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RIAA Loss Report Contradicts Nielsen Sales Record
DerekAtLC writes "In a not-so-surprising twist of the tables, RIAA reporting of 'losses' is a little bit off. An interesting blurb at Ars Technica referencing a Kensei News article points out that Nielsen's Soundscan (Which tracks retail point-of-sale numbers for the music industry) shows a 10% increase in sales from Q1 2003 to Q1 2004. The RIAA has recently reported drops in revenue from last year, citing online piracy as the main problem. The crux of the issue? The RIAA hasn't been talking about sales or revenue in terms of sales to consumers or money generated via those sales. The RIAA talks about losses in terms of number of units shipped to retail outlets. The article points out plenty of problems with this (and reasons why we are seeing the trend), but it is fairly obvious that the RIAA is not reporting the most 'useful' numbers to the public."
Another interesting thing has happened over the last few years. The growth of mega-chains such as Best Buy plus the .com's joining into the marketplace have knocked mom and pop record stores out of existance.
Less stores selling music means not only are stores keeping smaller inventories, but some store inventories fell to zero as they left the business. There's just plain less "unsold" disks sitting in the system.
They also tend to count every single pirated copy as a loss. Even though, if forced to buy, most of it would not be purchased.
In America we are imprisoned by our fear of them.
I'm sure you know ever really getting hard numbers on piracy is impossible just because the nature of the industry and who would really buy something if they couldn't get it for free.
Honestly the responce to it? I think they should embrace and encourage, maybe give a biz model similar to what Napster was pushing for. A distributed model (sign the music so you know it isn't tampered with) that will is a premium up and above the free realm stuff like kazaa. That way people still get their free stuff, the music companies get a shit load of revenue without much effort on their part and everyone is a little happy.
Of course they want to have absolute power over their product, think of the profit that could be made if they could control it no matter what. Or if they could do a pay to play model(pay per view), or if they could figure out a way to pull a microsoft in that they have a limited seat license that only one or 2, etc people could watch that copy of the movie at one time. That is a gold mine in their eyes and will be what they go for. Is it right...? No, but do they want it? Yes.
Piracy, P2P, and etc are just the latest buzz words for them to try and get what they can. Remember a couple of years ago how piracy was akin to supporting terroism, it is just getting more attention from you and I because it is now in a field that is affecting us more as techies.
Sales are down for the RIAA... they're considering a CD sold at the point when they get paid for it, the point that it lands in the warehouse of a store chain, not the point at which it lands in a consumer's hands which is where Soundscan sets up its counting points.
The fact that store shelves are holding less in inventory is bad for them, but isn't exactly a sign of piracy, just a sign that the RIAA's business model is becoming dated.
I'm pretty sure that the major chains such as Wal-Mart and Best Buy would love to have a small CD factory in the back of each store in which they could print the discs and surrounding paperwork on a just-in-time basis. Afterall, both the music and liner notes could be available to the store over a digital network. Why ship physical packages that might not sell when you can just ship blank disks and figure out what to put on them later?
Bottom line, it's going to get worse for the RIAA. They profit from the wastes in the system, and the system just keeps getting better at not buying things that can't be sold to consumers...
If they have the moral and legal right to seek action against people who pirate music in the case where piracy is costing them lots of sales, then they have that same right in the case where it doesn't hurt them much or at all (or even helps them). Whether you have the right to copy music should not be decided based on how it affects the profits of the companies who make it. Either it belongs to them and these restrictions are permissible, or they are not.
I'd rather be lucky than good.
the RIAA is not reporting the most 'useful' numbers to the public."
OMG! Someone is using statistics to slant an issue their way! OMG!
Soundscan would also count an "unsigned artist's" CD just the same as any other because it went through the cash register... but the RIAA's stat doesn't include CDs sold by companies that aren't members of their group.
The RIAA represents most of the recording industry, but not all of it. Sales going down for the RIAA members does not always equate to sales going down for the industry...
You've got to make sure you know what a stat was really counting before you make conclusions based on it.
This trend is commonplace everywhere. Retail outlets don't want things sitting on their shelves for two reasons: First, because they have to PAY for them and second if they don't sell, they have to PAY to ship them back.
What the record stores are doing has been done for years in most other retail outlets. It's called "Just in Time" inventory. For example, a grocery store tries to predict how much lettuce they'll sell and only buys that much, lest they get stuck with rotting produce. McDonald's made a science of this back in the '90's.
