Music Piracy study by Warner Music

[Alyeska]

Warner Music financed a study into piracy and its affects on their market. The results are rather interesting. Pirates make up less than 20% of the actual market. Pirates still buy music even if they buy reduced rates, and pirates actually act as agents of the industry by using their knowledge as references for other people who then go out and buy music on these recommendations.

Ars Technica

Excerpt:
The music industry's latest annual report on the digital world has one main "ask" in it: would governments around the world please, please, pretty please get off their collective lard-filled posteriors and start passing the sorts of laws that would dragoon Internet providers into the antipiracy wars?

Whatever one thinks of this as a policy approach, it certainly represents a considerable shift in Internet regulation. Given the strength of the medicine, it's worth examining just how bad the disease is; that is, how many music pirates actually exist?

Given draconian public pronouncements in the past that, for instance, 95 percent of digital music has been illegally acquired, one might be forgiven for thinking that almost everyone on the 'Net is a pirate. It's not true. In fact, according to the music industry's own research, only a small percentage of Internet users are even pirates in the first place—and even the pirates turn out to spend money on music.

Click on the link to read the entire article and see the charts.

[adam_grif]

This is basically confirming what most reasonable people already suspected to be the case. I'm surprised that they didn't do one of their signature studies with hilarious flawed methodology, assuming that 1 pirated copy = 1 lost sale, assuming that any downward trends in sales must have been due to piracy, conveniently forgetting to factor in digital sales to make the state of the industry look worse than it is etc etc.

Shame the videogame antipiracy crowd hasn't wised up yet.

[General Zod]

This is news? I thought we've had a good half-dozen studies by now essentially confirming the same thing.

[Alyeska]

This was a music industry backed study that said the exact same thing. Kinda hard for them to claim the sky is falling when their own evidence says otherwise.

[General Zod]

This was a music industry backed study that said the exact same thing. Kinda hard for them to claim the sky is falling when their own evidence says otherwise.

The last study was done by a government agency at the request of the music industry. I'm really not sure how this is significantly different.

[Phantasee]

Since when should we be satisfied with one study?

[General Zod]

So the link says "about 20 percent of the music industry's woes could be blamed on online infringement" and you took away from that "pirates don't hurt, they help the industry"?

The link says "13 percent of Americans were music pirates" who "listen to more music and spend less money than other groups", but you think it is going to convince bosses to back off?


The music industry sells about $30 billion a year. If 10% of people are pirates, and pirates spend 80% of what they are willing to spend if piracy wasn't an option (so by infringing, they get a 20% discount overall), then that shows: 30 billion * 0.1 * 0.2 = $600 million potential dollars per year lost on it, give or take.

That's still a lot of money, a lot more than they'll spend fighting it.

A pirated song doesn't directly translate into a lost sale, you know. Do we really need to have this stupid argument again? And frankly just because someone "spends less money" on music doesn't mean they download all of it illegally. I probably spend less money on games than the average uninformed game purchaser would, but that's because I know where to look for sales and how to get my money's worth.

[Xon]

There is also the word-of-mouth advertising, which company's will cheerfully spend tens of millions in advertising to match.

[Guardsman Bass]

But to the big picture, really, do you think all the CEOs in the world are stupid too? Or that the majority of them share the same delusions, and you Internet idiots know more about their business than they do? They've had plenty of years to look at the effectiveness of their fights against piracy. If it was pissing money away, and it was so incredibly obvious that a handful of Internet people find it self-evident, surely at least some of them would have seen it by now, no?

It turns out that, yes, companies do stupid shit to protect their existing businesses even at the expense of future opportunities. Like how a number of the studios sued Sony when they tried to release the first VCR, because they were afraid it would hurt their income by the use of video-recording - even though the theater business was getting ravaged by television, and videos (both rental and home sales) later became their biggest sources of revenue. Or how they initially tried to block the release of DVD players.

Moreover, there are other factors at work besides the cost of lawsuits vs the money lost on piracy. If they let piracy slide, they're going to get hell from the rights-holders (aka bands), the people they contract with legally to distribute songs, and so forth.

