Illegal downloading – A threat or an opportunity?

As mentioned in my previous blog post, the emergence of the internet and the mp3 file format has led to a huge change in distribution and consumption in the world’s music market. Not surprisingly, the CD industries are now facing a crisis: global CD sales are decreasing significantly each year. According to data collected by the International Federation of the Phonographic Industry (IFPI), CD sales have been constantly declining since 2000 (there has been a drop of 60% in US CD sales compared to the US’s best year) whereas the global digital market has been expanding the size of its market.

However, with the growing size of the digital market, a new challenge for the digital music market has arisen: illegal downloading. Although illegal music downloading has been widely criticised as immoral, many people around the world still use peer to peer (P2P) services such as BitTorrent and Kazaa to download music. People nowadays also try to legitimise illegal downloading by euphemistically calling it ‘sharing’ in an attempt to escape from a sense of guilt. (see picture 1)

Picture 1 Source: Duffy.T.G

The Recording Industry Association of American (RIAA) describes illegal music downloading as a major threat to the world’s music industries.

‘The Global music piracy causes $12.5 billion of economic losses every year, 71,060 U.S. jobs lost, a loss of $2.7 billion in workers’ earnings, and a loss of $422 million in tax revenues, $291 million in personal income tax and $131 million in lost corporate income and production taxes.’

The RIAA also highlights the fact that illegal music downloading not only drives the artists and record companies into a tight corner but also threatens the livelihood of less represented employees in the music industry, such as sound engineers.

While the CD industries are blaming file sharing for a drop in CD sales, some researchers have come up with a controversial argument in defence of illegal downloading.  According to Aram Sinnereich, a senior analyst at Jupiter Research in New York where he manages the unit related to digital music and communication policy, illegal music downloading, contrary to popular belief, boosts music sales.

‘It is safe to say that active usage of online music content is one of the best predictors of increased consumer purchasing… Music sellers should devote their limited resources to online marketing and distribution – rather than eradicating the phantom threat of file sharing – if they truly wish to stanch the blood flow and turn the music market around… About 34 percent of “experienced file sharers”, or those who have used file-trading networks for more than six months, say they now buy more music.’

The debate on the positive and negative impacts of illegal downloading remains contentious among the world’s music industries. One thing is sure – even if illegal downloading is proven to boost music sales, it is still an unethical behaviour as it ignores and steals the endeavours of not only the musicians but the workers supporting the music industry as well.

In my next post, I will be discussing the main causes of the recession in the music industry other than the issue of online sharing.

References

Borland. J (2002) ‘Study: File Sharing boosts music sale’, accessed on 20th of August <http://news.cnet.com/Study-File-sharing-boosts-music-sales/2100-1023_3-898813.html>

Recording Industry Association of American (2010) ‘How much money does the recording industry lose from piracy?’, accessed on 20th of August <http://www.riaa.net/faq.php>

Sinnreich. A (unknown) ‘profile of Aram Sinnreich’ , accessed on 19th of August <http://www.radarresearch.com/aram/>

Tschmuck. P (2010) ‘Music Business Research- the recession in music industry’, accessed on 13th of August <http://musicbusinessresearch.wordpress.com/2010/03/29/the-recession-in-the-music-industry-a-cause-analysis/>

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