Now, the RIAA wants to use this new inventory trend to SPREAD THEIR LIES! It shows just how dirty rotten to the core they are! They KNOW what's going on; they're cherry picking stastics to LIE!!
The US census is now counting every possible sperm-egg combination as a "potential" citizen.
Unknown host pong.
From all those companies lying about their revenue during the height of the stock market bubble/scam? Are the numbers the RIAA is reporting to us any better than the numbers Enron or Tyco reported to us?
The RIAA's numbers are at least correct counts of what they're supposed to be representing. However, consumers are paying less for music doesn't ring too when it's the wholesale transactions going down but not the number of retail transations. That just says there's less CDs sitting unsold on shelves these days...
Of course the RIAA is going to fudge the numbers. If word got out that they were *GASP* not losing money, or at least not as much as they lead people to believe, it would make it oh-so-harder to justify their legal pursuit of grannies and pre-teens to the general public. As it is, it's a game of "oh look at us, we're the poor RIAA, we are making so much more money in a week than you poor consumers will ever make in our lives, but it's not as much as it used to be... we used to make more in a DAY than you would make in your entire life! Take pity on us, and understand why we are fucking the artists, and giving them pennies for every CD sold, so that we can afford limousines and caviar for our poor underfed kitties!". And the consumers eat it up, as evidenced by the ill-informed dolts saying things like "duh, anybody who downloads music off the internet is a thief". The RIAA makes it so that even if you download music that you're ALLOWED to (like Indy) it has a stigma associated with it. It's not about protecting "the artists", or the IP, it's about ensuring their lifestyle. They're thieves too, but in a way that is so much worse than average Joe Public who jumps on Kazaa or SoulSeek to download the new Creed/Eminem/[insert shitty pop band here] song-- Joe Public downloads the song because he likes or loves music, the RIAA and MPAA'ers of the world do what they do because they are money hungry fucks who will do anything they can to maintain their dominance.
I'm not a religious person, and I normally don't resort to Biblical citations, but I think this one applies:
"The love of money is the root of all evil." (also one of the most misquoted passages in the Bible just for the record).
On the reverse side, piracy is not the ideal situation either. I am a musician, and I hope someday to make a living off my music, but I know it won't be with a record deal-- and I sure as hell know it probably won't be from selling records. Hopefully by the time I am ready to try my music as a full time career we'll have something a bit more established that will allow truly independent music distribution, with a vehicle that guarantees the artist will at least see some money for their hard work.
Dan
Just like driving a car:
(D) to go forward
(R) to go backward
I believe the word you were searching for was "honest", not "useful".
Then again, this is peanuts compared to Hollywood which manages to make it look like every single movie looses (or makes very little) money so they don't have to pay taxes or pay people who are supposed to get a cut of the profits.
Of course, most of corporate america does exactly the same thing, which is why they've gone from a 52% tax share (versus individuals) to under 5% in 50 years.
Please help metamoderate.
You know what they say 97.89% statistics are made up on the spot....
This was obviously a farce from the get go. Mp3's open people up to music they would have never bought, same can be said with libraries and books.
If we don't make light of everything, we are just stumbling in the dark - Blank
Ahh, statistics are wonderful things, aren't they?
Reminds me of a couple of classic quotes about statistics:
Aaron Levenstein once said "Statistics are like bikinis; What they reveal is suggestive, but what they conceal is vital."
and Thomas Carlyle once said, "A witty statesman said, you might prove anything by figures."
The thing is, I dislike the RIAA quite vocally, but I'd still probably believe them if they said their revenue is down. But the first thing they teach you about statistics in math is that "Correlation does not equal causation."
First, it's not theft, it's copyright infringement.
Second, if a person can't afford to buy something, they're not morally obligated to thrash themselves with the spiked whip of capitalist ethics. They hurt no one by doing so.
Strict adherance to law is simply strict adherance to politicians. They're the ones who make it.
occultae nullus est respectus musicae - originally a Greek proverb
ARIA tried to hide their record CD sales from the Australian public Music industry way off track with song and dance about falling sales
Damn, I left my good sig in my other pants
It's a very common practice in many industries to "tilt" the facts to their favor. Look at the hard drive industry and tell me why my 80GB drive ends up being a 74.5GB drive when I format it.
;-))
i do actually hope that the above was a rhetoric question... but just for the heck of it:
Giga is defined (in almost all of science) as 10^9; therefore 80GB = 80 * 10^9 Byte.
Computer Scientists have calculated most data sizes in exponents of "2"; therefore it is common to write KB as 2^10 Byte, MB as 2^20 Byte and GB as 2^30 Byte; this is also how your operating system will output your HDD capacity.
