CD-Rs and MP3s Not Hurting Record Sales

David Gerard writes "Forget the industry shills' spin - the numbers prove that, for Australia, CD-Rs and MP3s are not hurting record sales in the slightest - based on a recent Australian Record Industry Association survey. It would be interesting to see what the numbers for the US or UK say."

Comments

mp3s helped my sales!

[acefantastik]

Yep, my band has had a bunch of sales becausepeople can hear it free on my site, and I welcome trading. If you can hear it before you pay for it, and you like it, chances are you'll pay for it. I have several more dollars for beer and guitar strings due to internet sales. Thanks, Al Gore!

Re:mp3s helped my sales!

[Negatyfus]

Dude! Great way to unconspicuously promote your band! If I had a band I would be so mentioning my band in every sentence of my Slashdot post! What a good idea to direct people to two death metal MP3's free for download. Heh.

old news, but...

[tuxette]

...every time I read something like this, the report is from a different country than last time.

So to the RIAA - the WHOLE WORLD is proving you wrong!

preaching to the choir

[McDrewbie]

this is basically giving proof for what most of slashdot already knew. I for one bought more cd's in Napster's hey-day then I do now.

Re:preaching to the choir

[fucksl4shd0t]

The bottom line was that everyone made more money, consumers got more choice, and sampling (and buying) of CDs got distributed over a wider cast of artists. The only exposure was with the top few artists at each of the top 5 record labels, which she thought would be very influential on the way the industry would behave. Unfortunately, a significant share of most record labels profits come from very few artists.

Record company thinking is a dinosaur. I have labeled the very last sentence in your post as the "rock-star mentality", and it is identical to the "home-run mentality". :)

Basically, the record-company is stuck in the rut of trying to make rock-stars out of musicians, and pushing every musician they can to stardom. Statistically, this model fails because only a very select few, determined by market forces, will become a "hit". The industry can impact that, to some extent, and they do try, but in the end it's market forces that dominate the next big thing. It always is. I suggest that dropping CD sales is mostly due to the record industry trying to make the next big hit, rather than trying to find out what it is.

I think the record industry needs to drop the rock-star mentality and go for the muffler man mentality. This requires more description:

Back when I did exhaust work, I worked with a guy who didn't want any of the "small" jobs. The setup was this: When a job sold, the ticket would get hung on the wall in shop. We (the mechanics) would take them each in line. When you finished a job, you grab the next ticket in line and start working on it, no matter what it is. We made commission, no hourly or salary pay, so we got paid (theoretically) for what we were worth.

So, this guy decides that small jobs are a waste of time and he only wants to work the big jobs. He did a few brake jobs that day, and one of the higher-priced exhaust jobs. He cherry-picked. ;) He hovered close to the tickets and would slow down his work until the next ticket was a high-dollar ticket. Then he would crank it up, finish his job, and grab it before someone else got to it.

That left all the small jobs for me and the other guy. So I busted my ass and did as many of them as I could.

At the end of the day, I had done $1,400 worth of work (earning 14% of that), while the cherry-picker had only done about $900.

His was the "rock-star mentality", and mine was the "muffler man mentality". It compares nicely with grocery stores who only get 3% profit on gross sales, and take a loss on many of the individual products in the store! Yet they rake in millions each year!

The recording industry needs to take a lesson from all of this and focus more on getting all of their music to sell rather than pushing the Next Big Thing. People have diverse interests, and any investor will tell you to diversify your holdings. Why does the record industry insist on focusing on less than 10% of their total catalog? Because it makes money? I'll bet that they'd make a LOT more money if they focused on getting their whole catalog to sell and worried more about gross sales than they worry about individual musicians. And that's where P2P file sharing becomes an asset in their marketing strategy, rather than the liability it poses now.

Make no mistake: P2P does represent a liability to the record industry. Ultimately it might well result in their downfall. Not through immoral piracy, but simply because customers don't give a shit about the industry, they care about the musicians that make the music, and they will support those musicians. Historically, all of the big rock bands to come out that have shown staying power started by building their own following. Aerosmith wasn't an overnight sensation, neither was Metallica. Both of them worked their asses off for years, making shit for pay, until they finally had enough of a following to be viable bands to the record industry. For all those years, they were classed in the 90%+ of

Re:preaching to the choir

[fucksl4shd0t]

Ya, but what about the days you worked your ass off and made less than him?

