Music Industry Thriving In an Era of File Sharing

levicivita notes ZeroPaid coverage of a recent study by the UK music industry's own economist showing that overall UK music industry revenues were up in 2008 (study, PDF). The study is titled "Adding up the Music Industry for 2008" and it was authored by Will Page, who is the Chief Economist at PRS for Music, a UK-based royalty collecting group for music writers, composers, and publishers. From ZeroPaid: "[T]he music industry is growing increasingly diverse as music fans enjoy a wide range of platforms to hear and consume music. Sales of recorded music fell 6% for example, digital was up 50% while physical dropped 10%, but concert ticket sales grew by 13%. In terms of what consumers spent on music as a whole last year, this surprisingly grew by 3%."

Long story short...

[KneelBeforeZod]

The money flow is going the way it should. More about the artists and less about the publishers. And at better prices. To gain recognition, artists aren't required to sign away all their rights to a giant publisher anymore.

Where the profit goes.

[Repossessed]

Ticket sale money doesn't line the same pockets as CD sale money (for one, the artist gets a cut).

AGAIN?

[PerZon]

From what I remember, the same increase was seen throughout the industry when Napster was at its peak.

The industry should be thankful for being able to reach a larger audience without having to pay the giant advertising costs!

To hear the accountants tell it

[symbolset]

An album hasn't turned a profit in twenty years. Otherwise they would have to pay royalties to the artists, which would ruin their business model.

Re:Where the profit goes.

[PerZon]

When you can fit a million people into a concert then you can compare figures. Its good to see artists sweat n work for their millions. Almost anyone can spend a week in front of a modern PC and bang up a reasonably audible production.

The Money is going into the wrong pockets

[defireman]

The RIAA et al. is screaming about piracy not because money is not lining into pockets. The money is only being lined into the wrong pockets, and they don't like it.

Executives only exists to protect themselves. The facts don't lie.

File-sharing has dropped in the UK

[bonch]

I like how both the article and the Slashdot submission completely ignore that file-sharing has dropped in the UK [arstechnica.com], especially among teens. Though I know this was posted on Slashdot to give pro-pirates the idea that sales are thriving in spite of piracy, this story doesn't disprove the effect piracy has on sales--if anything, it bolsters the idea that sales go up when piracy goes down.

Re:What's the Cause?

[Opportunist]

My guess is that the kids just got smarter. You don't brag about filesharing anymore. No matter how much a study is allegedly "anonymous".

Re:To hear the accountants tell it

[Hammer]

Now would that be the same people who raised the price when the CD came "to pay off the investment"?
When independent economists calculated the price of a CD, on the shelf in the store, being ~10 cents less than the LP. That included paying off investment in 5 years...
Or is it the people who said that the prices would drop as soon as the market grew?
I am still waiting for the CD market to take off so the prices will drop ;-)
Or are we talking the guys who manage to set the price of a soundtrack CD higher than the movie DVD?

Re:What's the Cause?

[Draek]

So you're saying that, when illegal file-sharing dropped, so did actual sales?

Re:File-sharing has dropped in the UK

[sortius_nod]

I don't know about that one.

You're ignoring that there are better content delivery systems these days. Years ago you almost NEEDED to pirate if you wanted a digital copy (especially if you weren't a techie), these days you can buy from many online stores, DRMed or DRM free.

I'd say you're putting the cart before the horse. Piracy has dropped because there's more choice for legal avenues. It's not that pirates have been busted therefore buy more legit downloads.

Re:File-sharing has dropped in the UK

[Anonymous Coward]

Right, because I drive to the next city, find the store in the maze there and then, in the store, rummage through 248342 CDs to find the one I want. All the while someone is towing my car because one can't park that long in one spot. The store clerk then looks at me and pulls a price out of his ass.

Yeah, right.

Granted, Amazon does that better nowadays. But then it will take days to arrive, by which time I forgot all about it.

Piracy doesn't affect the economy

[KarlIsNotMyName]

All money that's not spent on what is supposedly downloaded instead (rather than in addition to), is still there to be spent on other things. Other media, even.

Performance - not sales

[DomHawken]

The PRS is the '_Performing_ Rights Society'. As the article says - 'Consumers spent less on recorded music, down 6% since 2007, but concert ticket sales have grown by some 13% as the industry as whole slowly evolves and adapts to digital distribution.'. They collect royalties for performances, not physical sales of CDs, or royalties from downloads, which are collected in the main by the MCPS (Mechanical Copyright Protection Service). The music industry in terms of the main labels remains slow to adapt, and the ridiculously high percentages charged by download services like iTunes (50% for smaller labels/bands in the UK, plus another 10% to go through a broker if they refuse to deal direct) means that bands are forced to play live as the only sensible source of income.

