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Latest Music Piracy Study Overstates Effect of P2P
Blackbeard writes "A new study from pro-business think tank Institute for Policy Innovation claims that music piracy accounts for $12.5 billion in lost output to the US economy. That includes 71,060 lost jobs and $422 million in lost tax revenues... if the figures are accurate. Ars Technica's write-up points out a number of flaws in the IPI's reasoning. 'The study makes for some alarming reading, but it suffers from a few significant flaws. First and foremost, it appears to fall into the "illicit downloads = lost sales" fallacy, the view that each song obtained over a P2P network is a lost purchase.' There's more: 'The IPI study also assesses the increased demand for music if piracy didn't exist and assumes the market would remain as "intensely competitive" as it is today. The problem is that music fans are largely disenchanted with the market. By and large, music fans think that music is too expensive, and that much of what is available isn't very good.'"
If a high-school kid was a massive warez junkie and managed to accumulate 1.5 million dollars worth of pirated software, would the IPI consider that 1.5 million dollars worth of lost sales... from a kid with a maximum $2K-$3K a year income?
Doesn't seem to me they're looking at actual buying potential of the 'offender'... just theoretical maximum revenue lost by the producer.
By and large, music fans think that music is too expensive, and that much of what is available isn't very good.
You're damn right. I wouldn't even waste my bandwidth on the vast majority of shit that the record companies are pumping out. But, what am I saying? I'm sure Linday Lohan's next album would sell millions of copies if it weren't for piracy.
What kind of idiot still believes illicit downloads = lost sales. Simple economics, if the price changes (to nothing) then you're going to see a lot more use. . if right now the world downloads 100 million songs a day that doesn't mean that if piracy didn't exist they would instead buy 100 million songs a day. . .It's just such a blatant twisting of facts who wouldn't see through it? If someone hands you a pen and says "it's free" would you take it? Now if someone handed you a pen and said "10 cents please" would you take it? I bet those "free" pens would move quite a bit quicker even though 10 cents isn't a bad price for a pen. There is a huge difference between "free" and. . well. . anything else really.
If you are about to mod me down, keep in mind that this post was most likely sarcastic.
that there is so much of this pandering to the big record labels. Where are the studies showing the truth about piracy, sales, and quality of recorded music?
I'm also ashamed that it has been about 10 years since Napster broke and this is still going on. I feel partly responsible. Time to crank up the anarchy.
I wonder how many of those downloads are for music one already has? I know I had to P2P some songs because some idiot put protection on my CD, so I could not listen to it in my car (my car and "protected" cd's don't work well).
Karma Whoring for Fun and Profit.
This concept that there is 'no good' music out there is a fallacy. While I agree that most of the mainstream music is pre-packaged twinkie pop, there is an entire subset of music (indie and non) that can be found with a little research. And guess what? It's available on iTunes and other services like eMusic (ad infinitum). And that said, with music being such a subjective topic, it's very difficult to say that one artist is 'bad' when they appeal to such broad demographics of teens that absorb them through their radio waves like mindless drones.
"A new study from pro-business think tank Institute for Policy Innovation claims that music piracy accounts for $12.5 billion in lost output to the US economy."
On the other hand, music piracy accounted for $12.5 billion in gained income to the listeners.
Music piracy INCREASES economic productivity because piracy is ULTRA efficient at copying and distributing songs. When consumers get the same (or more) stuff while LESS resources are required (labor and materials), that's an economic gain.
Now, it IS also true that piracy causes economic losses for record companies. But, economic losses for record companies are not necessarily bad for the economy, any more than economic losses for carjackers put in prison are bad for the economy.
To use another example, when the US instituted the Do Not Call list, it caused a lot of losses for companies whose business was paying people to call people who didn't want to be called. And it caused a lot of jobs in that industry to be 'lost'. Was this bad for the economy? NO! All the money that used to get spent interrupting people's dinner just got spent on something else, creating more jobs elsewhere.