I *never* worked my ass off and made less than him. At least, in the muffler business, laziness gets quickly beat out by the market itself. People want their cars fixed *now* and don't have time to wait. If you want to slog your way through the job, work less and get paid more, it's just not going to happen.

I've put out what I consider a half-assed effort and still made more than him. :) The only time I made less than him was on the slow days when it was just the luck of the draw. On any busy day, I beat him hands down, and usually topped the shop. In a different shop, in the same company, I didn't top the shop every time it was busy because there was real competition with the other mechanics. In that place, I found that I made more money being a team player than fighting over work. If I helped a guy out on a job, he wouldn't have a problem helping me out when I needed it. More, he would even be willing to give up a job or two on a slow day to give me beer money or whatever, because he knows he can depend on my help.

Cutthroat competition can be fun, but isn't usually the best way to get the job done. :)

The formula never changes: volume is where the money is. It's volume that makes manufacturing work in the first place! Without volume, there'd be no need!

Now, I certainly sympathize with your statement about the printing industry, and it is a different ballgame than mechanic work. But in the end, it's still volume that pays the bills, pays the workers, puts food on the table, and so forth. Sure, when it's busy you might be inclined to pass up the small print run. Then, when it's slow, you can be certain the small print run won't come back to you when you need it. They'll remember how they were snubbed when you were busy. Passing up work for short-term gain always screws you in the long run, and the simple fact is, you can't pass up any work. Every piece of work you accept will affect you when it gets slow. In fact, by definition, the more work you take, the less slow you are. :)

So, yeah, I can see the real business problem of passing up the small job for the big job. But it will bite you on the ass. Winter doesn't have to be biting. It's always slow in the winter. Hell, plenty of times I had work in the winter because I didn't pass up the work in the summer. That same guy didn't have any work when it got slow, and there were quite a few times when people showed up and asked for me to work on their car because I didn't pass them up for more money.

Before or after???

[blankmange]

"It would be interesting to see what the numbers for the US or UK say."

Before or after the numbers were manipulated by the RIAA?

Interesting

[metlin]

Hmmm, according to this article it has not affected the sales in the US either.

But this article at ABCNews seems to indicate that its not piracy thats really affecting the sales, but services like iTunes -

"CD sales are down 15 percent from last year, while legal online services like the new Napster and Apple's iTunes have taken off, especially for the holidays. Apple's iTunes sold more than $1 million in download gift certificates since October."

I think that more than CD-Rs or mp3 piracy, its services like these which would affect the records sales.

Re:Interesting

[mshiltonj]

"CD sales are down 15 percent from last year, while legal online services like the new Napster and Apple's iTunes have taken off, especially for the holidays. Apple's iTunes sold more than $1 million in download gift certificates since October."


I'm curious to know what is actually selling on iTunes, etc. Is it new stuff? Or classic, older stuff from the labels' catablogs?

I don't by any CDs now because most new music sucks, and I've already got my preferred CDs in my library. I may be a White Stripes or a Jet disc. But, of all the material being released in the past few year, almost none of it appeals to me.

I have to wonder if all the iTunes sales are for Zeppelin, Stones, Floyd, etc. (or artists from your genre of choice).

Eventually, iTunes users will have filled their iPods with the older music they've heard and know they already like.

When that point arrives, the industry will have to convince customers that Britney is more deserving of space on the iPod, and more deserving of one's listening time, than Jimmy Hendricks and Janis Joplin.

Good luck with that.

Wonderful news, but...

[troff]

... will it really help? We face a thousand-and-one lawyers and school or workplace administrators running in fear from those lawyers and they still refuse to hear this new, or disregard it completely. I AM Australian. My workplace IS a school (well, a university) where I also study; last semester, that included a semester of Law for IT students; we had to put up with the Copyright Law 1968 and its 21st Century amendments; in our workplace, they've cracked down on MP3s and the central IT section have instituted semi-regular searches of our Windows XP administrative shares (suits me; 1: I use Ogg and 2: I keep my personal music - yes, from CDs I bought - on my Linux desktop anyway).