Recently it has been tried to introduce the units Mebibyte (MiB) and Gibibyte (GiB) for the exponents of "2", but it might still take quite a while (or may never happen) that the majority of computer scientists and the industry will switch to the new notation.
thus it is (due to ill-defined units) more or less correct to write:
80GB = 80 * 2^30 Byte = 8.59 * 10^10 Byte = 86GB
obviously it should really be written as 80GiB = 86GB, but such is our beloved computer science
yet, most likely you already knew that... well, next time better put the <irony> tags *gg*
Since most of the "losses" come not from file traders but from those who copy the full disc, including the liner notes and sells those on the street and even to music stores.
The RIAA once reported one in six discs that you buy is a pirate disc. This is where they are truly losing money. However if all this contrary information were to make it to the courts that are granting the search warrants for ISP's then it would be that much hard for the RIAA to get those warrants....and that would prevent them from getting the easy money from going after file traders.
Speaking of this easy money, has anyone seen the figures of how much the RIAA has brought in from these Nazi tactics and how much of that total was reimbursed to the artists who lost sales? Also how does the RIAA determine who has been pirated and how are the reimbursed? If someone were to bring these point up to the judge who is issuing warrants then the RIAA might really have to do something more than whine to get a warrant.
- fake products -- scam artists shipping stuff to stores that RIIA membership doesn't know about -- but good enough to fool consumers (haven't heard of this running rampant).
- Less spoilage (shipping fewer, selling more, returning way less). Better profits all the way 'round. Works for stores, artists get more money, so does the RIAA.
- RIAA scam (they tell artists "140M records", but they sell 160M) -- but the RIAA wouldn't do that would they???
Note that, in all possible circumstances, record sales are up.Only in (1) would the RIAA (and artists) actually get less money, but that's not the fault of the "pirate scum" 12 year olds that the RIAA insists on suing. If this is the case, then the RIAA needs to start going after the real pirates, and stop suing kids.
For (3), The artists are getting less money, but that would be because the RIAA is scamming on both ends (cheating artists, raising prices, suing customers). It'd take a public scandal to fix that.
Free Software: Like love, it grows best when given away.
There are 2 ways to get music, buy and and steal it (and please no diatribe on whether steal is the right word).
OK, you *know* it's the wrong word, and yet you use it anyway? You sir, are being an industry shill.
So if you stole it, it should be considered a lost sale, as you obviously wanted the music but chose to steal it instead of buying it.
A "lost sale" is someone stealing a CD off the counter, or even a customer walking out without buying anything because the clerk pissed them off - but we are talking about copying from media that has alrady been bought, not the theft of a product. It's a subtle difference that business doesn't like to acknowledge because all they see is dollars that they didn't get. It's like NOS getting pissy abuot "lost sales" when people build a DIY nitrous system for their car. Sure, they didn't sell a kit to someone who was interested in their stuff, but if the price was closer to the reproduction cost + hassle of DIY, they probably would have. Not being competitive in the market place is the reason they "lose" sales like this, plain and simple.
Once again, it's not a lost sale if you weren't going to get it anyway. I'm interested in lots of music, but I'm not going to buy a $32 NZD industry backed CD because they are a complete rip-off (I also don't download MP3s either). Having said that, I bought a $5 NZD CD of driving music from the gas station last night. Pricing is a key issue - they'll bleat about the cost of producing new music, but if the industry wasn't snorting their profits and spent less playing at being rock stars prices would be more realistic.
And BTW, the same retail vs wholesale thing is the reason (pop star|idol) tops the charts the week of release - nobody bought it except the stores, but the punters see it in the charts and buy it 'cos a) it *must* be good if it's in the charts, b) it's advertised everywhere so it's all they know. The music recording industry is a joke - go down to the pub this weekend and supprt your local bands instead.
Forget thrust, drag, lift and weight. Airplanes fly because of money.
> Another interesting thing has happened over the last few years. The growth of mega-chains such as Best Buy plus the .com's joining into the marketplace have knocked mom and pop record stores out of existance.
Excellent point. But it goes further than you suggest.
It is much easier for a mega-store to predict its sales, and manage its inventory efficiently, than it is for a small store.
For example, a small store might receive shipments once a week, or even once a month. For a given CD, that store might expect to sell just two copies before the next shipment, but a week or a month is a long time to be sold out of something, so that store will want to stock three, or more likely four copies of that CD. That's 50% excess inventory on average. Plus, there is nothing the small store can do with that excess except to return it with the next delivery truck.
