RIAA vs The Economy

thumbtack writes "Boycott-RIAA.com is running an analysis of the RIAA sales vs a number of other large corporations. It was compiled by Justin Moore at Duke University. It is really quite interesting, showing the the RIAA sales are pretty much consistent with the rest of the economy. From the analysis: 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. The CEOs of Eastman-Kodak are in a nearly identical economic situation as the RIAA, yet do not have the luxury of blaming digital piracy."

Comments

You don't understand...

[Anonymous Coward]

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.

Entertainment vs. economy

[Merovign]

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.

Piracy sometimes HELPS economic development

[Ryu2]

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.

Re:In conclusion...

[OWJones]

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

[Animats]

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

[OWJones]

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:They just blame Digital Photography.

[randyest]

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.)

The history of music

[iso]

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

[u19925]

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.

[randyest]

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).