So when someone pirates a song instead of paying for it, yes, the record company has a loss, but the economy does not - that money instead gets spent on something else, like a trip to the movies. That's an economic GAIN - the consumer gets to listen to music AND they get to go to the movies, whereas before, when they were paying for extremely inefficient record company distribution, they only got to listen to the music.
paintball
I think the point about the general lack of quality in the music marketplace is right on. Most albums have one or two good songs, so you end up paying $7+ per song that you actually want. My urge to pirate music was drastically lessened when online stores (iTunes was the first one I came across but I don't know if they actually pioneered this or not) started allowing me to buy the specific songs I wanted by themselves. I'm happy to pay 99 cents for a good song. If all the songs on the albums were good then I would buy all the songs and they would make that much more money from me.
There are no "lost jobs". The jobs were shipped abroad years ago.
The 12.5 Billion figure stinks with the smell of excrement because of where they pulled it from.
Running with Linux for over 20 years!
Assume the average buyer like me spends $15.00 per CD avg. After marketing and retail costs, let's say that an average profit to the music company per unit is a max of 40% or about $6.00, divided by 10-15 tracks per CD or 40 to 60 cents each.
Now assume that I bought those same number of tracks from iTunes. Cost for distribution is nearly zero. Cost for marketing: nearly zero -- and many of the songs I am looking for aren't current albums, so the profit margin on these songs is even higher. Net profit between Apple and the music company and the musician? let's say 90%, shall we?
You figure it out. But the politicians probably never will.
...Open Source isn't the only answer -- but it's almost always a better value than the alternatives...
If unrealized gains were losses, then any product that didn't sell as well as it might would have "lost sales"
Hint: you have to have something before you can lose it.
If I have nothing to hide, don't search me
From what I've seen, the people that tend to buy the music that sells in big numbers (pop, top 40 stuff) also tend to only listen to the 1-3 songs that end up being singles off of that album (look at how successful the "NOW" series of CD's has been). Actually buying the CD single version of the song was never a very popular option b/c the price per content was even more unreasonable than the CD's themselves (and they often weren't available). By letting people buy single tracks from iTunes (or any other online music vendor) around the much more reasonable $.99 per song, the "masses" are able pick out whatever the cool song is. I would think that this would cut into CD sales on the same order of magnitude as piracy.
As a side note, music piracy has caused me to buy far more CD's than I otherwise would have. My first exposure to some of my favorite bands has been through (illicit) downloaded tracks, and I often end up buying their entire discography. I know, I know, fuck the RIAA - regardless of their evilness, it's not going to stop me from wanting to own a physical copy of Marquee Moon by Television (shameless plug for the album at the top of my playlist right now).
They assume: Most of what's pirated is clearly of good enough people would buy it anyway quality that it's a direct loss of sale.
The poster assumes: Much of what's pirated is of poor enough quality that no one would buy it but high enough quality that they'd go to the trouble of downloading it.
Both sides have pretty much retreated to their corners and are refusing to meet in a middle. Most likely, the situation is: Piracy, having a lower cost, allows people to consume more than they would otherwise do but that isn't a consumption that would go away if forced to pay the price requested, either. Instead, both retreat to their corners, pointing out how the other one's wrong whilst refusing to look at how their arguments are flawed too. It becomes a somewhat pointless discussion when neither side is capable of considering anything other than their own views.
Yes, there may be a link to lost revenue, but I agree with Ars that is isn't 1:1. Also in this case, it isn't a physical good that once stolen, couldn't be sold again. If someone stole something from a store, it can't be sold by the store and the sale is "lost". Downloads are different in that they equate that the person would have purchased it in the first place. I don't agree with stealing content, but the study is lacking some connections.
