The Music Industry and File Sharing

In today's technological age, music is readily available for anyone who wants it over the Internet. Peer-to-Peer file sharing programs such as Kazaa, Limewire, or Gnutella offer free music downloads. As technology increases, record sales decrease; the cause being internet file sharing. This wave of internet music downloading began with Napster in 1999. Since then, the file sharing network grew and grew and many people, particularly teenagers, stopped buying CD's altogether. This caused some problems with the recording industry, claiming they lose billions of dollars annually from potential record sales lost due to internet file sharing. File sharing, although convenient, fast, free, and easy, is still considered stealing and is therefore illegal.

How come then, people don't think of the illegality of downloading music when they're doing it? Simply put, there's no reason to. There's virtually no way of getting caught, and it's much faster than going to a store and buying the music. Also, people have this mentality that the record executives and producers have enough money already, that they really aren't losing anything when they download music, and that they can get over losing a couple bucks. Carey Sherman, president of the Recording Industry Association of America (RIAA), however, does not accept that as a reason. "Tell that to the thousands of people who have been laid off, tell that to the thousands of records stores that have been closed, tell that to the artists who aren't getting signed", says Sherman in the Chronical.

The creation of iTunes, Apple's online music store, in April 2003, was one answer from the music industry to the influx of online file sharing. Charging 99 cents a song, iTunes gives users a cheaper alternative to buying CD's. Why buy a whole album if there are only one or two songs worthwhile? This is one reason for iTunes success, which, after only its first summer, sold over three million songs.

A study done by one of the majors of the music industry indicated that between two-thirds and three-quarters of the drop in record sales had nothing to do with internet piracy. So what could be the problem then? One reason could be that the public is less excited with many of the new acts, causing a decline in CD sales. Although no one knows exactly, shrinking retail space, rising physical CD piracy, other media competition, and the creativity and quality of music all seem to be reasonable explanations. Creative and innovative music undoubtedly plays a key role in keeping the public's interest in new music. Many new artists seem to be carbon copies of older bands. The record industry, in my opinion, signs these bands to release a hit single or two, make a quick profit, and then move onto the next one hit wonders. Tom Calderone, executive vice-president of music and talent for MTV, Viacom's music channel stated, "The days of watching a band develop slowly over time with live performances are over." This is true in many aspects. Many recent bands have toured less and quickly faded from the limelight.

Most of today's music is aimed at teenagers, the age group which is most likely to download music from the internet. This is one reason why the music industry cannot continue to release acts that have only a few good songs and limited success. Music industry executives, however, could argue that it does not matter if a band doesn't sell well tomorrow, as long as they sell well today. This mentality may cause a problem for the industry in the future. Back-catalogue albums earn the industry three-quarters of its profits. If the industry continues to rely on one-hit wonders and stops building catalogues, they could be in for a rough period.

There are signs, however, that the music industry is in fact addressing the issue. Universal Music and Warner Music are both experimenting by starting up units to help new independent artists on independent labels. Many independent labels, however, are gunning against the industry because it is making it more difficult for them to get airplay and shelf space.

Even if big firms can support their positions in recorded music, they still might find themselves sitting on the backburner. For only their part of the music business is on the decline: live touring and sponsorship are big earners for artists, and, the music industry does not share in the profits from either of those two. Many artists have a contract with their record label that they only share in record sales, which goes back to the problem of internet piracy and declining record sales.

In the meantime, the music industry is plotting to go digital and move all their albums to the internet. It is still unclear, however, what a successful business model for selling music over the internet would consist of. Many people continue to buy singles off of iTunes, for example, opposed to full albums. If this problem persists it could mean two things. For one, it could encourage the music industry to make albums of a more creative, consistent quality, since, the industry stands to make more money off of a full album bought than a couple of singles. Secondly, it could mean the concept of an album would fade if the industry fails to revamp their quality of music.

It's tough to tell exactly where the music industry will be in the future. They show signs of improvement from recent years of music that has lacked in originality and ingenuity. The gap between the industry and piracy has definitely narrowed over the past years, starting with the RIAA filed lawsuits and continuing with the influx of online music stores such as: iTunes, Napster, and Rhapsody. There's still much more needed to be done by the industry - both creatively and technologically - if they want to remain on top in the next decade, and that's something they have failed to do in past years.

Sources
Economist. 28 Oct. 2004. The Economic Newspaper Limited.
18 Sep. 2006
http://www.economist.com/displaystory.cfm?story_id=3329169

Imhorst, Christian. "The Lost Generation of the Music Industry." Wordpress 17 Nov. 2004
http://www.imhorst.net/?page_id=21