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Thursday, June 23, 2011

The Music Industry-- the Free Download Problem

By Diane Shubinsky


Baseball is the favorite game of many Americans. Its popularity is clear when the expressions used in this game - three strikes - are employed in a totally different field: the legal system. In America the law known as the Three Strikes Law means that any person who has broken the law three times will be given a stricter penalty. The influence of American culture on society is also clear when the phrase is picked up by other countries and applied to other contexts. In France the Three Strikes Law relates very particularly to electronic stealing which is also termed electronic piracy. Should anyone be caught downloading material illegally from the Internet three times then the punishment will be that further access to the internet will be impeded.

The bill, which is also known as HADOPI, an acronym for the High Authority for Copyright Protection and Dissemination of Works on the Internet, is extremely controversial. The European Union (EU) has declared that access to the Internet is a fundamental human right and therefore this law is, paradoxically, illegal. But apart from all the legal wrangling that is taking place, there is an even greater irony. HADOPI brought out a new logo to make the public aware of what they were doing. Unfortunately they used a font that had been created by France Telecom exclusively for their use. In other words, they were guilty of electronic piracy! The fact that a government agency that was established to prevent this phenomenon inadvertently committed the crime they were fighting, demonstrates how problematic it is to control electronic theft - something that the music industry has discovered to its cost.

Greed is classified as one of the seven deadly sins and it is certainly one that the music industry is suffering from. Were the cost of DVDs more reasonable then people would be prepared to buy them rather than circumvent the law and download them for free. In 2009 the book, "Appetite for Self-Destruction: The Spectacular Crash of the Record Industry in the Digital Age" by Steve Knopper expounds on the problems that beset the music industry. Knopper describes how the music industry's business model is obsolete since it is not geared to fit the new electronic era. He illustrates this claim with the story of Napster. This site, which flourished between the 1999-2001, was originally peer-to-peer file sharing music service. However, when the music industry saw its profits being reduced by this competition it sued Napster and succeeded in terminating the site. The fact that 26 million people used Napster should have told the record industry something. And their inability to see the significance of these figures and negotiate with Napster was the start of their own destruction.

The new technology that developed from 2001 brought about a whole new reality. First there was the iPod, shortly afterwards MP3 players, and then you could upload your music files into your mobile phones. All these new electronic gadgets meant that it was impossible for the music industry to retain control over their products. Dr. Michael Bull of Sussex University in Britain researched the influence of the iPod on the market, and came to the conclusion that most people are prepared to buy the equipment - that is the iPod or MP3 player - but not the music. As a result they end up downloading the music illegally. In 2006 Steve Jobs, the founder of Apple who produce iPods and created iTunes, said in an interview with Newsweek that the most effective manner in which to deal with electronic piracy is to offer the same or a better product at a reasonable price. Knopper made a similar claim saying that if the music industry would make their products more affordable then the legal alternative could compete with the illegal route most people take.

In 2000 the music industry sold $14 billion worth of goods. In 2008 the sales were $10 billion. While these sums are still large it is hardly surprising that the music industry is both unhappy and worried. Yet despite the decline of the industry, the singer and musicians are doing quite well. Many musicians are choosing to embrace the new reality and upload their music onto MySpace Music or other similar Internet sites. As a result their followers, who understand these people have to make a livelihood, are showing their appreciation of reasonably priced music and paying the $10 to download rather than going in for electronic piracy. The problem for the record companies is that they do not receive any of this money. In other words the musicians and their admirers have found a way of cutting out the middle men who in the past were the ones who reaped the vast profits.

Thus the problem for the music industry is their inability to find a niche in this electronic world. If it continues to try and implement, sometimes by force, the antiquated system that existed in the pre-Internet days, they will clearly get nowhere. They have to adjust to new times. The irony is that the music industry would be amused if anyone suggested Mozart should be in the pop charts of the 21st century, even though he was a big hit in the eighteenth century. So in the same way they cannot continue to employ outdated business methods in a new period. And just as music styles change so to do commercial rules, and they have to learn how to rock the present boat and roll with the new electronic times.




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