm not saying I'm one of them but you have to admit that stealing and copyright violation are two completly different crimes. If I steal something from you you no longer have it, and have experienced a loss. If I copy something of yours we both have it, and you have lost nothing.

Where this position fall short is that information has value only when it is scarce. Patents and other IP violations are only copyright violations, but once scarity is removed (i.e. easily available for free), the value to the legitimite owner is destroyed. The owner consumed resources to develop the IP, and it is reasonable for that owner to expect to extract value from that investment.

I have yet to see a credible argument that only tangible property has value. Using IP without the owner's premission is theft. The thief can justify it however he or she wants, but the IP has less value after he or she takes it without permission.

Re:Out with the old and in with the new by M.+Silver · 2003-05-20 13:05 · Score: 2, Interesting

A good sign of how well CD distribution is dying is the ill fated "Wherehouse" music stores. To my knowledge here in san jose, they are all gone. CD sales just slipped into the toilet and all their stores have just vanished.

Countering anecdote with anecdote: We had a Wherehouse or three here, and they're gone, but I didn't take it as a sign that CD sales in general slipped into the toilet, but rather that the store I checked out was a few blocks from a Best Buy whose prices were several dollars cheaper on any given disc. We used to buy from there once in awhile, but once we started being able to preview stuff (by which I mean listen to samples on artists' sites) on the web, there was no reason to pay the extra.

Far as I can tell, Best Buy still dedicates the same amount of space to CDs as they have for the last few years; I don't know if that indicates anything about their sales levels, but I would guess it might.

--

Slashdot's token middle-aged housewife

Re:stealing become acceptable? by Anonymous Coward · 2003-05-20 13:50 · Score: 1, Interesting

yeah, even the founding fathers of America couldn't decide how strict to make copyright laws, so they left it up to congress.

too bad they didn't have YOU there to CLEAR THINGS UP.

yeah, it's "very simple".

New model for the recording industry by Art_Vandelai · 2003-05-20 14:54 · Score: 3, Interesting

There's been so much talk that the old business model - sell a CD at 18 dollars a pop, is dead.

What I'd like to see discussed is how the recording industry actually stands to make more from net-based services than they ever could have from the old way.

Think of a central server, similar to what Apple has set up, but with the following features:

extensive back catalogs of all of the major labels, going back as far as recorded history can go. (MP3 downloads arent killing the Top 40 artists nearly as much as they're affecting catalog and "Best Of" compilation sales.)

$10 annual "membership fee". That fee gets you access to the system, and software that allows you to set up playlists, etc. that the RIAA can use the data from to aggrgeate stats on most popular tunes played and burned (with respect for individual privacy, of course). You also get powerful search software that can search by artist, song name, lyrics (so you can list every song that goes "...all of my love..."), year, and whatever other search types you can think of.

$0.75 per song, 128 kb MP3 downloads. All files have the proper artist & track name in the ID3 tag. Correcting misspelled, and incorrectly labelled p2p download file & track names is just such a pain in the $$hole. It sounds cheap - but your average 12 track LP would be $9.00 USD.

special "premium fan content" - if you're a fan of a particular artist, you might be more than happy to pay $2.00 or even more for a rare, out of circulation B-side tune, or an MPEG concert video, even tracks played on tour or even whole concerts can be recorded (as cheaply as possible) and sold track by track to the hardcore fans that want more. If the Grateful Dead could do it, why not every other band out there? We could follow our favourite artists across the country like the Deadheads from the comfort of our living rooms! If I want to have 15 different versions of "Satisfaction", why not just sell them to me and make some money! Get this stuff out in the public.

no restrictions on copying, burning to CD or DVD, or encoding in a different format. I'm sure many would scoff and say "if someone shares the stuff on P2P we'll be pirated". If you make the economics (time + low cost + low user base) work, P2P will die naturally. Yes, a few people will still pirate stuff, but at least it will be out of the mainstream.

powerful servers that allow fast downloading, and reconnect at no charge if the server went down in the middle of a transfer. This kind of raw power would leave Gnutella, Kazaa, etc. with few users who are willing to waste time searching through scads of crap files and downloading at 2KB/sec. Fewer users for P2P services = fewer available files, and more customers willing to pay.

since the product is somewhat inferior, you still want to recommend to your customers purchasing the actual CD's. Provide links to allow purchase, make it visible but not annoying to the individual who is content to download.

add to the premium content by selling liner notes, CD cover art (for those who are willing to print the CD cover) so that the total price of a 12 song CD is about $10.00. Add to that the cost of making, distributing and retailing the CD, and subtract the cost of the server infrastructure & staffing - the profit margin is roughly equal.

