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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.
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.
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.
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!
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.
"On the other hand, music piracy accounted for $12.5 billion in gained income to the listeners."
Not only that, the $12.5 billion were instead spent on other things in the economy. Creating work for people like carpenters, contruction workers, resturant workers, etc. Which in turn means no lost taxes at all (in fact, considering the creative accounting of the entertainment business I'd say it's more likely the piracy resulted in $422 million in gained tax).
So the question is, is the economy better off with more coke snorting music execs, RIAA lawyers, fantasy accountants and boyband promoters, or with the others?
I'll bet the 71,060 who are currently employed instead of the RIAA lawyers would say piracy was a good thing for the economy.
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.
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"