The only reason they are mouthing about "P2P" is that they've heard about it on the evening news, the American news media isn't about reporting anything of consequence, it's about "buzzwords" like "the internet", "terror" and now "P2P" and "mortgage meltdown" and soon (when the talking heads notice it) "web20". The simple fact that I have to watch foreign news broadcasts to find out whats really going on in the world is pretty damn sad, a good deal of time on "The CBS Evening News with Katie Couric" is dedicated to fluff about some kid in the Midwest who can stand on his head and spit wooden nickels . ;-)..
I killed da wabbit -Elmer Fudd
By and large, music fans think that music is too expensive, and that much of what is available isn't very good.
Yet it's good enough to download, apparently. The "music isn't good enough to justify paying for it" argument vanishes in a cloud of hypocrisy when people download the very music they disparage.
When you're a freeloader, any cost is hard to justify, compared to free (beer).
"Ask not what your country can do for you." --John F. Kennedy
In the beginning there was... Word of Mouth. A Bard with a Song and performance and got paid from a local Tavern or Hall. Then there was Radio.. Radio provided access to huge amounts of people at once. They could get a taste for the product and then go purchase it because they could not keep the taste. Then there were tapes... Taped Radio was a cheap way of getting music but the music was of a lower standard and so the RIAA never came down.. the advertising was very helpful to them in their view. Music Entertainers got paid still by performance and some small royalties.
Now we have Music that could not be played on Radios or controlled being sent out and listened too by millions of extra ears. Music that has caused the surge of bands from Europe and other places that are not know in the USA. Music that would not be played because RADIO stations cater to people who would PAY for things... thus the music may not have been purchased anyways.
What happens? Music may not be purchased as much, but we have broader bands still roaming the lands getting paid to perform at a Tavern or a Concert Hall. The huge entertainers will still get the money and now we have more Middle Class Entertainers who can make a decent living performing.
Bottom Line: Make good music and people will buy it and they WILL go to see your concerts. Make mediocre Music and people will not do either. More music out there means get Lean and Mean or get destroyed.
We end up with better music across all Genres and we pay less to test the waters.
I can program myself out of a Hello World Contest!!
If someone ships a hard drive full of music to someone else, would that be a federal crime? What would the value of that music be?
So let's say I borrow someone's external hard drive, and copy all the MP3s on it to my hard drive. In just a matter of hours, have I just cost the RIAA millions of dollars?
To be fair, I do think that illegally downloading music does hurt the music industry. But obviously, there is a market there for downloading or iTunes would have failed by now. When Napster burst onto the scene, the music industry should have seen the untapped GOLD mine that is music downloading. Instead, they fought it. They refused to embrace it. Did they think it would just go away? The ability to download and take music with you everywhere has only strengthened the fact that people WANT to listen to music. They still don't get it.
Years ago, I looked into a concept, and someone had it patented already. But here is what the music industry should do:
1. Digitize their massive stockpile of music.
2. Partner with music stores so they carry that music digitally.
3. Price it right.
It would be easy to come up with a tiered pricing model.
A: anything 2 years old or newer: 0.99 per track, or a flat rate per album ($8?)
B: anything 2 to 10 years old: 0.25 per track, or $3 per album
C: anything older than 10 years: 0.10 per track or $1 per album
Think about this... why would people spend hours downloading questionable quality music when they could go into a store and walk away with a CD, DVD, or portable device FULL of music for a decent price? Then, people are in the store - you can sell them DVDs, Tshirts, CDs, etc. You could have a massive digital catalog to choose from. Keep it in the stores, but maybe make the track lists available online so they could submit an order and go in and pick it up. Charge a nominal burning fee for media. You could have "top 100" lists from all genres, people could upload their playlists for others to purchase..... there are LOTS of possiblities.
Sadly, I am sure this will never see the light of day because it requires the "owners" of the music to open their eyes.
My beliefs do not require that you agree with them.
If it's too loud, turn it down.
They call me the wookie man, I guess that's what I am
>"web20"
Dang. I must have been asleep. When did we go past version 2?