Re:File-sharing has dropped in the UK

[selven]

Slashdot (or at least the segment you are referring to) is not trying to increase piracy, it's trying to reduce copyright, and one of the desired reductions is to make personal file sharing legal. If the artists are doing fine without the draconian laws some people are proposing then it supports the (Slashdot-approved) idea that we do not need those laws.

Re:Well Good

[Andy_R]

The reason that the big record labels perpetuate the myth that new artists need to be 'funded' is so they can perpetuate the closed ecosystem where artists can't reach the public without signing away 90 to 100% of the profits to them. This is the real reason why the music industry are willing to make payola payments to distribute songs for free on the radio, but are fighting against the free advertising of their product by filesharing, although both forms of advertising generate sales - it's because they can monopolise the airwaves but they can't do the same with P2P. It's all about artificial barriers to entering the market.

Apple don't lose money on iTunes, they make a HUGE profit. They take 29 cents per 99 cent song, and have sold over 6 billion songs, do the math!

Not much variety in music? Go count the number of artists on iTunes, Mr Troll.

Re:File-sharing has dropped in the UK

[Andy_R]

The RIAA labels are well aware that file sharing is free advertising and it increases sales, the reason they are against it is that it breaks the monopoly on exposure that the RIAA labels had. Being able to try before you buy via P2P allows people to discover great self-promoted and small label music without making expensive 'stab in the dark' purchases. This means that although file-sharers spend on music is higher, the amount that ends up in the pockets of the RIAA labels is lower.

Re:To hear the accountants tell it

[sjames]

So, then why does the movie soundtrack on CD cost more than the movie itself (soundtrack and all) on DVD?

As for the cost of CD vs. LP, during the time period when both were released at the same time and the CD cost more to buy, it cost less to make. That's not inflation.

There's been an explosion in audio technology that if used to full advantage should have halved the recording cost by now.

It's not about sales, it's about control

[mookiemu]

I still contend that 90% of all illegal downloads comes from people who weren't going to buy the music anyway. The problem for the music industry is that piracy opens the world up to a larger variety of music. As a result, it's almost impossible for the industry to dictate the music trends. In this modern world it's much harder for the industry to ram "She Bangs, She Bangs!" down our throat. My cousin was so happy when he got a six record deal ten years ago. Then they promptly shelved him for the duration of his contract. Turns out my cousin sounded too much like their cash cow, Marc Anthony. These shenanigans happen all the time. In 1998 the record company shelved Chuck D, stating that market research showed that no one was interested in Public Enemy anymore. So he circumvented the record company by releasing the album on mp3.com and it went on to become, up to that point, the most downloaded album of all time. though he lost the battle with the record company, he was able to, thanks to digital downloads, rub egg in the face of the label execs. What the record labels are most afraid of is not piracy, it's the fact the digital era and the internet is going to render their services obsolete. Who needs a record company when you have the internet? The recording industry needs embrace piracy and re-adapt their business model to one that embraces the advantages created by piracy. As this article clearly shows, though album sales are down, concert sales are way up, and so are sales of paraphenilia. If you don't think the piracy model can't make money, then take a look at the Grateful Dead. They asked their fans to pirate their songs and to make bootleg tapes and distribute them freely. Then they went on to make a fortune on sold out concerts, t-shirts, books, magazines, etc.. They became the highest grossing act of their time! One last thing, another reason for more sales is that now you can buy your music unencumbered. That's major. DRM is terrible in that it severely inconveniences those who are trying to do the right thing. Meanwhile, the people using pirated goods have the freedom to play their music anywhere and on any machine or gadget they want to.

Re:Just imagine...

[Tono_Fyr]

I think that your problem here is that you listen to bad music, rather than that CDs follow that pattern.

I have well over 250 CDs, and I enjoy almost all of them from start to finish, and my list grows larger every month. I contend that the problem isn't with music at large, but with your devouring of what the radio shovels into you.

Re:Just imagine...

[Tono_Fyr]

Well, perhaps if you don't like most songs by your favorite artists, then maybe they're not your favorite artists. Or perhaps they're not worthwhile as musicians. If they can only write one or two good songs every 10 or 15, how could one call them "good" at what they do? If a chef could only make one good meal every 10, no one would call him a good chef, would they? Or a computer company that only manages one good OS every 15.

Also, you're really overreacting, for the record.

Re:File-sharing has dropped in the UK

[Anonymous Coward]

... if anything, it bolsters the idea that sales go up when piracy goes down.

I don't know about that one.

... Piracy has dropped because there's more choice for legal avenues. It's not that pirates have been busted therefore buy more legit downloads.

Taken all together, sales go up when "piracy" goes down, and it was that swappers that forced an intelligent, sales friendly market into being - by requiring publishers to see that prohibitive pricing, bizarre "rental" offers and DRM were hurting sales (or at least forcing them to compete with file sharing to get customers back). The path of least resistance between the consumer and the file was finding free downloads - now, it's iTunes/Amazon/eMusic etc.