piracy-responseLast month, Debating Europe looked at the controversial subject of digital piracy. We spoke with Francis Gurry, Director of the United Nations’ World Intellectual Property Organisation (WIPO), and the Swedish Pirate Party MEP Christian Engström. We showed them both some of your comments, which generated an interesting discussion, and we thought we’d revisit the subject to bring in some more voices and hear how publishers and producers would respond to what you said.

We had a really interesting comment come in from Alison, who argued that digital piracy is really hurting artists. Alison gave the example of her sister who had been forced to abandon her career as a gigging artist. We approached Stephen Navin, Chief Executive of the Music Publishers Association in the UK, and asked him about the effects of piracy on the industry.

Let’s assume that you start from the axiom that no business can survive on a free basis. The yard-stick by which any business model sinks or swims is ‘can those who invest in it make money from it’? Where do they get their money back from? Do they get it back from advertisers? Do they get it from the state, and a return to a system where culture is financed through patronage? I think you’ll find it’ll be a mixed economy.

What about this question of enforcement, though? We had a comment come in from Pontus who argues that “the integrity and fundamental right of a private life online of millions must outweigh the imaginary losses of four record companies”. Regardless of the effects of digital piracy on the industry, is it possible to enforce anti-piracy measures without seriously infringing on people’s privacy? What about, for example, the “three strikes and you’re out” legislation that is being introduced in some European countries – where repeated offenders risk having their internet disconnected?

If you don’t pay your electricity bill, you get disconnected… So, the principle of disconnection is one that we accept as a society. The question is, to what degree can it be exercised? If I don’t pay for the content I download, shouldn’t the same principle apply? It’s a question of finding the right balance.

I have a specific example from one of my members, called ‘Just Music’, who are publishers and have a small label. They invested time and money in developing a particular artist so they could market and promote them to the real fans. When they find that this label is available in a thousand different places for free, they are justifiably upset. That sort of behaviour needs to be dealt with quickly. We need to be a little flexible to that. Why should John and Serena, who own this label, why should this business be destroyed because disconnecting access to a particular website is seen as wrong? You have to measure all of their suffering against somebody’s so-called rights. We need to be able to deal with this quickly.

The question of the scale of the issue has come up repeatedly. How big are the numbers involved? Are we talking about an existential crisis for the entertainment industry? Glyn added a comment arguing that not enough research has been done into this area, and criticising existing research for being financed by record labels. We took this comment to Youngsuk Chi, President of the International Publishers Association, and asked him what the scale of the problem really was.

In looking at piracy, it can only be an estimation – and by nature an estimation means a rather wide range. How much piracy is happening and how much of it could have been commerced? Some people will say ‘all of it’, and all of that profit is being lost. However, only so much of it would have been transacted.

So what does the future of the entertainment and publishing industry look like? Is this a crisis that threatens the survival of an entire industry? Or will artists and publishers find ways to adapt to the new environment and produce new business models?

I think artists will thrive, but not without going through some hiccups. And one of those hiccups could be if there was rampant piracy through total disregard for intellectual property rights. There is education required for what tremendous effort it takes to produce cultural objects. And therefore there needs to be enforcement to prevent egregious offenders.

Again, we’re back to the question of enforcement. How much should it be enforced? Does it mean, as Christian Engström argued, snooping through people’s emails to check they’re not sharing music as attachments?

I can’t say I have an absolutely clear view on this because, on the one hand enforcement is necessary to protect people’s rights, but on the other hand we as a society cannot violate privacy. There’s not complete clarity on what is right or wrong until we try it… I don’t think that enforcement on its own can address the challenges, however.

If not enforcement, then can anything really address the challenges? We had a comment come in from Scott arguing that it would be easier to “just cut out the ridiculous salaries and numbers of middlemen”. Perhaps the question shouldn’t be “will the music industry survive” but rather “should the music industry survive”? If there is no business model, is it time to scale back?

The record labels grew so large because they benefited from an economy of scale. The better question you should ask is: ‘does the new paradigm require economies of scale’? Look at Google, look at the size advantage of Google in this new environment. There’s no question that publishers will be needed in the future. There’s too much information out there, and ‘information’ does not mean ‘knowledge’. There will always be a place for someone to curate that information for people.

Finally, the argument was made several times that we need to remember that the “industry” and “artists” are not actually the same thing. Is it possible, as Jesper argued, to support artists without supporting the “distributors and intermediaries” of the entertainment industry? We asked Stef Coninx, Director of the Flemish Music Centre, what he thought.

I think there is a clear misunderstanding of the debate, and I think it’s sometimes even consciously being kept quite vague. There is a mix-up between the industry and culture. Music? Music is doing fine. When you look at it from an industry perspective, however, it’s dramatic. The way the music industry has done its business for 100 years will not continue, that’s clear. But that doesn’t say anything about music itself. Not at all.

However, I think it is important that there is a music industry that can help artists build up a career and maybe even help them make money. Record companies and publishers for the music business will always be needed. We know that artists are not the best people to run a business – they admit it themselves. Most of them don’t want to do it – they would prefer someone they can trust who can do it for them.

What do YOU think? Is digital piracy killing the music and entertainment industry? Are there “economies of scale” in the new digital age that only large record companies and producers can benefit from? Or can artists now market and distribute their music on their own, without help from anybody else? Let us know your comments in the form below, and we’ll take them to experts and policy-makers to hear their reactions.

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11 comments Post a commentcomment

  1. avatar
    Albert Saxén

    So, whilst it may be nice to buy the album (you know, get the CD, have a pamphlet that comes with that) the only time you should pay is to support a new talent, an upcoming artist. They need this.
    if have enuff $, ‘made it’ .. but still want more that’s greed. That’s wrong.