As has already been said, 'nuff said, heard it all already. Knew it.

But how does this news get to the lawmakers, to the people whose ears are already stuffed with campaign donations by some other "interested" party?

Has any article metioned this

[Dcboy]

Has any article mentioned that while music sales for 2003 were lower than those of 2002, less new albums were also released in 03 than in 02

Exactly!

[Dolemite_the_Wiz]

Record Sales are indeed down because people would rather burn a CD of great music than the Bubble-Gum Pop and "Pseudo-Punk-My-Girlfriend-dumped-me-and-I-am-in-p ain" Overpriced Crap the Record industry has available in the Record Stores.

Dolemite
_____________________

Re:Exactly!

[gantrep]

I'm not sure that I can believe that the only places available to you to buy music legitimately do not have the kind of music you like. Yeah, when I walk into walmart or target, I'm generally pretty disgusted with the selection, but there are easy-to-find better music venues all over. I just bought two non-riaa cd's from Borders, an underground hip-hop cd on the Definitive Jux label, and a disc of idm/glitch beats on Warp Records. Not only that, but there's a great chain of used, new and local music stores around here that caters to even more unusual tastes than mine. This is Nebraska, and what one would expect to be the low-end of selection as far as music-scenes go, is really quite good. I find it hard to believe the "I just can't find what I like" excuse. Unless you only listen to Polish grindcore or Japanese polka, you're probably not looking hard enough. Do your research so you don't get tricked into buying a one-good-track cd, and then pull out the phonebook. Someone in your area probably sells it. Failing that, try the INTERNET! Amazon is a great resource.

aussie aussie aussie

[SinaSa]

Can I just say, as an Australian I'm really enjoying all the sudden attention that the Australian nerd news has been getting on /.? It's great! Seriously though, I can vouch for this. Most of my friends are stubbornly insistent on buying their favourite bands new album as opposed to letting me download it and burn it for them. Most Australian bands are releasing their albums with a bonus dvd, or a bonus cd with extra stuff like live show video clips, etc. This is the kind of thing that stops people using Kazaa or BitTorrent MP3 sites. They are loyal to whichever band, and that free poster that comes with the CD is something you can't download off the 'net.

RIAA Bashing

[_RidG_]

I hate the RIAA as much as the next guy (if not more so), but I do believe that we should look at some numbers for US before wholly condemning the organization...yet again ;). I mean, after all, a single country, such as Australia, is not necessarily indicative of burning/buying patterns in US...although it seems that similar trends can be seen in numerous other regions...and after exercising common sense...and...

...*pauses to think*...

God dammit, RIAA. I can't even think of ways to defend you. Stop lying to us, you bastards! Stop with the "you are destroying your favorite artists" Jewish-mom guilt trips! Even if it were true (which it is not), and our "favorite artists" (by whom they apparently mean Brittney Spears and her ilk) will be unable to buy yet another $2 million sports car, then I think I will still be able to soundly fall asleep at night.

*Sigh* As an act of protest, I'm going to go out and send an angry e-mail to RIAA, coloring it a vehement red. I am sure they will read it carefully and alter their corporate policies, thus ceasing to be a terrible cesspool of biomatter waste. *rolls eyes*

The only one stealing is the record labels...

[Anonymous Coward]

How am I supposed to feel bad copying a cd that costs at the most a nickel to produce and costs me $18??? The worst bit is the Artist only gets pennies on the dollar for the sale. Your better off just giving the artist a buck and calling it even. Check out this article it is a interview with Courtney Love. She does the math and the only person making a profit is the Record Label.

What can we use this "proof" for?

[mbrix]

Why is this important to prove? Even though downloading music doesn't hurt CD sales, does it make it more right? If downloading music becomes legal, *then* it will hurt CD sales. Without doubt.

Re:What can we use this "proof" for?

[Scarblac]

It is important to show this, because at the moment some extremely draconian laws are being implemented, huge jail terms for downloading music. Their given justification is that downloading music hurts the industry so much, that something like that is necessary.

