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Column: In era of downloading, music industry must adapt or die

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RANNY MA
Gargoyle staff reporter
Posted Thursday, May 31, 2007
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THERE IS A controversial “problem” today in the music industry that concerns us all: illegal downloads.

In 2006, college students alone were responsible for 1.3 billion illegal music downloads off the Internet and into their iPods and elsewhere. This, in turn, hurts the music industry drastically. This causes the Recording Industry Association of America and numerous other organizations to crack down on individuals in the hopes of eradicating illegal downloads.

However, I believe that they are heading down the wrong path. In order to stop the growing trend, the RIAA must realize that downloaders are not the problem; technology and the industry are.

The industry must realize that it is time to adapt or take a huge economic hit.

Ten years ago, how did people listen to music? If you wanted the brand new Kanye West album (assuming he had one 10 years ago), you would drive yourself to Best Buy, locate the CD, pay $15, and finally drive back. You would take meticulous care of the CD so it wouldn't scratch after two months.

Despite all this hassle, you were generally happy with the process because that was all technology could provide. No way could you have imagined that within a couple of years you would be able to store 100 times more music on a thing called the iPod while screwing the music industry over.

Fast forward to the current day. Technology has provided a more efficient and, more importantly, a cheaper way to listen to music.

Now if you want the next Kanye West album, all you have to do is download the MP3 files off of the Internet for free using a program like LimeWire.

Then you store the files into your iPod so you can enjoy the music over and over again without worries. You just got an album without even getting out of your house. Technology has simplified the process of getting and listening to your music.

I would say that 94 out of 100 people would go with the more efficient way of getting music, which is something the RIAA and the music industry do not understand. They still expect the majority of people to go out and pay for their music, which might happen if we lived in a perfect world — or if we made a time machine and went back to prevent the creation of the Internet.

In response, the RIAA has been trying to bully college students with its legal gibberish.

The truth is that there is absolutely no way that the RIAA and its allies can win this fight unless they find every single person in the United States who has illegally downloaded music and charge them with a hefty fine.

We all know that this will never happen, and by attempting to do this, the RIAA and others organizations are seen as bad people. This is analogous to your snobby fifth-grade hall monitor trying to catch everyone who is running in the hallway. Annoying, isn't it?

Instead of picking off innocent college students, the music industry and anti-piracy organizations should be collaborating with the general public in creating some system that benefits everyone. Instead of dreading online downloads, they could be using that infrastructure to expand the music industry.

They have only hit the tip of the iceberg; all that is necessary is some collaborative effort by both sides.

Right now, the fastest, easiest way to download music legally is through iTunes. However, you have to pay 99 cents per song. That may not seem like a lot at first, but good luck finding the money to buy up to 1,000 songs.

There are certainly other music providers online, but you have to pay for all of them. To make things worse, some files are not compatible with your computer or your MP3 player as of now (although that's changing).

The bottom line is that the system is too fragmented. Apple, Microsoft, music labels, and major music companies should come together and find the best way to serve the public.

Why not create one legal music provider online that is available to everyone? Use the Internet to mass distribute the music for free, and soon you will have a precious place for third-party advertisers.

This has worked for Google, so with a little tinkering this may work for the music industry as well. That is only a rough idea, and I am not the one getting paid millions to come up with these kinds of ideas. If the record companies wanted to, they could definitely make something work.

What I am saying is that the music industry has the resources and everything else needed to make a dramatic change in the way we listen to music. Instead of trying to prevent the inevitable, industry executives should use technology in their favor.

We have moved forward with the technology available to us now, so the RIAA and others should stop living in the past and start adapting to the new realities.


RELATED

— Los Angeles Times: CD or not CD?

— Ars Technica: Despite revenue slump, RIAA still not getting the big picture

Comments

The reason Google is able to offer so many services for free is because the services they offer don't have a huge operating cost. So, yes, they have to pay employees to code the software, deal with customer support, pay for servers and hardware, and pay for all of things that any company pays for, but think about the cost of emails being sent. While most companies business model is to maximize the profit margin by charing a premium on a services that doesn't cost them a lot, Google's business model is to offer the services for free and generate money from advertising. Would this work for music? Doubtful. Because of the RIAA, music is expensive, and a service such as free music couldn't be offered without many restrictions and heavy advertising. I don't know about you, but I hate the radio because of the restriction and all of the advertisements. I'd rather pay a few dollars more for an ad-free book than buy a cheaper book that has ads on every page. Advertising is becoming a major turn off because of the way it is flaunted around these days. Even paid subscriptions to unlimited music with no advertisements are not popular. People want to OWN their music, not rent it. Numerous studies have shown that illegal music downloading actually increases sales. First, it generates interest in new and lesser known artists. Second, it allows people to try things at no cost or risk. Third, it increases the volume and diversity of music people are exposed to. Fourth, it makes people more likely to legally purchase the same song they illegally downloaded for higher quality and to support the artists. And finally, it increases sales in merchandising and concerts for artists. A recent study also shows that the people that illegally download music actually purchase more music legally than those who do not illegally download music. Music sales actually did drop circa 2000, but this wasn't due to the rising tide of P2P networks, it was due to the fact that the entire economy took a downturn. In fact, in the last few fiscal quarters, music sales have increased despite the increase in illegal music downloading. The RIAA is also realizing this, albeit slowly. Previously the RIAA said that illegal music downloads were entirely responsible for the downturn in music sales. Now, the RIAA says that file sharing is, "one factor, along with economic conditions and competing forms of entertainment that is displacing legitimate sales." Another reason, for instance, people weren't buying CDs, is because they were too busy buying DVDs instead. By the time the DVD transition period was over, legal internet music purchases had grown in market share, replacing the lost revenue from CD purchases. I refer you to this study: "The Effect of File Sharing on Record Sales: An Empirical Analysis" by Felix Oberholzer-Gee and Koleman Strumpf in the Journal of Political Economy. According to the study, the effect of file sharing on music sales is no more than 0.7% If the music industry really wanted to increase sales, they would give customers what they really want: high-quality DRM free music.

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