One of the hottest -- and most contentious -- markets for digital media is music. The music industry, however, needs to turn to their cousins in Hollywood and see how film and television have adapted to the Internet and maybe learn some lessons.
A couple of years ago, no one had heard of the RIAA (Recording Industry Association of America). Now it's a household name, and depending on whom you talk to, usually equated with tyrannical evil. Despite this, one of the mainstays of media sales online is digital music, and it likely will be that way for some time.
The ham-handed approach the RIAA has taken in the past with users and distributors does not seem to have slaked the public's thirst for digital tunes. According to the International Federation of the Phonographic Industry (IFPI), digital music sales rose worldwide by 9.2 percent in 2009, gaining 10 times their total dollar value from 2004. Record companies in the US, according to the IFPI, now count 43 percent of their market and trade revenues as digital music.
Despite this, the recording industry claims to suffer huge losses due to piracy. Still, world digital music sales comprised 25.3 percent of total music sales in 2009.
The IFPI says there are just over 400 digital music services offering media worldwide. These companies offer a combined 12 million tracks for download. And one of the largest driving forces of digital media in the past two years has been mobile devices.
The NPD Group, a market analysis firm, shows that 16 percent of people in the US over the age of 13 use a device other than a home computer to download content from the Web. Most of those (about 75 percent) are iPod/iPhone users, and the rest are mainly game console and Blu-Ray set-top users.
Yet, the music industry has continued to pursue a model of top-down sales. Their digital music sales are treated as just another aspect of their traditional record sales, despite nearly half of their sales not being put on physical media at all.
What’s more, the music industry's business model of heavy-handed control over sales and distribution is likely holding back the industry rather than promoting it.
Film and television have taken a much different approach. Hollywood producers and studios/distributors have partnered with several digital media providers, such as Hulu LLC and Netflix Inc. (Nasdaq: NFLX), to offer both paid subscription streams and commercial-based revenues. Users can access content for free or with a fee and are often happy to do so. Studios and production facilities in the film industry embraced the new online media at its outset and are moving forward with it, not against it.
Most of the film industry's anti-piracy efforts have been aimed at both policy (law) and public awareness. According to the Information Technology & Innovation Foundation, most video piracy happens outside of the United States now, and the industry is working hard to find the "sweet spot" between free content (pirated) and paid content.
So the music industry is finding itself combating public perception on two fronts: perception of how piracy does or doesn't affect the industry, and the public's disapproval of the industry's crack-down methods for enforcement.
The music business needs to get with it.
— Craig Agranoff is an entrepreneur and national social media consultant as well as a published specialist in online reputation management and monitoring.
NY Times recently reported the 95% of digital music is still aquired ilegally. Obviously this remains an enormous issue for the record industry in lost revenues, and I beleive this to be the cause for the on-going struggle the RIAA has perpetuated. The reason we have seen no solution, no halt to piracy is because how this subject is approached. The music industry throws out accusations and legal battles and holds a looming cloud of negativity over the battle. They have raised a foe that is standing up to fight and continues to share digital music "illegally." The RIAA have waged a war they cannot win. They have picked a fight with technology- it is just to easy share music and not get caught.
The traction iTunes gains is outstanding and we learn that 'some' people will pay for music. But the biggest take away should be that people like music NOW; on their computer, in the iPods, on their phones with a couple clicks and a matter of seconds. iTunes is an option for those that want to buy music. it is not, however, a solution to music piracy.
Is this just a balancing act? I think not. What we have yet to see is a solution that gives the pirate a reason not to share/download music without paying for it. Rather than negativity surrouding an ongoing battle, how about a solution that positively reinforces the purchase of music. Technology has changes the landscape of the music industry for good, it is also technology that brought us the piracy problem. It is only a matter of time before technology offers a solution.
There actually is a resolution to movie piracy, WhiteHatt Technologies has one that will be discussed Globally pretty soon. It is designed for Hollywood, not for music.
Either way, my apologies if I mistakenly put words in your mouth. It would appear we are speaking on two seperate issues anyway as you are not a movie watcher.
Craig, your post reminds me of the advent of TV & VCR that once were considered as 'threat' by Movie & Cinema industry. So much so that they lobbied against these two inventions: http://www.gametheory.net/News/Items/086.html
I think by now businesses & governments should realize that by fighting a technology they simply choose to stand at the wrong side of history. Instead they should focus their energies on how to best utilize the new technology to meet customer needs, even if it necessitates disruptions in their usual way of doing business.
