Music Industry Crisis Continues, Blame Everybody Else

Michael Hedges January 25, 2011 Follow on Twitter

Of all content producers, the music industry faced the digital revolution first. It has been the proverbial canary in the mineshaft. Music executives responded by fighting the Web, consumers and everybody else. The result is unsurprising.

Ahead of the MIDEM music industry confab, music industry association International Federation of the Phonographic Industry (IFPI) issued its annual report on the industry’s health. Global recorded music sales fell about 9% in 2010 after falling 7% in 2009. OK, so digital sales are up 6% - roughly €3.4 billion - but that’s not enough. The problem, again, is piracy.

“Nineteen out of 20 music downloads are illegal,” howled IFPI CEO Frances Moore to a MIDEM press gaggle. “We are working in a very, very difficult environment.” She went on to warn of more than a million jobs lost by 2015 in Europe.

Comparing the music industry’s loss of revenue since 2004 – about one-third – to the loss of life depicted in the gristly opening scenes of the film Saving Private Ryan, Vivendi Universal COO Max Hole said “that’s the music business.” The problem, again, is piracy.

“But governments are realizing that this is at the heart of commerce for the creative businesses,” Mr. Hole added, “and that you can't have chaos.” He also warned that other content industries – film, TV, books and newspapers – could suffer the same fate.

“Governments can turn the tide,” intoned Ms Moore. The IFPI endorses the graduated response “three strikes” laws enacted in France and South Korea that can result in cutting off internet access for dasterdly illegal downloaders. The American IFPI affiliate Recording Industry Association of America (RIAA) prefers to sue individual downloaders for every nickel they’ve got. IFPI admits the lawsuit path is “more punitive and less effective.” Individual lawsuits aren’t very cost-effective. Forcing internet service providers to police downloading is just perfect.

Sweden’s IPRED law gives music business lawyers access to IP numbers, therefore identities, . The French Hadopi law – originator of the “three-strikes” principle – has also had little effect. The reason is confusion, said a study of French consumers presented at MIDEM (January 23). More than half French consumers download illegally because more than half French consumers believe that just because there’s a charge for downloading it must be legal. It isn’t. It is, certainly, confusing.

As a music industry nemesis, BitTorrent download sites face continual pressure from lawyers, which might spell their doom. A recent study from Carlos III University of Madrid, looking at people who provide content for file-sharing sites, concluded it’s a very small group who “do it (use the BitTorrent application) because they receive an economic benefit in exchange for doing so.” Take away that economic incentive and they’ll give up.”

Putting illegal downloading websites out of business is a little trickier. BitTorrent peer-to-peer website Pirate Bay has been chased around the world by music industry lawsuits and, more recently, Limewire was shut down in the United States. Downloading, in general, has fallen from consumer’s behavior in favor of streaming music sites like Spotify, wildly popular in Europe and unable to find rights agreements with the RIAA in the US.

That fight – hackers v. music biz – has long been described as “whack a mole” – a new one always pops up. And Pirate Bay, wounded but not dead, may be planning something special for the music industry.

“The music industry can't even imagine what we're planning to roll out in the coming months,” said an anonymous “insider” to the website TorrentFreak (January 22). “For years they’ve complained bitterly about piracy, but if they ever had a reason to be scared it is now. It will be a special surprise for IFPI's 78th birthday, and we're thinking of organizing a huge festival in Rome where IFPI was founded.” Whatever the surprise, the name will be Music Bay.

Legal music downloading is, actually, doing OK. Apple’s iTunes just announced its 10 billionth tune downloaded. Sony announced it’s expanding the Music Unlimited download service to France, Germany, Italy and Spain. “We took a long time looking at music before jumping in,” said Sony Network Entertainment CEO Tim Schaaff at MIDEM. Others are giving up: BSkyB ditched Sky Songs. “There have been a lot of dead bodies along the way,” continued Mr. Schaaff.

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