Edit: As a side note, the specific number doesn't even matter to the point. It's surely within an order of magnitude of reality (that would be as small as 2% of potential sales actually lost to it), and the lost sales down there is still a big number: tens of millions of dollars each year. Easily enough to continue lobbying congress or suing people.)

The RIAA alone spent $17 million in 2008, and even more than that the year before. Of course, since they're trying to get governments to foot the bill for fighting digital piracy, that's only a fraction of the costs.

[PainRack]

This is basically confirming what most reasonable people already suspected to be the case. I'm surprised that they didn't do one of their signature studies with hilarious flawed methodology, assuming that 1 pirated copy = 1 lost sale, assuming that any downward trends in sales must have been due to piracy, conveniently forgetting to factor in digital sales to make the state of the industry look worse than it is etc etc.

Shame the videogame antipiracy crowd hasn't wised up yet.

I would argue that music piracy is different from videogame piracy.

Videogames are relatively more complex works with a short lifespan. How many games does one replay over and over again for years?

Music has that appeal factor. Going off my ass, I would also argue that due to its cost and prevalence in pop culture, impulse buying songs would be easier than impulse buying games, so, more people will be willing to fork out cash for music than games.


Of course, that doesn't mean the videogame anti-piracy measures make sense.

[Guardsman Bass]

More often than not in the professional world, the publisher is the rights-holder, not the original creator. The bands have very, very little say in the matter.

Then distributors then. You see something similar in the film industry - one of the reasons why the studios took so long to move up the release date for films in media other than the theaters (particularly in terms of On-Demand and Digital offerings) was because of resistance from theaters and DVD distributors (AKA Wal-Mart). Any laxity on targeting pirates is going to get them hell from other parties in the business.

This is a simple matter of the record companies looking at the cost/benefit analysis. Fighting piracy is pretty cheap (especially if you can get Uncle Sam to do it for you) and (presumably) gives back more than it costs, with the potential to give a lot more. Easy math.

That's true, but I was referring to their traditional "sue file-sharers" strategy.

If you want that to change: stop consuming their god damned product! That will take their power away very quickly. And I mean stop consuming, not infringe upon their copyrights. Doing that just gives them more ammo to bring to Congress.

I'd argue that piracy was a big part of why they eventually came around to digital sales of music (as well as licensing music to a number of streaming services). The "sue everybody" strategy was not working to stop piracy, and they had to accommodate digital music sales instead of trying to wipe it out/turn it into an extension of the CD sales business.

The RIAA alone spent $17 million in 2008, and even more than that the year before.
Of course, since they're trying to get governments to foot the bill for fighting digital piracy, that's only a fraction of the costs.

Indeed. Note that $17 million is a lot less than $600 million, or 60 million if you want to knock an order of magnitude off my estimate. So the potential warrants the fight. Next question is how much real returns they are getting. I don't know the numbers, but they've had a lot of victories (not just lawsuits, things like extra pennies added on to blank CDs and such are victories in this fight too and surely very profitable).

I don't know about the alternative revenue on blank CDs, but the link I provided points out that they got about $391,000 back from the lawsuits.

[Molyneux]

So, if thirteen percent of the American population are at least occasional pirates (and I'd love to see the margin of error on that figure, by the way) - I wonder if that'll affect government support, or lack thereof, for copyright protection? I mean, having more than a tenth of their constituents angry at them for bending the laws in favor of music companies could potentially put a representative in hot water.

[Losonti Tokash]

I'd argue that piracy was a big part of why they eventually came around to digital sales of music (as well as licensing music to a number of streaming services). The "sue everybody" strategy was not working to stop piracy, and they had to accommodate digital music sales instead of trying to wipe it out/turn it into an extension of the CD sales business.

Has digital music distribution actually had any effect on piracy? I'd suspect the biggest benefit there is opening the same technique up to a wider market more than actually pulling pirates away from piracy. (The pirate already has a pretty easy to use means of digital distribution and searches, and he gets lower prices. It'd be hard, though not impossible, for a competitor to take them away from that.)

Sure it does. It's actually easier for me to buy a song off of Amazon and download it to my phone than it is to torrent the album.