The equation's backwards here -- seems like the music industry in the form of iTunes and other music sites have more to teach Hollywood about a simple and easy to use interface, not to mention running a fantastically profitable business. I'd love a non-Apple iTunes for movies or other video content, but can imagine the theater owners and cable operators would squash this idea like a bug.
A good question and one that I don't really have an answer to. While it is currently easier to steal songs than movies, that's changing very quickly. Bandwidth, the cloud, and so forth are changing how this happens. I would suspect that a lot of pirated movies are no longer downloaded, but are streamed instead. YouTube hit 2 billion visits a day and with 24 hours of content being uploaded every minute, I doubt they can find everything. I can't count the number of movies I've seen available there in 10-minute blocks, usually as playlists.
Bootleg movies and music have been around forever, but it's only in the last few years that movies have been really available online while music has been online since DSL-speeds became available. Heck, I remember downloading tracks for the band I was in from one of the band member's BBS at 2400 baud back in the day.
Here's where we disagree on the problem. While Good music is like good film, much to the perception of the Listener/Viewer, there is so much music that is worth listening to more than once. And There are so very few films being made that warrant the time or storage space to see more than once, that piracy is not the same problem it is in the music industry. Add the issue of pricing per song Vs per album and you see an unfair diferencial. Even when Music Artists offer their music on the Internet at a "PAY WHAT YOU FEEL IS REASONABLE, EVEN IF IT's FREE" They receive an average of $5.99 for an entire album. While the RIAA types ask between $14.99-$22.99 for the samething. And as far as I can see the diffence in manufacture and distribution costs is paying the lawyers to stir up the trouble.
Chris, I assume you mean the Apple stores (specifically iTunes) and not the Oracle e-commerce platform. iTunes is currently the largest seller of digital music and is probably, along with competitors like Amazon, the savior of the music industry rather than a problem. I think the days of RIAA and large record publsihers and distribution houses are numbered. Indie music is getting more and more popular and small publishing houses that produce limited numbers of CD prints (or none at all) are popping up everywhere. Artists are often taking control themselves. I see the large record companies either downsizing and becoming marketing-only firms or shutting their doors entirely. Distribution and markups are dropping and will continue to do so, which means those big firms can't afford to keep doing what they're doing.
Craig, I have to ask a basic question. To what extent does the size of the output, for lack of a better term, affect the piracy problem? If we compare stealing a bottle of hand sanitizer with stealing a flat-screen TV, we see a different set of logistics and considerations for the thief to weigh before he makes a move.
In the same way, stealing a song is a different animal than is stealing a movie: one's three minutes long, the other 90 or more. Does the fact that songs are smaller and "easier" to copy/steal/pirate shape the industry's ham-handed response to the piracy threat? Are the studios just more confident that crappy pirated versions of their products will turn off more users than will entice them, even for $5 a pop?
Hi Craig, I agree with the music industry suffers both from a publically disingenuous reputation and an inability to provide a middle of the road solution to dealing with digitally pirated content.
I'm curious whether the istores business model adds to the contentiousness of the situation??? What are your thoughts?
Oy, I didn't say the primary market for bootleg was poor. Nor did I say "Who cares about them anyway)
"I'm going to bet that most of the bootleg watchers either wouldn't bother with the official version or can't afford it (and thus, wouldn't be buying either)"
I said most wouldn't bother if they couldn't get it for cheap or free. They'd find a substitute instead. That point came first, and you focused on the latter. I take offence to people putt'n words in my mouth.
Most of my argument was about the music industry and I'm sticking there because I'm not a movie-watcher.
The only thing I'm going to touch on for movies is that if those people were denied their bootlegs, they'd find something else to do. I hardly think they'd continue with originals.
One last thing that the pro-industry asset-protection-focused arguments always pass over is the benefits of entrenching a movie into popular culture, where it then continues to make money in the form of merchandise. For merchandisnig, you need as many fans as possible -- maximum exposure.
From a purely obesrvational standpoint, the war between industry and piracy isn't one that can be won in direct conflict. The costs of control are getting too high while the costs to break it are low.
And thus: If you can't win the war via direct conflict, it's time to take a different route.
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