But a mega-store will receive shipments every day. Plus, the mega-store might expect to sell 5 copies per day of that same CD. So let's say the mega-store keeps 10 copies of that CD on the shelf, with re-orders every day, and ends up returning the excess 5 copies at the end of a month. But that's 5 copies returned on a month's sales of 150 copies, which, in the long run, only represents an excess inventory of 3%.
And let's not forget the mega-stores' other advantages for efficient inventory management, including computerized check-outs, and the ability to move inventory around from one store to another.
So it shouldn't surprise us if excess CD shipments have been drastically reduced.
I can see another way in which Internet Radio, and music downloads would lead to more efficient sales. Today's buyer will go the the record store with better knowledge of what he/she likes and wants. Thus, that buyer will be less likely to pick up the mass-marketed Britney Spears CD, and more likely to pick up some lesser known band. It's not worth it to the record store to stock extra boxes of a small band's CD, the way they would with a Britney Spears CD. Plus, it's less likely for there to be a sudden rush on that small band. Thus, the trend is away from the mass-marketed items, where it's worth it to be wasteful (and necessary, to meet the peaks), and toward more highly focussed items, which sell a few at a time. And let's not forget the increase in the almost-100%-efficient special order sales.
As to the drop in international sales, I think that is more likely to be a shift away from the heavily-advertised American groups, and toward the less-advertised local groups in each country. Once again, Internet Radio and downloads would allow listeners in each country to discover those other groups, rather than simply being led by U.S. advertising. I assume that many, if not most of those smaller groups' sales in other countries are _not_ measured by the RIAA.
Wal-Mart is renowned for forcing it's suppliers to radically revamp their operations to meet Wal-Mart's needs. Wal-Mart dictates to it's suppliers, demanding just-in-time inventory control and annual - if not quarterly - wholesale price drops. 20% of CD and DVD retail dollars now flow through Wal-Mart. With that kind of buying pull, recorded music became yet another consumer item that Wal-Mart could live without, but that couldn't live without Wal-Mart. If we go with the theory that Sam Walton's boys popped the RIAA's cherry during the buyer's renegotiations, that probably provided leverage for other retailers from Kmart to Tower Records to cut the same deal, especially during a down economy.
I wouldn't be surprised to find that the gusto with which the music industry tries to squeeze more blood out of consumers by lobbying Washington and other capitals was in direct relation to how much of they're getting squeezed in Bentonville, AR.
Luke, help me take this mask off
on a shared cab ride 2 days ago, and we got to talking about P2P, so I slyly asked her if perhaps they had considered that "maybe DVDs, game consoles, cell phones, and gameboys may be competing for entertainment dollars?"
"NO, Absolutely not - its P2P, the children don't understand and need to be educated. Those other explanations are nonsense." she said
I said "hmmm, well are you sure, cause it..."
"Yes we are absolutely sure. These P2P programs are set up to steal and kids don't realize what they are doing it wrong. Its silly and inexcusable, we need to change their attitude."
So you see - they don't CARE to see any facts or evidence that point away from their view. They don't WANT to hear it. And this not wanting or caring will re-enforce their current behavior patterns. It will also cloud their minds such that EVERY way they approach the problem will have P2P destruction or absolute control in mind.
What they DO understand that "war does not determine who is right, war determines who is left".
Is the juice worth the sqeeze?
I think the problem that is affecting groups like the RIAA, MPAA, the television networks, and so on is the fact that their techniques for measuring things like sales and viewership are being rapidly obseleted by changes in communications technology.
If you're read Alvin Toffler's book The Third Wave, Toffer some 25 years ago said that as more communications choices for consumers become available, old means to measuring "eyeballs" won't work anymore. I mean look at what has happened since The Third Wave was published in 1979:
1. Consumers now possess the technology to time shift TV programming by videocassette recorders and increasing digital Personal Video Recorders, which is making the idea of prime time meaningless.
2. The choice of TV programming has literally increased exponentially. Back in 1979, most Americans could only watch at most 5-7 channels of TV programming on over-air broadcasts; today, cable TV has expanded the available channels to over 70 and small-dish satellite TV has expanded the available channels to over 200!
3. The rise of pre-recorded videocassettes and now DVD's have drastically altered the landscape of both movies and TV programming. Indeed, many movies are only breaking even with home video sales (or doubling their profit with home video sales!) and there's now the new trend of complete TV seasons available on DVD! I'm sure HBO has enjoyed healthy sales of full seasons of The Sopranos, Sex and the City, and Six Feet Under on DVD sets.