But of course, you believe that just because something is morally wrong, that immediately justifies absolutely any punishment that a law could give for it.

Re:What can we use this "proof" for?

[Crypto Gnome]

Because the corporate machine that is the RIAA is lying to you, the customer.

All the time.

Every Day.

And if that isn't bad enough for you, they want to stop legitimate use.

Specifically, you might want to rip and encode that Music CD you purchased in order to listen to it on your MP3 player (a reasonable expectation) - but the RIAA will do *anything* to stop you from doing that.

WHY do they want to do that? because

1. people ONLY rip and encode to MP3 in order to pirate music
2. music piracy decreases sales
3. decreasing sales hurts artists
4. hurting artists will produce less music

Of course, it's been shown in many/most cases that only #4 is true

1. Some People rip and encode to MP3 for legitimate private use, not for piracy
2. in many cases Music Piracy is in actual fact encouraging people to broaden their music tastes (ie buy stuff they'd not previously consider)
3. decreasing sales are often a myth, or at best "decreasing sales of actual CDs" (ie because there's STRONG UPTAKE in legal and legitimate digital downloadable music sales)
4. The RIAA already screw most if not all artists as hard as they can, so who are the RIAA to whine about "save the hurting artists"?

Does it matter?

[Richard_at_work]

Copyright infringement is wrong, just because its not having a negative affect on sales doesnt mean its ok to continue copying. Im not against fair use, whether implied or granted by the government, but wholesale copying of music, which is what is going on via kazaa etc, is just plain immorally wrong, regardless of what the RIAA or the ARIA or whoever does so people can "justify" it.

Re:Does it matter?

[bit01]

but wholesale copying of music, which is what is going on via kazaa etc, is just plain immorally wrong

Nope, it may be illegal but it's not immoral. IP law is totally broken at the moment and civil disobedience is entirely appropriate.

---

It's wrong that an intellectual property creator should not be rewarded for their work.
It's equally wrong that an IP creator should be rewarded too many times for the one piece of work, for exactly the same reasons.
Reform IP law and stop the M$/RIAA abuse.

Re:Does it matter?

[MartinG]

Not that I neccesarily disagree, but can you explain why copyright infringement is wrong in this case. (without saying "because it's illegal")

Don't forget that copyright is a means to an end. If its not achieving that end and it's only effect is to prevent the spread of information then it's doing more harm than good. (I use the term information loosely)

Re:Does it matter?

[Crypto Gnome]

As much as I disgree with prople infringing on copyright (ie breaking the law) here's my personal take in the situation.

----- Don't flame me, I'm posing a moral question here -----

There are countries where The Music Industry has pressured The Government to apply a FEE to all and sundry users of a Particular Recording Medium (eg the CDRs in Canada).

The Music Industry argues "*ALL* users of this recording medium are PIRATES, therefore they ALL should pay ME money".

Ok, so if I've done the time, then looking at this from a purely moral standpoint, why should I not do the crime?

I've *already* "paid for" the criminal act of pirating music, so why should I not go out and perform the criminal act itself?

----- It only stands to reason.

On the other hand,if they want to treat me with the assumption that I'm basically a good law abiding citizen, that I want to rip my music to MP3 for my own private listening, and that I use CDRs for storing backups of my own personal original digital photography, then why do they need to impose a *blanket* CDR fee *as well as* doing their best to technologically prevent me from riping CDs on my computer.

---------------

You ask "does it matter?" I say yes it does because the Music Industry Associations are arguing from a "morally right" standpoint (eg infringing on copyright hurts the artists), even though they're very clearly morally wrong (ie by assuming that *all* CDR sales are for piracy , and that *anyone* who rips music to MP3 is always/only doing so for the purposes of piracy).

Re:Does it matter?

[Richard_at_work]

Nope, it may be illegal but it's not immoral. IP law is totally broken at the moment and civil disobedience is entirely appropriate.