>some kid in the Midwest who can stand on his head and spit wooden nickels.
Youtube linky please?
You can't talk about Wikipedia's flaws on Wikipedia
More like Puff Daddy will have to somehow "get by" with only 13 Bentleys instead of 14.
The summary (and the artiicle, for all I know) is not quite right when it says:
He's just fallen foul of Fingals First Law [*] of chart music - the widely observed principle that the charts always turn to complete rubbish within 5 years of quitting full time education. The cool kids will always be listening to something completely different from what we listened to, and we'll just think the new stuff isn't like music used to be, in the good old days. In turn the cool kids will grow up, and find that the music they like has been superseded.
The point is, it's older fans who think that much of what's available now is rubbish. There is a constant supply of new fans ready to be programmed with the new stuff.
Of course, not all of them will buy the new stuff, but that's another issue - and the posters above have covered that pretty well!
[*] I just made that law up right there! Don't expect to find it in the textbooks till next week at least. We're only at Internet 2.0, you know.
Paul "Say no to feeping creaturism"
that does not mean i am on the side of RIAA or something, but thats just the point. I been looking for a new ride, If I could get on off Pirate Bay I would down load it in a heartbeat.
Sorry about the writing. Robot fingers, you know? Cliff Steele in DOOM PATROL #23
This think tank is definitely in the business of bias. Here's one that concluded tax cuts would not primarily benefit the rich, but Congress didn't buy it. Here's one cited in Forbes saying that insurance deficiencies are due to government regulation--which Michael Moore's "Sicko" exposes as a horrible untruth. It's easy to find studies like this from IPI. They use Free Market rhetoric to influence lawmakers, but it's that variety of the Free Market that is anticompetitive.
The music industry, as everyone here likes to say, relies on an outdated business model, but one part of their business model that is quite current and up to date is how it seeks protection through government influence. Sometimes Congress likes to hear distorted studies, because it helps them to have excuses. That's the real issue here.
Saying "piracy" cuts into sales ignores the fact that a whole lot of file sharing involves music the record companies won't sell anyone for any price. What about all the hundreds of b-sides, remixes, demos, etc that are not in print? That was what I mainly used Napster for, grabbing digitized copies of music I used to have on LP and cassette that was never put on CD, or was once on CD singles but was out of print by the time I wanted to purchase it. The most disappointing thing about iTunes to me is it's just the same old stuff already on CDs. Why don't the record companies open their archives and put out of print music online? It would cost them almost nothing to have digital copies available to download.
Last I heard concert attendance and revenue were down or stagnating. Since you can't pirate concerts, it would seem to indicate that people just don't find the music being produced today compelling enough to spend an ever increasing amount of money on. I'm sure concert promoters would like to have something like file sharing to blame poor attendance on, but they're stuck with the sad fact that demand for their product, at the price they're asking, isn't what it once was. The RIAA needs to realize they're in the same position.
Propaganda machines!
Pfft... Think-tank my crusty ass. The only thing they "think" about is who they can sell out to.
A real think tank would start off a report on this topic with the truth.
"Recording companies that hide behind RIAA are misguided by employing armies of lawyers, instead of one or two good innovative entrepreneurs".
"P2P networks are the definitive distribution model of the digital economy".
"Recording companies that hide behind RIAA either are so out of touch with reality they'd rather replace the internet with telegraphs than take the effort to lead the music industry".
"Recording companies that hide behind RIAA need not worry, where they lack vision others are more than willing to pick up the slack."
"All that recording companies that hide behind RIAA really need to do is to sit down and shutthefuckup."
That think-tank sounds more like a stink-tank to me, they reek of lies and inaccuracies.
Hope is the currency of fools
Taking the Barry Bonds defense, how many of these users who downloaded songs via a P2P application "knowingly" were downloading songs illegally? Apparently the Feds can't even beat that one. Now, you IPI accountants, figure that into your numbers and no sales were lost. The IPI, MPAA and all Virgin Records, Tower Records and Record Town stores are probably more interested in catching my friend from 15 years ago who could walk in and out of a music store in 10 minutes with 50 CDs in his jacket.
