We’ve heard it for a decade now. “We’re losing more than half our music sales thanks to digital piracy,” proclaims the music industrial complex. The problem is that the music industry has freaked itself out so continually over hyped-up numbers attributed to music piracy that it can’t tell the facts from the reality anymore. The truth of the matter is that while music piracy was a real live problem at one point in the past, today it’s just a distant memory.
Don’t believe me? Let me give you a couple of data points:
- A study released earlier this month by networking company Sandvine on Internet traffic trends found that peer to peer traffic is now below 10%, down from 31% five years ago and 60% eleven years ago. Less P2P traffic equals less piracy according to a report from Envisional.
- Meanwhile, a combination of Netflix NFLX +0.5% and YouTube now account for more than 51% of all Internet traffic in North America. YouTube is now the go-to platform for consuming music for US teens according to Nielsen’s annual Music 360 report, with more than 64% of teens consuming their music that way.
Here’s the bottom line – people don’t pirate songs anymore because they don’t need to. They can get whatever they want for free online via YouTube or a streaming service like Spotify.
After all, what’s the point of clogging up your hard drive with songs that you rarely listen to when you can have access to literally millions more any time and any place you want, and a lot more conveniently too? And why try to steal a song from a Torrent when you’re not sure if what you’re downloading is the original song or if it’s encrypted, corrupted or spoofed? You can waste a lot of time just trying to find a usable song to listen to. Who needs that?
Convenience has trumped pirating, which is exactly what’s happening in the video world with Netflix. It’s just way too easy to consume entertainment legally anymore, which makes pirating almost a non-factor.
Now let’s look at some of the RIAA (Recording Industry Association of America, the industry association for the major record labels) claims currently on its website.
“In the decade since peer-to-peer (p2p) file-sharing site Napster emerged in 1999, music sales in the U.S. have dropped 47 percent, from $14.6 billion to $7.7 billion.”
True, but the entire drop didn’t necessarily come as a direct result of piracy. It came from the fact that the emergence of digital music caused a return to single song sales instead of album sales. It’s difficult to make up for the loss of the high-profit album versus the low margin of the digital download, which is the major reason why revenues declined.
“From 2004 through 2009 alone, approximately 30 billion songs were illegally downloaded on file-sharing networks.”
Says who and how do they know for sure? The industry has claimed in the past that for every digital song sold, anywhere from 10 to 20 where illegally downloaded, but this is just a guess, or at best, an extrapolation from a small but convenient data set. This is like asking how many grains of sand are on the beach. We’ll never know the answer for sure so you can claim just about anything.
“NPD reports that only 37 percent of music acquired by U.S. consumers in 2009 was paid for.”
I have my doubts about this figure to begin with (although I do admire the work of NPD), but the fact of the matter is that we’re now coming to the close of 2013, so any figure cited from 2009 is ancient history. It’s a completely different business today thanks to the transition away from downloads to streaming music.
The reality is that there’s always been piracy in some form, going way back to the days of bootlegged vinyl records and cassettes, and to some extent there always will be going forward as well. In the grand scheme of things though, that represents a tiny part of the business as long as the industry’s primary customers see piracy as a less desirable alternative to obtaining the product legally. The music industry’s financial woes stem more from the fact that the business changed from a high-margin to a low margin product than from piracy. And lest we forget, the quality of music has a lot to do with it as well, but that’s a subject for another post.