Civil disobedience in these cases is where you publically declare that you are going to break the law, state your reasons why, and publically do it. Civil disobedience stives to raise the public view of the act you are campaigning against, and it does it by demonstrating why it is wrong, and why you are against it, and giving the chance for the act to be taken to court, so it can be demonstrated there as well. People downloading off kazaa, copying off friends etc etc are not doing this, they are hiding in the shadows and not performing any civil disobedience at all, and until someone does im sorry but this arguement does not stand for me.

Re:Does it matter?

[Brian Boitano]

I don't think the act of civil disobedience requires you to advertise that you are doing it:

civil disobedience
n.

Refusal to obey civil laws in an effort to induce change in governmental policy or legislation, characterized by the use of passive resistance or other nonviolent means.

(from dictionary.com)

Re:Uhhh ARIA said different.

[Random832]

"More than 80 % of people who received burnt CDs say that they would 'rarely' or 'never' buy a copy of a burnt CD they had received. More than 50 % of file sharers tend not to buy music they have downloaded (ie. 'rarely' or 'never' buy)." --- No, I know I wouldnt "Pay" for a burnt CD.. I'd pay for the original item.. but never for "burnt CD". Wouldnt the be "burned" ? http://www.aria.com.au/news.htm

read it again. it says they wouldn't "buy a copy of" [meaning, buy a legitimate disc] for something of which they had already received a CDR copy.

Australians pay directly for every byte downloaded

[alien_blueprint]

In Australia we pay directly for every byte we download.

For our monthly ISP fee we are granted a certain number of megabytes that we may download without incurring extra cost. This "bandwidth cap" varies depending on how much you pay per month. Beyond that we typically pay some rate such as 15c per megabyte, or are cut back to dialup speeds.

Now, this doesn't directly affect the discrepancy discussed in the article (between the rate of people burning CDs for their friends and the lack of a corresponding drop in CD sales), but in general you have to keep this in mind when trying to draw conclusions from any investigation of illegal music sharing in Australia.

Of course, it might just be that illegal music sharing has no effect on sales elsewhere in the world, but it's important to realize that our usage patterns will be very different from areas that have unlimited downloads.

Crying Wolf ? When will thy bluff be called ..

[leoaugust]

The recording industry and its brethren have been crying wolf for years.

• At various times we have been told that the pianola was going to kill sales of sheet music,
• that radio was going to kill sales of records,
• that photocopying would kill sales of books,
• that the VCR would stop people going to movies, and
• that cheaper imported records would stop people buying Australian music.
• Along the way we have been told that the use of the latest technology was immoral - everything from the photocopier to the cassette recorder to the VCR.

Crying Wolf for years ? Crying wolf implies that someday your bluff will be called. Remember the Story of the Boy Who Cried Wolf ?

If the bluff ain't ever going to be called then is it really crying wolf ?

Is the RIAA and MPAA bluff ever going to be called ? Has it ever been called out even after the above listed examples ?

Big Money speaks. And Big Money carries a big stick. In today's world don't underestimate the belief that brawn overcomes brains. Hopefully, though, someday the brains will inherit the earth.

Basic wrong assumption.

[SharpFang]

The music, software and all such industry assumes, that piracy - scenario:

Customer with product - Producer without money

replaces classic "sale" scenario:

Customer with product - Producer with money

In fact, it usually replaces a different scenario:

Customer without product - Producer without money

The industry loses nothing at all. If they want $30 for a CD album, I won't buy that album. Simple as that. And doesn't matter if I downloaded it or not, they wouldn't see my money ever. At best, I will be pissed off at their ridiculous price and refuse to buy it later when it's cheaper, simply because I don't support thieves (yep, I mean what I just said!)

But when I download the album, another situation appears. They may gain one, rather esotheric thing from me: Gratitude. Maybe I'll buy some crappy product of theirs, just to support them in the future, just to express my thanks. Maybe I will buy "colector's edition" of what I copied earlier. Just because I like it so much.
Under one condition: They can't piss me off before that. If I hear about stupid lawsuits, sites closed due to ridiculous copyright issues, evil marketing techniques - then, sorry. I'll gladly make a copy for my friends: "Hey, don't support that assholes with your money, get a copy instead!"

Re:WiFi it in Aussie land

[alien_blueprint]

Sounds like gaming over the net in Australia can rape you wallet in a hurry. Must suck to be a gamer down under.

