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If Eliminating Piracy Couldn't Save this Country's Record Industry, Why is Downloading Still the Enemy?

Illegal downloading is no longer a real threat to record labels and their bottom lines.

by Ziad Ramley
Feb 3 2015, 5:00am

Sunny, tranquil, and piracy-free, Norway's record industry is still in decline. Photo via WikiMedia Commons.

Ever since Napster allowed its first low definition single by The Offspring to be transferred between computers, illegal downloading has been public enemy number one in the eyes of record labels. Sixteen years later, combatting digital music piracy is still at the top of the record industry's agenda. We've all seen the figures: revenues are lower than ever, so piracy must still be to blame. Contrary to this, recent data from Norway obtained via Music Business Worldwide and IFPI Norge has shown that despite record low levels of piracy, recording revenues were flat from 2013 to 2014 and CD sales continued to plummet. If this is the case, why is illegal downloading such an issue, what's really going on, and where should our attention be focused?

In the United States alone, sources closely affiliated with the Recording Industry Association of America estimated in 2007 that music piracy annually costs $12.5 billion in lost revenue, 70,000 lost jobs, and $2 billion in lost revenue—values that are still being trumpeted by the RIAA today. The tactics used to combat these inflated figures have evolved over the years, but they never lost sight of their target.

After the practice of suing peer-to-peer companies such as Napster, Limewire, and KaZaa failed to result in any consumer behavioural change, laws like the US' Digital Millennium Copyright Act (DMCA) were then established across the globe to protect media organizations. In the early 00s, between 18,000 and 35,000 individuals were the targets of lawsuits in the United States as a result of illegal downloading of music. Although many of the six-figure lawsuits were settled out-of-court for far lesser sums, the practice of suing individual downloaders was widely accepted to have done nothing to combat piracy. One of the last people to be individuallytargeted was a Minnesota woman accused of downloading and distributing 24 songs in 2012. She was sued for $220,000.


Napster's Sean Parker was one of the original targets of the RIAA's assault on the digital age. Photo via WikiPedia.

Recently, industry tactics in combatting piracy have changed, increasingly shifting responsibility to Internet Service Providers (ISPs). On January 1, changes to Canada's Copyright Modernisation Act made ISPs legally required to notify their customers suspected of illegally downloading. Similar practices have been in place (and largely criticised) in the UK's Digital Economy Act since 2010 and often lead to mass subpoenas for relatively smaller three-figure sums. Still, record sales continued in their decline.

Despite continued lobbying of policymakers, it seems that nothing can slow the decline of physical sales. Even digital sales have plateaued. You can't help but wonder what's actually going on. What's different in 2015 compared to 2005?

Let's run through a few technology changes that have made both illegal downloading AND buying CDs irrelevant:

1. We increasingly opt for mp3 connectivity, satellite radio, or local stations in our cars.
2. New MacBooks, Chromebooks and other laptops don't even come with CD drives. Ever-popular Galaxy Tabs, Microsoft Surfaces, and iPads are all also CD incompatible.
3. Increased access to self-distribution via the internet has slashed barriers to entry for new artists. Current numbers of independent artists and level of competition is unprecedented.
4. Many albums, singles, and EPs are available for free, directly from artists on SoundCloud, BandCamp, or other platforms, either as temporary promotions or longterm philosophically-based strategy.
5. Collecting fan email addresses, earning HypeM hearts, or racking up Facebook likes are the new currency for artists that leverage them for agency deals or publishing contracts. In 2015, 50,000 Facebook likes are more valuable than $50,000.
6. Powerful and omnipresent internet connectivity provides 24/7 access to streaming services like Spotify and YouTube. You can listen to music for free, legally, almost anywhere and no longer have to rely on iTunes.

We live in a time where Martin Garrix can go from bedroom hopeful to international headliner on the strength of a single song. We live in a time where Ed Sheeran can go from sleeping on London's Circle Line to selling out Wembley Stadium for three consecutive nights in a matter of years. The road to success, while highly competitive, has never been as accessible as it is now.


Without the Internet that major label's fear so much, breakout artists like Martin Garrix wouldn't be able to exist. Photo via Facebook/Martin Garrix.

If the record industry really wants to improve their quarterly earnings and the lives of the artists that they represent, there are a number of revenue areas that better deserve their attention. Streaming royalties, for example, are still painfully low; countless talented musicians still go unheard and have no easy way to get recognised; entry-level vinyl record players are crap; the machines that produce the actual vinyl records (the only physical medium whose sales are growing) frequently break down and need significant capital investment; performance royalties often go uncollected. If we gave any more ideas, we'd need to charge a consulting fee.

Illegal downloading, once perceived as a crippling force, has proved to no longer be a threat to record labels and their bottom lines. The biggest threat to the record labels' survival is the labels themselves. By vertically integrating and investing in the products fans are actually interested in buying and consuming, they can secure their own futures, those of their artists and the happiness of fans for years to come.

Ziad Ramley is streaming for free on Twitter.