How Does Piracy Affect the Music Industry? Research Paper

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Table of Contents

Introduction
Body
Conclusion
Works Cited

Introduction

This paper is a study of the affects that piracy and violation of intellectual property rights has on the music industry. With the advent of the Internet, music piracy is now nothing short of a norm, because while most individuals do admit that it is wrong, few would go to the extent of classifying it as theft, and thus few people refrain from it. This paper presents some of the major detrimental effects that music piracy has had on the music industry. At the same time, it outlines some advantages as well. Then, it presents some of the reasons why it music piracy is increasing at such a fast pace and why regulatory authorities have not been able to curb it.

Body

Drop in Worldwide Sales of the Music Industry

Music piracy is contributing substantially to drop in worldwide sales of music. In 2003, there was a sharp 7% decline in worldwide sales, whereas the decline in sales in the US alone was 10% (Borland). The retailers or vendors obviously suffer huge decline in sales because if people download tracks for free from the internet, very few people would now actually purchase records from music vendors. Pirated CDs also cost much lesser that the originals, therefore, the vendors of the original CDs can simply not compete on the basis of price, and again, lose out on customers. The sale of CDs has dropped substantially, in contrast to the sale of DVDs, which has risen. In 2002, the value of music shipments in the United States dropped by $1.02 billion to $12.6 billion, whereas the sale of DVDs went up by 61%. One of the reasons behind this, according to research, is that music listeners now download music for free from the internet, and therefore have more money to spend on DVDs. (Borland)

Huge Losses for Vendors, Recording studios, Music Artists and Consumers

Piracy results in monetary losses for all the parties involved in the industry, from the artist who creates the music, right down to the end consumer. The industry on the whole is reported to “suffer losses of $4.2 billion yearly all over the world because the increased amount of music piracy” (RIAA). The consumers suffer because as a result of their pirating activities, prices are increased for everyone as the retailers and recording studios attempt to cover losses faced as a result of piracy. Most importantly, creative artists; songwriters, singers and musicians suffer because they, at the end of the day, do not receive the fee and royalties due to them. About 95% of these creative artists depend on their music for a livelihood, and even more depend on their reputations, which is degraded as the quality of music is degraded substantially on pirated versions. (RIAA)

Music Piracy Hurts Economy

Music piracy has lead to a “loss of jobs amounting to 71,060 jobs in the United States”. When people no longer buy original CDs from vendors, employees would naturally be laid off. This unemployment translates into $2.7 billion in lost earnings and also results in $422 million being lost in tax revenues for the government. (Bangeman)

Positive Effects of Piracy on the Industry

Thus far this paper has focused on the negative aspects of music piracy. However, piracy does benefit the industry in some ways also. Small, independent artists, who are not signed up with well-known labels, usually do not get the kind of exposure that big artists who are signed up with famous labels do. For example, labels like BMG and EMI can afford to spend heavily on advertisement, good quality music videos, and launching songs on the radio, etc. But small, relatively unknown artists cannot afford all this. The internet is a new way of giving these new artists the kind of exposure they need.

People might not go ahead and purchase CDs of unknown artists, but they do experiment a lot when downloading unknown tracks for free from the web. In this way, they hear tracks from small artists that they normally would not have heard, and new, small artists can also thrive and gain fame. Music piracy, in a way, creates music fans. This is especially true when it comes to teenagers, who do not have the money to buy original CDs, but do have the time to download songs. Artists create much bigger fan bases through the internet that they would have otherwise. “Music piracy gives access to dead tracks” (RIAA). Contracts are made in such a way that the owner of the record is the record label, not the artist. Therefore, when the artist changes his label, and the previous label decides not to produce the track anymore, the song, in effect, dies. Consumers are not able to obtain original copies of the song, and piracy is the only way of getting access to them.

People Don’t Care

The main problem which hinders the authorities’ attempts to curtail piracy is not that people are not aware that piracy is wrong or illegal. They are aware, but they simply do not care enough or give much importance to the issue. According to a Pew Internet and American Life Project survey, “two-thirds of internet users are unconcerned about whether or not they are downloading copyright material from the internet, 29% of the people simply do not care, and 6% do not have an opinion on the subject” (Moore). This reflects the degree of nonchalance in the attitude of the end consumer. Young adults and students are least likely to show much concern over this issue. 82% of the people who download music aged 18-29 claim to not care about whether the songs they download from the net is copyright or not, and 80% of full-time students and almost three-quarters of part-time students have the same claim. A reason for the non-caring attitude is that although music piracy is technically theft, most people do not think of it as theft. The reason is that most people do not consider that by downloading free unauthorized music they are actually harming someone, or taking away someone’s possession. This is especially true for those who would not necessarily buy CDs had they not had been downloading. In this case, then, downloading music is not resulting in lost sales, because there would be no sale in any case. (Moore)

Attempts to stop Piracy are mostly Futile

Research shows that piracy is on the rise despite many attempts to curb it from regulatory authorities. Such attempts, such as stopping file sharing on software such as Napster or Kazaa have been largely ineffective for the following reasons. The increasing number CD and DVD burners are making it possible for consumers to make their own music CDs as opposed to purchasing them. There has been growth in broadband, and fast internet connections enable consumers to effortlessly download songs in a matter of a few minutes. Apart from being less expensive, this is far more convenient for consumers than purchasing CDs. There has also been growth in cheap storage devices such as USBs and recordable CDs, which has lead to increased piracy (BBC). All these factors increase the pace of piracy far more than the pace of countervailing actions.

Conclusion

This paper outlines some of the biggest disadvantages that music piracy poses for the music industry, but at the same time showed some benefits as well. The conclusion is that despite the various threats that it has on the industry, controlling piracy is close to impossible. The reasons for this are that technological advancements make it increasingly cheap and easy for consumers to download and store music illegally rather than to purchase it. Also, since most consumers do not consider it as crime, they do not refrain from it.

A possible solution could be for music companies to make music more readily and cheaply available in a legal manner. For example, in September 2002, five music companies and three music retailers were charged with a fine of $143million because they were found guilty of fixing CD prices too high. Thus, reducing prices to a fair and affordable level might help in revitalizing the music industry and saving it from the harms of piracy.