This is where your choice of ISP becomes very important. Many ISPs offer free download servers and game servers that don't incur any cost. I don't happen to play PC games at the moment, however my ISP has an array of game servers for different popular games. It also mirrors various Linux distros, FreeBSD, Mozilla, Python, Perl and other popular open source projects - which is what *I'm* interested in. So my total bandwidth is actually quite low. The "gamers" I know who use my ISP are also pretty satisfied with the game servers and associated software downloads.

So, it becomes a matter of finding an ISP that provides extra services that match your interests.

But, at least WiFi is an option right? [...] Could it work? Any thoughts on this.

The problem, as I understand it, is that there are very few large pipes into the country, what with it being an island and all.

And yes, people have been trying to set up local community wireless networks for years now, but it's not crossed the chasm into the mainstream yet. I suppose the problem is that in the end you have to connect to an ISP at *some* point to reach someone outside the network, and so you end up paying anyhow. It might work for local gaming, though.

Re:Uhhh ARIA said different.

[Crypto Gnome]

... lower prices ...

I don't know what planet you're on, but I'm struggling to find these mythical "lower prices" I hear rumored.

Yesterday I saw

• at a retail music store
• an actual current release album
• with one CD (ie not a 2 or 3 CD set)
• for (australian) $39 and change (for the USians out there, that translates to ~$30 US at current exchange rates)

To my amazement I found that:

• it was not diamond encrusted
• it was not made of solid gold
• it did not include oral sex from the cute chick at the counter

I for one am struggling to find the value-for-money in this proposed transaction, so The Music Industry should not in any way be surprised to see "lower than expected sales" when they pitch suck LOONEY prices.

Keep in mind, people....

• a CD weighs approximately 0.56oz
• An ounce of WEED (pot/hash/marijuana) can cost as little as $50
• Those CDs you purchase cost ~$53/oz (ie more than pot)

As for the UK

[Spad]

We've had a very good year for the music industry in the UK. CD prices have dropped, which has lead to record sales.

On several occasions, the BPI (UK's RIAA) have politely told the RIAA to piss off when they've tried to convince them to start suing customers. Not only are the BPI just generally much nicer people, but they also realise the futility of suing their customers while their sales are at record highs.

The BPI also believes that offering singles for download will help revive the crippled singles chart.

For the moment, at least, we're much better off than the US is.

Re:Au contraire mon frere!

[gehel]

People don't pay for stuff if given the choice not to.

I'm not so sure about that ... As an example : in the town where I live, there is a bar where you can pay what you want. Their is no fixed prices, you choose. If you dont want to pay at all, no problem. And believe me or not, but it works ! People actually pay more for a beer than what they would in another bar !

Ok, that's with "real" stuff, you actually get something more than a bunch of bytes ... It might not work exactly the same for music on the internet ... But still ... and if you go check the numbers at Magnatunes you'll see that their is people who pay more than requiered ...

Re:Au contraire mon frere!

[Ironica]

People don't pay for stuff if given the choice not to. Sure, some do, but vast vast majority don't.

Sure, but then you've got the goose that laid the golden egg issue, too.

If you hear an independent band's music, and like it, and can download it for free... you want more of it. And chances are, they haven't *recorded* more of it yet. You won't get it unless they have the funds to record it. What's the simplest way to ensure they have the money to continue their endeavors? Buy the CD. And the T-shirt, the baseball caps, and the bumper stickers.

Furthermore, if you download music, you *don't* have the whole product. Not even if you legally download every second of recorded sound that's on their CD. Because the liner notes, the cover, the case... it's all part of it. Want to know what the band members look like? Want to know what the heck that guy is saying? Wondering how they got that funky name? Often you'll find it out from the liner notes. Bands who want to sell CDs should make these as interesting as possible.

What people have empirically observed is that their CD sales (or book sales) increase when they make the material available for free download. This is usually the case for folks without a big reputation, or a concert tour, or money for advertising. Maybe it's not the case for big-name artists, but if it's not, that's probably because they've reached market saturation. It might hurt sales, true... but probably only if it turned out the album sucked.