Maybe not directly, but definitely indirectly. For example, I'm a huge Pink Floyd fan. I started getting into them around 1990, which was the end of an extremely frustrating musical era with all the crap that was churned out in the 1980's. I had gotten so disgusted with music that I honestly never listened to the radio. A buddy of mine had The Wall, though, and I was hooked. He gave me a copy of his tape, and over the years since, I've bought almost every Pink Floyd album there is, except some of the crappy early ones with Syd Barrett. I've also seen them twice in concert.
Another example. When I was in college, like most college students, I was dirt poor. I've always liked Billy Joel, and another buddy of mine invested his disposable income in a CD player (still pretty new at the time) and almost all of Billy Joel's CDs. Of course, I couldn't afford all that, so I bought a bunch of blank cassettes and he made copies for me. Fast forward a few years, and I now am the proud owner of all of Billy Joel's albums, and I've seen him twice in concert, too. (If you're ever lucky enough to get the chance to see either Pink Floyd or Billy Joel in concert, incidentally, go.)
Another example. Just today, a friend of mine was listening to a Lazlo Bane CD I bought. (They're the guys who did the theme to the television show Scrubs, and their stuff is very good.) He had never even heard of the group before. At best, most people I run across are familiar with the theme to Scrubs ("I'm no Superman..."), but they'd never buy a whole Lazlo Bane CD because of that little snippet of song you hear on Thursday nights. I'll be honest, I seriously doubt he's going to rush out and buy a Lazlo Bane CD or go to a concert. But at least now he knows who they are, and if someone mentions Scrubs, he'll probably say something like, "Oh yeah, the theme was done by Lazlo Bane. I've listened to their CD and thought it was pretty good," and thus the "buzz" of the Bane has been bumped up by a bit.
I could keep going, but you get the idea. The collective effect of all of this is that CDs do sell better. Artists and bands do become more famous. Concerts do get attended that otherwise wouldn't have.
Plus, that's also neglecting the money that artists and bands make through increased exposure that have little to do with CD sales and concerts directly, such as through endorsement deals, magazine articles and interviews, non-CD merchandise, etc.
My hatred of the RIAA is now greater than my desire to be legal.
It's not just the DMCA and all the terrible lawyering, lying and lobbying, it's the way they consistently rip off the artists. If the artists are suffering it's because of the record companies and their contracts, not the people who download CDs.
I actually know some real, famous musicians and heard their storr about making one of the top 100 selling albums of all time and not making a penny from it - the record company took it all.
nb. This isn't something new, it was back in the '70s - Yes, they've been doing it since the '70s!
If I ever meet the musicians I listen to I'll happily give them a tenner, buy them a pint, or whatever. But I will not support the RIAA or record industry in any way shape or form.
They bring this upon themselves.
No sig today...
[Begin site plug] (I don't have anything to do with these sites except that I like them, but this sounds pluggish.)
Magnatune's free versions are MP3, if you pay you get your choice of several formats, including a couple lossless ones and mailed CDs. Jamendo gives you the same stuff whether you paid or not. They both let the buyer set their prices (minimum $5 on Magnatune). Neither of them require exclusive contracts from their artists. (I've seen some albums on both.)
IIRC, each site keeps half of what you give them, and the other half goes to the artist. (Compare that to 10 - 20 cents per dollar for the big labels.) Sounds like a good deal for everyone to me.
[End site plug]
I currently don't have a lot of money, so I shamelessly listen to music for free from those sites once in a while, knowing that after college, I'll pay for all the ones I like. Since they let me listen to it, the music will constantly remind me of their existence, so I'm not likely to forget to pay up.
By the way, if you like instrumental classical, check out Rob Costlow (solo piano).
This is not a signature.