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For more than a decade the music industry has claimed that digital piracy is the main cause for the gradual decline in revenues. However, looking at the sales data of the music industry itself shows that the disappointing income might be better explained by a third factor that is systematically ignored.
According to statistics taken from the RIAA shipment database, between 2004 and 2008 the number of single tracks sold in the U.S. increased by 669 percent while the number of album sales dropped 42 percent. Consequently, the income of the big labels suffered since single track sales are less profitable than full albums.
File-sharing is obviously a by-product of the digital revolution in music, but its effect on revenues has been much overstated. In every annual report that comes out, the music industry blames piracy for its troubles, even though digital sales are booming and even though these are directly competing with piracy.
We believe that the format shift from physical to digital music, and the change in buying habits that came along with it, may explain the decline in revenue more than piracy can. To back this up we’ve compared the labels’ revenues in two countries on opposite ends of the digital / physical rift, the U.S. and Germany.
In Germany physical CDs are still very popular, with digital sales representing less than 25% of all music ‘units’ sold. In the U.S. on the other hand, digital outsells physical with 70% of all sales.
If the theory that the shift towards digital music is negatively impacting revenues holds up, then the German record labels should do much better. Indeed, between 2004 and 2008 the net revenue (in dollars) of the U.S record companies fell more than 30%, compared to less than 5% in Germany.
Many younger people don’t even own a CD-player anymore, yet the music industry sees digital piracy as the main reason for the decline in physical sales. Strange, because digital piracy would be most likely to cannibalize digital sales. This anomaly also refutes the excuse that the U.S industry could be hit more by piracy than the German.
You have free radio, you have free TV. If it doesn't have what you want save up and buy what you want. Can't afford the book you want then go to the library. You can't afford the video game you want? There are thousnads of free flash games to play while you count your pennies.
There are free options. If you don't like them save up and pay for what you think is the better option. In most western countries you are given tons of free access to information, music, and art. If you find the free options lacking you can pay for better options.
You are not being denied your needs. You are being denied your wants, your luxuries. To try justifying stealing a non necessity is simply justifying being a common thief.
No matter what people say piracy is killing the record business. I've watched it happen first hand. I've seen marketing staffs sliced in half and I've seen independent labels cut staff as well as production budget. The little guy it is supposed to be helping is hurting.
I was at an indy label recently. The owner/president was telling his staff that project budgets are getting cut by 15% because sells are still falling. This isn't some fat cat trying to maintain an exuberant lifestyle. He drives a Mazda 3 and lives in a 2,000 sqft house. This is the guy that should be doing great according to pirates. His artist should be making a killing because of piracy. They aren't.
The artist are flipping out because the budget from the label for production, photography, video, tour support, and promotion is shrinking. Yet they are playing shows to smaller crowds. The number of venues and the number of people showing up is shrinking.
People are stealing the music and failing to show up to support the artists. That is the truth of the matter. Like it or not piracy hurts artists.
[edit on 26-6-2010 by MikeNice81]
The artists don't make a lot of money off of sales. That is where the writers make a lot of their money. It is also where the label makes the money to release those bands that don't sell huge numbers. You can't take a chance on a new quirky band when you're not making money off of album sells anymore. It is also where the "promo" money comes from to send out the next album to radio stations and reviewers. It is wheret he money to pay the producer, engineer, publicist, tour promoter, and a million other people that make it possible comes from.
Piracy is destroying life for thousands of people that work to keep the music coming. The music business is about more than the artists and their recordings. The support staff it takes to get out there and make a successful album or career isn't free and it is necessary. Even the indie lables have teams of radio promoters, tour publicist, accountants, A&R guys, publicists to keep up with social media networks, IT guys, and more.
Piracy might not destroy the artists' income directly. However, once you start cutting off the money for all of these other things you start effecting the artists' ability to make money. Your also start taking jobs away from honest, hard working, people that do what they do because they love music.