4. The rise of the public Internet has also started to affect TV viewership, as several recent surveys have shown.
5. Current methods of measuring TV viewership don't take into account the increasing trend of large scale public viewing of TV programs at public gathering places and/or having a large group of friends watching the program at someone's residence. For example, the final episode of Friends probably got underreported by Neilsen tracking because a large portion of viewers probably saw it in a group setting either in a public place or at a private residence with a large living room.
6. Tracking sales of music will have to be revamped, especially in light of the way Wal-Mart handles sales inventories, the sheer retail power of Best Buy, the heavy use of online sales at Amazon and Barnes & Noble web sites, and individual song downloads at various legal sites such as Apple's iTunes web site.
I think if the various media companies actually bother to change their way of monitoring sales/viewership they could actually get a far more accurate measurement, something that could eliminate underreporting of actual sales/viewership.
Much like if a closed source software company wants your software, but can't "afford" to abide by the rules of the GPL, they're not morally obligated to thrash themselves with the spiked whip of GNU ethics.
If, like many of us, you object to the scenario I have outlined above, you will want to vigorously support copyright law. That is the root of your moral obligation - not capitalist ethics, but your own ethics. This is very much like supporting free speech: I may object to the uses that the RIAA and MPAA make of copyright law, but I will support their right to do so.
[snipping sarcastic rebuttal]
Sorry, but you completely changed the point just to fit something unfunny. I'll bypass it for the points you attempt to make:
Your attitude wouldn't be nearly so obnoxious, if the subhumans you were apologizing for didn't try so hard to murder every single bit of free entertainment there used to be.
How's this? I'm not apologizing for anyone, nor supporting the actions of the RIAA/MPAA. I'm against anyone who thinks that if they can't afford something, then they're perfectly allowed to steal it. Steal, as in, not pay for something which can only legally be obtained by paying.
You can't afford Windows XP Pro, but hate Windows XP Home, so you should be allowed to pirate it because it's too high a price. Same with Photoshop and Acrobat Writer.
No one's being hurt, after all, since you couldn't afford them anyways.
Except, well, you're gaining something from their use and taking away a profit from those who created it. There are free alternatives to nearly every software package out there, so why not use them? If they don't meet your needs, lower your needs or raise your disposable income.
For music and movies, there are free alternatives. Nick Park released one of his ten mini-films for free on his website. Many big bands have free music on their websites. There are concerts you should be able to find in your area which have little to no charge to attend.
So, again, how on earth are the RIAA/MPAA killing free entertainment? Oh, yeah, they're trying to retain their monopolies and losing. So what? Help them die off by NOT listening to/watching their productions, even if you could do it for free, and support those who meet your price range or code of ethics.
How long til they actively start lobbying against it? With software, we already see the "free/open software threatens the livelyhood's of programmers!" bullshit, and that being true (god, that was hard to type, even as a "for the sake of the argument"), does not the guy that puts up a free novel on the web not steal from those trying to sell theirs?
So? Educate the opposite. Pass out free copies of software you legally can. Offer to train a person or two in how to use it so that perhaps they can show off to others, and pass along the knowledge.
But playing the "Someone else put this up for free, so we must stop it" bit is boring already. There are free novels available, and free stories, free music, free movies, free everything. As much as people hate competition and will try what they can to limit the damage competition does, supporting free alternatives helps them to grow. So please stop using this as an argument that free alternatives are dying; they won't if people like you help them out.
If I play the guitar on my front lawn, am I not robbing poor little Britney Spears?
No, and I have no idea why you bothered with this logic. It's not based on anything in my post.
You arguments are old and tired, and have nothing to do with logic. If they want to be artists, fine, you'd think they'd be flattered so many want their "art".
How does it have nothing to do with logic? The parent poster suggested that if people cannot afford a service, they are not morally obligated to pay for it, but can still receive it. Where's the logic in that? And I provided examples of how stupid it really sounds when it does not involve a geek trying to get free entertainment.
But no one said that they had a god-given right to make a job of it, or that they have any say in how I arrange bits on my hard drive. That they could make a living out of it, for a few decades, that doesn't make it any more profound or righteous.
Nor did I even imply it. However, no one has a god-given right to get services for free that are otherwise only obtainable through paying channels. Whether or not you could afford it makes no difference. You want that welfare, contact the gove
Human nature is the same everywhere; the modes only are different. -- Earl of Chesterfield