[ThomasP]

I don't doubt that piracy hurts the Big 4 (or is it three now?) music labels, at least to some degree. While I don't buy the one download = one sale argument, I'd think that there would be at least some harm from opening up the playing field to wider competition.

I think that's where the discussion should focus. The Big Labels aren't synonymous with music, no matter how much they want to make that case. Harm to those companies isn't the issue as far as I'm concerned, not when compared to the issues that constitute "harm".

Virtually all evidence on total music consumption, and on the compensation to individual artists, shows that the music industry as a whole is far better off. There are far more options to purchase, far more choices in terms of artists and genres, and far more opportunities for the struggling little guy to be seen and make a living.

Put another way: if the big labels vanished tomorrow, would anybody notice? If they didn't exist now, would anyone be scrambling to put them in place? The market is changing; while it's hard to construct an ethical basis in favor of piracy, it's even harder to justify the measures the labels want to take to protect themselves.

[Norade]

Honestly pirate songs go see live artists and buy band t-shirts. Then you support the band and fuck the money grubbing label which honestly deserves to die in fire anyway. I mean, the labels do all of fuck nothing creatively but make the lions share of the money. Honestly we'd be better off with artist pressing their own albums and selling their own songs and watching i-tunes die along with the riaa.

[Keevan_Colton]

Interestingly though most of the cost of that boring stuff is paid out of the bands share of the money anyway. Generally the advance covers production and marketing and has to be paid back out of the artists royalties.

[RedImperator]

Interestingly though most of the cost of that boring stuff is paid out of the bands share of the money anyway. Generally the advance covers production and marketing and has to be paid back out of the artists royalties.

It's pretty hilarious to read about the music industry routinely committing practices that would get a book publisher tarred as a vanity press and blacklisted by authors' professional associations.

[Lagmonster]

Pirates make up less than 20% of the actual market.

Leaving the piracy issue aside, this is an interesting figure. As a comparison in honesty, the Bagel Man of New York considered a company 'honest' if he got more than 80% to pay up while on the honour system. There seems to be something fairly consistent in the notion that 80 to 90 percent of people are functionally honest about common things even when they know they could get away with being dishonest. I'm sure you could influence that figure by varying attributes such as social acceptance, value gained or severity of punishment if caught, but it's fascinating to see that "only 15% of humans are truly assholes" figure keep popping up in these sorts of articles.

[Xon]

White collar is very poorly understood, both in the impact and the causes. Western society almost turns a blind eye to some truely damaging white collar crimes, or drops on a ton of bricks on those who don't game the system 'correctly' and you have to really start hunting to find any potential victims.

[Gil Hamilton]

If the artists were capable of doing it in general, don't you think more of them would do it? They'd multiply their earnings several times over!

The problem is there's a lot more to running a successful big business than just the creative parts. In fact, creativity is a pretty small part of it next to boring stuff like marketing.

There are plenty of bands that have done exactly that and it's become a more and more popular thing to do, particularly since online distribution is making it alot cheaper. The famous example I can think of was Joan Jett, when they were when she and her guys wanted to get her solo debut going, she was rejected by 23 major labels (many of which didn't want to sign her because they noticed the other labels weren't signing her... funny how that works) and eventually had to launch their own label, Blackheart Records. The single "I Love Rock n' Roll" did really well in 1982, and suddenly the labels were tripping over themselves to try to get involved (this is actually what her song "Bad Reputation" is about).

There is also another part that you are not mentioning. You say it's expensive and hard to launch you own label, which is true, but you aren't talking about the part where the major labels actively trash independent artists and work hard to make sure they don't make it big via indie labels. You seem to act in this threat like major record labels and the RIAA are just some poor businessmen getting abused by music pirates, but their behavior towards artists and what they get away with probably gives Al Capone wood from beyond the grave. Perhaps if they weren't screwing over artists and randomly suing everyone in sight for vast sums of money in the legal equivalent of a mugging, one could have sympathy for them. Hell, piracy would probably go down if they weren't thugs; people feel free to pirate music because, aside from the fact that the "theft" is almost philosophical in nature, no one feels bad about gangsters themselves being robbed.