    • avatar

      How can you possibly say that people don’t deserve payment after becoming successful? Where would the funds for future albums and shows come from?

    • avatar

      Seriously dude…nobody would tell you that you no longer deserve a paycheck just because you reached a successful point of your career. So I don’t know why you think artists should.

  2. avatar
    Bill Rosenblatt

    I think Youngsuk Chi is on the right track. I have seen a number of studies that purport to measure the effect of copyright infringement on content industries. Unfortunately, they are all flawed in some significant way. (By the way, I’m not the only one who thinks this; so does the U.S. Government Accountability Office – see http://copyrightandtechnology.com/2010/04/14/gao-report-throws-doubts-on-piracy-studies/.) Some say this is impossible to measure with any accuracy. I wouldn’t go that far, especially given how many other things economists measure with a relative lack of precision and their findings are accepted regardless. I believe that the right sort of study has yet to be attempted. It must, at a minimum, be cross-disciplinary (drawing from technology, economics, law, sociology, and possibly other fields), take enough time to minimize the effects of specific market or technology trends, be based on real-world data instead of theories, and above all, be financed and staffed by unbiased people. The latter has been the biggest problem, as most studies are only undertaken by (or on behalf of) someone with a particular point they want to prove before the study begins.

    Regarding music specifically, I see the effect of copyright infringement not so much as “killing the music industry” but as a manifestation of a larger trend in which digital technology is killing the value of recorded music.

    Let’s be careful about what this means. This means that the way things are going, the public will cease to ascribe any value to recorded musical experiences. So-called piracy is one model that takes advantage of the ultra-low cost of digital music distribution. There are also many legal business models being tested nowadays that attempt to create revenue from something other than “the bits” of music, to aggregate an audience in hopes that someone will pay for something in the future, or to “engage consumers with brands” in order to get them to buy music. My view is that the latter is especially a fool’s errand. All of these models, in hopes of “competing with free,” ultimately give away music in hopes of selling something else.

    The job that isn’t being done is to get people to appreciate that recorded music has value. Pirates are complicit in this, but so are some record companies (major and otherwise). Indie artists and labels give away music in hopes of getting exposure; majors license their material to digital music services with the primary objective of “taking the money and running,” i.e. maximizing short term revenue through up-front payments often at the expense of long-term viability.

    Without action in this regard, the value of recorded music will, like most other goods, fall to the cost of manufacturing and distribution, which in the digital age is near zero. All music-related businesses have to realize that this is inevitable unless they stop doing things that facilitate it.

    Remember that there were musicians long before there was recorded music. We could well regress to something like that prior state. I find this to be a shame because it means that certain types of musical artists – those who can’t make livings from live performances or “merch” sales, and whose art primarily exists in recording studios – have very uncertain futures.

    • avatar

      I agree! Remember there was a time when music was not marketed on a mass scale and it was not part of a consumer industry at all. It was solely for the enjoyment of sharing with others and listening to. It was in its purest form.

  3. avatar

    If piracy will be prosecuted than the music industry will become so commercial to the point that music as we all know and love will not exist anymore. Ask yourselves one question: Why hasn’t the music industry gone bust?. People including myself will buy albums of the entertainers we love and respect. This is the end consumer side.
    The other side is the people that use piracy to make money. They should be closed and locked away.

  4. avatar

    Here is part of my take on the debate… NB. none or all of this may be factually correct….

    Is this perhaps a question about whether it is ‘right’ or even economically viable to now sell a duplication of music?

    Historically, the mechanisms behind mass music reproduction could be considered highly technical and specialist processes (think about early vinyl presses and factories). The equipment required for the reproduction of music was expensive and the knowledge not widely known. As such only a small number of people had the capability to reproduce music en mass. This creates a bottleneck; many people want to experience popular music yet only a few people have the capability of reproducing it. The record industry is born.

    It is safe to say that whilst this arrangement continued record companies exploited it both at the consumer end (by over-charging the consumer) and the supplier end (by under paying artists).

    Skimming over the advent of recordable cassette tapes, which in the 1980s were charged with ‘killing music’ (see http://en.wikipedia.org/wiki/Home_Taping_Is_Killing_Music) but which arguably prompted something of an artistic renaissance in terms of sampled , lo-fi style of music we arrive in the digital era of today.

    In contrast to the years of heaving vinyl presses and factories, nowadays the equipment required to reproduce music is commonplace (a computer) and even small children of more than capable of learning how its done. There are even websites which effectively carry out the process for us.

    So the bottleneck of equipment and knowledge which once enabled record companies to prosper has evaporated and correspondingly people are less willing to pay big bucks for a reproduction of music. The question of who really suffers is however far more complicated…

    Responses welcome

  5. avatar
    rona main

    i think the old values of the music business have completely gone.Do some business men not realise that kids of 15 don’t even know that artists were only signed up to 4 major record companies who basically owned them? Now its moving fast.Too fast for the old companies to keep owning artists and pocketing the profits.The gates are open. Good.

  6. avatar
    Mark B

    I’m glad the music industry will eventually shrink – there was once a ‘need’ for them in society, however their business models are outdated and not suited to modern digital media. Adapt or die unfortunately – but whatever happens, music and musicians will survive and prosper.

    • avatar

      adapt to modern digital media!! can you please explain atleast one way of doing this along with making money? with piracy being around and less of innovations in this field to make money, it is getting extremely difficult for the music industry, let alone, the record labels and publishers make any money.

      they would like to work in different manner, but what are the options?

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