IFPI Digital Music Report 2010 Chimes in on Future of Music Industry

Lawrence Schwartz is a first year JD candidate at Osgoode Hall Law School and currently enrolled in the course Law & Social Change: Law & Music, in Winter 2011. As part of the course requirements, students are asked to write a blog on a topic of their choice.

IFPI has published its Digital Music Report 2010: revenues from digital downloads have only increased 6%, while overall music market revenues dropped 8%.  The music industry is hurting to find new streams of revenue.

It is apparent from the Report that the music industry continues to engage in a battle with the digital environment. From illegal piracy to digital download sales hitting a plateau, where does the industry find new revenue streams to keep afloat in a new evolving area of accessing music?

The global economy continues to hurt, but this cannot be the main reason for the drop in sales. The impact of counterfeits and piracy are at uncontrollable levels. In 2009, 95% of music downloads were pirated. In the UK alone, £190 million came from the pockets of the record industry. Regardless of the economy’s health, the music industry needs to continue to lobby for better copyright and anti-piracy laws or the industry will continue to fade away.

Tougher laws in countries like South Korea and France suggest ways of curbing the piracy epidemic. The laws have affected internet users that were pirating any copyrighted material on their computer by suspending their access to the internet. This recent develop has arguably sparked an increase in legal digital downloads and music giants like Universal Records, for example, have returned to South Korea to search for new music acts.

The legal victories have created hope for an industry that has been wounded during an ongoing battle with the pirates which have illegally downloaded and distributed millions of digital tracks. Music executives add that internet providers are the gatekeepers in helping with this battle by policing internet users.

Legal solutions for helping to combat illegal downloading have helped some of the revenue problems for the music industry on the business side, but artists are still hurting. What other types of streams for royalties can be obtained? The business model of the industry is changing. Music executives have adjusted to new ways of monetizing new streams of royalties from digital, but are artists getting left behind and in the dark? Is there potential in legislative reform that can help the artist?

While artists are getting hurt by copyright infringement, copyright reform in Canada under Bill C-32, which is designed to modernize the Copyright Act arguably does not aid in the creation of new revenue sources for artists.  Political wrangling is often an obstacle to progress; we must look towards a more pragmatic and innovative way for generating cash flow for these artists.

  1. I don’t see how tightening anti-piracy laws can make any difference to the burgeoning problem of illegal downloading. I also think that the record companies know this so have been changing their business models.

    For starters, so many people have a wireless internet connection these days which can so easily be hacked into, thus, proving the culprit is almost impossible. Regardless, the problem is so widespread, the money spent in legal costs just isn’t viable – they can’t prosecute everybody.

    What needs to happen is that music listeners need to change their attitude. Presently, there is little guilt felt by illegal downloaders, and hardly any of them consider their activities illegal. The only way to stop people downloading illegally is to stop producing the music from the artists they love – and that will never happen.

    Eventually, music is going to be free and the music industry will make their money on concert tickets and merchandise sales alone. It is already happening with services like Spotify becoming increasingly popular.

    One website that tries to prick the conscience of illegal downloaders is http://www.fairsharemusic.com. This site promises to donate 50% of its profits to a charity of the user’s choice. The idea of ‘altruistic buying’ will appeal to some, I’m sure, though it doesn’t change the fact that most people are looking for free music. If you check Google global searches, the word ‘free’ is prominent in music and download searches, whereas the word ‘buy’ is relatively rare.

    It will be interesting to see what the music industry looks like in 5 years, but in terms of dealing with piracy they are fighting a losing battle.

  2. As long as morals and ethics are not part of the Internet mindset, continuing piracy will take place.

    Also, he is right in stating that you cannot charge everyone.

  3. The National Post last week released an interesting article which suggests an interesting solution to the idea of anti – piracy laws. Take a look what the Canadian Songwriters Association of Canada is proposing.
    It will be a difficult task changing the mentality of the consumer. The internet unfortunately helps with fueling this mentality of thinking “free” rather than “buy”. A consumer license for file sharing would hopefully prevent the growth of privacy if the file sharing proposal would allow users to share files rather than illegally downloading them.

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