Now, granted, the record retailers and the people at K-Tel would suffer if this kind of a service were available, but the music industry as a whole would survive and grow under such a plan.

Re:The situation's aren't comparable. by ipfwadm · 2003-05-20 15:06 · Score: 2, Interesting

Hmmm... The RIAA seemed to do pretty good with cassettes that let you copy their product and give it to some one else.

There was a lot more effort that went into copying tapes than a file on a hard drive. First, there was the cost of the blank cassette. Sure it wasn't much, but given high enough distribution, it adds up to a lot. With p2p there are no real distribution costs (don't tell me your internet access costs money because that's not a marginal cost, and you'd be paying for your internet anyway). Second, the number of people you could distribute the cassette to was largely limited to the people you knew. Because of the cost of the blank cassette, you certainly weren't going to mass produce copies that you showered on everyone in your neighborhood. With p2p, you can get music from anyone in the world, 99.9999% of the time not knowing who they are. You can argue the 6 Degrees of Kevin Bacon thing, but making a copy of a copy of a copy eventually results in terrible quality. You may think it's recording industry propaganda, but it ain't.

CD burners have been available longer than P2P and don't seem to have hurt them much.
Oh, and the movie industry seems to do allright with video tapes.

These are both analogous to the above. Video tapes suffer from analog copying especially badly, since a standard VHS tape is only half TV resolution to begin with, and who ever paid the money for Super VHS?

The PC game industry seems to have done pretty good against people copying games and giving them away.

Again, analogous to the above. But in this case, I think you're wrong. It's not as totally widespread as music swapping, but go onto any p2p service and you can probably find whatever game you're looking for. I know when I lived in the dorms in college there weren't more than a couple people on my floor that owned a game, but everyone had a copy. The game industry just doesn't publicize it as much as the RIAA or Microsoft. And even though everyone hates MS and the B$A, Windows piracy is really a huge problem. I used to work at a mom & pop computer store around the time of Win95 and Win98, and every time the computer show rolled around, someone would bring their system in for service and along with it came an (obviously) faked Win95 disc.

One little known (well, at least in the US) fact. by Anonymous Coward · 2003-05-20 16:57 · Score: 3, Interesting

In Russia, the major local game publishing companies like 1C, Buka, and Russobit sell their own games and foreign games licensed for localised release in jewel boxes at about 1.5 as much as what the pirates ask for the pirated CDs of the same titles. Just like the pirate releases, it's el cheapo jewel boxes with no manuals or whatever, only a cute label. They also release an expensive box version, which, unlike this cheap version (about $2.5 per disk usually) costs three or four times as much, and comes with manuals and the whole shebang, but it doesn't see just as much light.

This policy has effectively killed off the piracy of locally published titles. Nobody does it anymore. People only duplicate games which are out of print. I can just go to the exact same CD retailer and buy the game I want from among the pile of the pirate releases of games they couldn't license.

Re:They just blame Digital Photography. by Anonymous Coward · 2003-05-20 17:48 · Score: 1, Interesting

I'm as suspicious of the drug war as anybody else, but you know, this "let's support hemp to make paper without trees" (or in this case to make rope without plastic) argument does not cut it. After all, cotton makes excellent paper and clothing, but is often displaced by different materials, such as wood pulp for making paper. Why? Because wood pulp is cheaper. Now, can someone convince me that hemp fibers are much cheaper to produce than cotton, thus giving hemp a chance to replace the usual hippy-protested products? Anybody?

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