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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."
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.
Yeah, Eastman-Kodak blames Digital Photography instead.
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.
Obviously, they need to add a license agreement to their film products. Just forbid the stuff you don't like to happen, and then you can use every crooked law in the book to sue folks who switch to digital.
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.
Yeah, I've got a couple Eminem MP3s here, I've been duplicating them over and over. I figure I've got 200 copies on my HD right now. That'll show 'em.
I'm gonna burn each one onto a CDR 10-15 times, I figure he'll be broke by the time I run out of blanks.
I am hated.
I am one of "those" dot commers responsible for screwing up the economy.
This is the attitude I get from a lot of people. Since the crash all the non-tech people I know have taken every oppertunity to take a cheap shot at me, "Ya told you it wouldn't last forever" or my personal favorite, "It's never coming back"
"Bullshit" I say to myself as I try to keep my temper from flaring up.
This type of thinking perme-ates (sp?) our society simply because nobody likes being replaced by younger newer models. This is the way it's been since the dawn of time. Someone makes technology (Castles) and someone else makes a technology that makes the former irrelevent (gunpowder) With both the RIAA and Kodak, it's the same problem. Someone came up with technology that quickly made the foundation of these organizations obselete.
In the case of the RIAA, the combination of internet with Mp3 compression made the old models of music distribution obselete. I worked for a local music magazine for a few years, and often I would hear rockers cry about how Mp3's are sending them all to the poorhouse crying because they can't sell CD's anymore. No matter how many times I would try and tell them website+thawte+oscommerce=mp3 online store they just wouldn't listen because they were all brought up to believe that the RIAA method was the only way. Now apple sells songs 99cents apiece and is making a fortune. With all the money and power the RIAA has, it's a shame they didn't adapt the way apple did and just give their customers what they want.
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.
Kodak isn't much different. For years they depended on film technology as the cornerstone of their business. By the time they entered digital photography other players had already developed cheaper and more mass producable camera's with higher quality than kodak. I suppose kodak never thought that digital technology would catch up with film, they should have paid closer attention to moores law.
Both companies are old hats, trying to milk every dime out of innovations that are already 100 years old. Let them die already so the new upshots can give us better, faster, cheaper.
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.
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
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.
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.
Hmmm... The RIAA seemed to do pretty good with cassettes that let you copy their product and give it to some one else.
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.
The PC game industry seems to have done pretty good against people copying games and giving them away.
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.
Correct. But, as the cases above show it is possible to compete with very inexpensive. Oh, and just like the other cases of this same thing it is not free. Just very inexpensive. The cases mentioned above you still payed for media. With P2P you pay for your internet connection.
There is no justification for stealing, the problem is that a disruptive technology has entered the marketplace, and rather than embrace it as the opportunity it presents RIAA members have decided to try to put the genie back in the bottle. There attempts at embracing the technology have been feeble due to infighting (two subscription services that couldn't share catalogs). Not presenting a product that the consumer wants (subscription services only allow you to play music on your computer). Pricing that was unacceptable $10 a month whether you download music or not.
In the end, it appears Apple may save the music industry from itself by providing the product that people want, at a reasonable price, legally.
Wouldn't really be surprised if RIAA eventually sports this argument. :)
1. Many buyers and sellers
2. Low barriers to entry and exit
3. All buyers and sellers are price takers(unable to affect price)
4. Homogenous product/service
And most relevant here:
5. Perfect information
Before people were unable to properly sample a music product before purchasing it, and therefore made their purchasing decision based on incomplete and often misleading information - often by factors that had nothing to do with the quality of the music (hype, etc). File sharing has created near perfect information for consumers, and the results suggest that with this information consumers have decided that they were not getting their money's worth in value. Also, and this has been proven in court, the small number of large recording companys have effectively created a cartel - and have and continue to collude to inflate prices. This behavior is expected in a market with such conditions. How else can one explain the inflated price of music despite obvious and significant efficiencies and cost reductions in the production, distribution, and manufacture of recordings?
So you advocate the artificial creation of scarcity? So the owner of an otherwise non-scarce product can artificially create scarcity so that something that wouldn't otherwise have value has value?
I can understand the artist's desire to make money, but things that are by nature NOT scarce should not and, in the long term, CANNOT be made scarce. Legally or illegally the market will make certain of that.
The owner consumed resources to develop the IP, and it is reasonable for that owner to expect to extract value from that investment.
Many people create IP and don't expect to extract money from it. Many others even invest time and money creating IP *expecting* an ROI and never get it. Just because something requires time to create doesn't automatically mean they are entitled to money. The market decides what any given product (or IP) is worth. If the market has decided that music in its digital form is free then the artists either adapt to that reality by taking advantage of free music distribution to promote themselves, their products, and hopefully score endorsements, or they can find something else to do for a living.
I have yet to see a credible argument that only tangible property has value.
It's not that IP doesn't have value, it's creating artificial scarcity that gets you (or the RIAA, rather) into trouble. Charging $20 for something that costs a buck and for which even $3 should create healthy profits is as much robbery as people getting some free tunes online. You overcharge like that and you're just ASKING for a black market to be formed (file sharing) or asking for someone else to redefine your market (Apple).
The thief can justify it however he or she wants, but the IP has less value after he or she takes it without permission.
Maybe, but if the owner had chosen a price nearer to its NATURAL PRICE the owner would find that fewer people would "pirate" it and, thus, fewer people would lower its value by taking it without permission. In fact, I'd say that piracy is bringing the overall price of music to its NATURAL PRICE. They charge $20 for CDs but lots of people get it for free. Perhaps if you did the math you'd find that averaging the total amount earned and the total amount pirated that the final amount earned was, say, $6 a CD. To me that means that that's the NATURAL PRICE.
Legally or not, all products in a free market WILL find their natural price. Free markets do that.
But in the end, yes, digital distribution will reduce the "value" of music. That's because most of the value has been concentrated in the DISTRIBUTION of music and that's now nearly cost-free. I'm not convinced any of this really affects the artist who generally earns more money from concerts and endorsements than from the sales of their CDs.