We’ve all heard the stories. Peer-to-peer (P2P) pirate lords distribute thousands of albums for free across the Internet, single-handedly bringing down the music industry as we know it. In retaliation the organization representing the “Big Four” music labels (EMI, Universal Music Group, Sony BMG, and Warner Music Group), the Recording Industry Association of America (RIAA), launches a massive legal campaign obtaining IP addresses of “malicious users”, and without researching the validity of each claim sends lawsuits to each offending username. Caught in this wide net with many copyright violators are grandmothers, families that don’t own computers, and at least one dead person.
This article is not going to defend the legality or morality of suing these users any more than it is going to defend the legality or morality of downloading music. There is certainly room for lively and vigorous debate on each topic, however this will not be the space for such talk. This piece will, however, assert that legal action, and the haphazard manner in which the RIAA has pursued it, runs counter to the business interests of every single label represented by this organization.
Hurting the Industry or Changing the Paradigm?
As Smiling Jack noted in his excellent piece, online media measurement company Big Champagne reported roughly 3.8 million users of P2P networks in August of 2003. By June of 2005 that number increased to 8.8 million and a year later to over 10 million. The RIAA has, since the advent of file-sharing software, consistently blamed figures like these for the downward trend in album sales in the U.S. (though with such increases one must wonder whether the lawsuits are having any effect, or if they’re perhaps a sad attempt to recoup lost income in the form of court settlements) but a study conducted by the Harvard Business School regarding file sharing stated:
We find that file sharing has no statistically significant effect on purchases of the average album in our sample. Moreover, the estimates are of rather modest size when compared to the drastic reduction in sales in the music industry. At most, file sharing can explain a tiny fraction of this decline. This result is plausible given that movies, software, and video games are actively downloaded, and yet these industries have continued to grow since the advent of file sharing.
After a quick look at music sales numbers from 2007 an alternate theory emerges. According to that report, physical CD sales dropped 15% from 2006 while sales of digital tracks increased by 43%. Additionally, total music sales including albums, singles, digital tracks and music videos increased by 14%. Clearly, people are buying music, and buying it in increasing amounts. Is it possible that album sales are suffering in a marketplace that allows single track legal downloads (with a black market allowing free acquisition of the product) because people are no longer willing to pay full album price for a record half full of chart singles and half full of filler?
Given a choice, most music consumers will pay for something that they like, and something that they value. For the last several years, however, major record labels have made a habit of foisting half-finished “albums” on consumers for ever-increasing prices consisting of a few radio hits and several throwaway songs. When listeners have the option of paying less just for the songs they like, of course they will take it. If the major labels want to see increases in their album sales, they need to start investing in the album again. A record that is solid front-to-back is not an outrageous request, especially for a consumer who is being asked in many cases to shell out $16+ for a piece of plastic with some cover art.
The Power of Viral Distribution
It’s a generally accepted fact that small bands benefit from file sharing, legal or otherwise. Indeed, this philosophy predates the Internet. The hip-hop community has a long-standing tradition of making mix-tapes of different acts and selling these tapes on the street. Street-famous mix-makers soon became able to break acts just by including them on their mixes. This avenue of marketing was so successful that the major labels recently tried to usurp it (without much success) by making official, licensed, versions of such mixes.
Further, what audiophillic child of the 80s hasn’t taped a favorite song from the radio, or dubbed copies of favorite albums to give to friends? These actions serve to increase exposure of bands, and while it doesn’t translate to immediate revenue it can, and often does, lead to later sales in the form of not only albums, but also ticket sales and merchandise.
The exposure unsigned and independent acts receive from a viral model in this digital age is enormous. Fans that a small act might never dream of reaching in an analog world are able to listen to music instantly; without waiting for a record store to stock it, without waiting for radio to play it, without waiting for the band to finally play a club within driving distance of the fan’s home. Anyone with an Internet connection and some spare time can find an infinitely deep pool of new music waiting to be heard, and bands without easy access to mainstream distribution channels are finally given a chance to flourish.
While these distribution systems have traditionally worked best and most noticeably for small acts, there is no real reason to believe that large, major label artists cannot (and have not) benefit from these channels. In this day and age users are not willing to buy a product that they have not heard, and with the advent of both file-sharing and single-track music purchases they are even less willing than in the past to pay for 10 songs only to enjoy 4 or 5.
Utilizing New Media
In 2007 Talib Kweli, one of the premier names in modern hip-hop, was set to release his fourth studio album, Eardrum. Before this came out, however, he cut another album, Liberation, with famed hip-hop producer Madlib, and this album was released completely free for download from Rappcats.com, and both artists’ Myspace pages. The goal was to create demand for Eardrums which came out later that year.
Critically acclaimed hip-hop duo Atmosphere followed suit this year. In advance of their forthcoming studio album When Life Gives You Lemons, You Paint That Shit Gold the pair released Strictly Leakage complete free on their Web site.
Last year, around the one year anniversary of their sophomore effort Dog Problems, The Format planned to go on another U.S. tour. Leading up to this set of shows, however, the band released the album on its Web site completely free of charge. At last fall’s CMJ Music Festival Nettwerk Music Group manager Tom Gates reported that the band sold out every single date on the ensuing tour.
Rock and roll icon Radiohead released its latest record In Rainbows online, prompting downloaders to pay whatever they felt like for the album. Three months later they rolled out the CD and vinyl versions which, despite three months of download both from their site and from peer-to-peer networks, continued to sell very well in the U.S. and reached the top of the UK sales charts in its first week despite the fact that 48% of U.K. downloaders of the record paid for it (40% of their U.S. counterparts paid for the download according to the same report.)
The point of these examples being that it’s possible to leverage digital distribution models to spur on business. Downloads can be used to make money for a band despite the apparentl “loss” of a CD sale (though many downloaders claim to still be avid purchasers of physical media.) The rub, of course, is the quality of the music. Consumers at large might pay twice to have an early copy and then a vinyl copy of In Rainbows but they will be hard pressed to buy even one copy of Britney Spears’ Greatest Hits.
The RIAA has proven that it has the ability to sue anybody for whom it can obtain an IP address, and the courts have thus far upheld the group’s right to do so. The main reason it’s so far given to continue this course of action, however, has so far been “because we can.” While it may be illegal, the exposure even large bands can get for their music can serve to drive not only further record sales, but sales of merchandise and concert tickets. Additionally, the phenomenon of online file-sharing and the technology it is based on is a well of limitless possibility when it comes to generating listeners and profit. Instead of paying the RIAA to waste time suing end users and potential customers, the Big Four should be thinking of ways to leverage the technology of the day in imaginative ways to benefit themselves and their artists.
Given the bump in exposure from a successful viral campaign, and the rate of growth of file sharing despite continued lawsuits, every time I see another blurb about the RIAA I have to think, “What’s the Big Deal with Music Piracy?”
© Eric Atienza 2008 for Listen In. Some rights reserved.
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