Fightback or death-rattle?
The Economist recently published an article about the music industry's recent practice of launching lawsuits against folks who download music illegally, titled "Fightback or death-rattle?" (31 March 2004). I've posted the interesting bits below for your convenience.
The Economist: The recording industry has launched a wave of lawsuits outside America in a bid to curb illegal file-sharing on the internet, which has contributed to a steep decline in music sales. The industry is cutting costs, consolidating and—finally—getting to grips with legal online distribution.
DESPITE a wave of hostile publicity, the 1,500-plus lawsuits launched by the music industry in America since last September seem to have had some success. Final figures for 2003 have yet to be released, but preliminary estimates suggest that the decline that has seen worldwide music sales fall by more than a fifth in the past four years (see chart) was arrested in the second half of last year in America. Heartened by this, the industry’s lawyers launched a second wave of lawsuits—this time in Canada, Denmark, Germany and Italy—on Tuesday March 30th.
None of these actions has done anything to change the public's view of the music industry as one that gouges its customers. One reason that the illegal sharing of music files online is still so widespread is that music-lovers know how little of the price of a compact disc goes on its manufacture, or to the artist. Musicians, too, are becoming fed up. In an interview with BBC radio at the weekend, Simply Red’s Mick Hucknall described recording contracts as an “absolute disgrace” which belonged to “a Dickensian era”. He was particularly annoyed that musicians pay for recordings, but the music companies retain the rights to these. He suggested that this “immoral” system be replaced by a leasing type of arrangement, in which the artist gets control of the music once his relationship with the record label ends. Mr Hucknall has set up his own company and plans to re-record old output and release it in competition with existing recordings. Another pop star, George Michael, has said he will release his songs free on the internet, to remove himself from “all that negativity” surrounding the pressure to produce new records that comes from major labels.
When it comes to the internet, the music companies have, after years of burying their heads in the sand, finally got the message. The industry has at last given its backing to online music stores, such as Apple Computer’s iTunes and Roxio’s Napster 2.0 (not to be confused with the company killed off by the music industry for aiding illegal downloads). Even so, the number of 99-cent tracks sold by these companies remains dwarfed by the free downloads still available using the likes of KaZaA and Grokster. The industry has failed to shut down file-sharing companies whose peer-to-peer software has legitimate applications. However, behind the scenes the big labels are understood to be in talks with these pirates, to see if they can agree on a way to extract payments for songs.
Despite the industry’s official optimism about its legal strategy, it has limitations. Even after lowering the bar to go after those who have shared hundreds of songs—rather than thousands—the big labels have still sued less than 0.1% of illegal file-sharers; the lawsuits have made many of the others think twice before downloading illegal music, but plenty have continued regardless. Moreover, the strategy has created public-relations problems, exacerbating the public view of the industry as rapacious.
Meanwhile, there are signs that the industry is looking at more imaginative ways to arrest the decline in music sales. Universal Music and Sony Music are both working with their stars to remix songs into shorter versions, up to two minutes long, that can be sold through mobile phones. A.T. Kearney, a consultancy, reckons this market could account for almost a third of all music sales by 2006 if it is priced attractively. There’s the rub: songs on handsets are currently being sold for a pricey $4.50 a time in Britain and $3 in Germany. Anyone for illegal ringtones?
Posted by matt at April 1, 2004 01:48 PM