The Recording Industry Association of America is scared of what’s happening to the music industry. More specifically, it’s scared of what’s happening to the money in the music industry.
On its website, the RIAA announces that, “Since peer-to-peer (p2p) file-sharing site Napster emerged in 1999, music sales in the U.S. have dropped 53 percent, from $14.6 billion to $7.0 billion in 2011.” Pretty alarming, right?
Not so fast.
In terms of the RIAA’s interests, it needs to be understood that the association is comprised of record labels. Suddenly it makes sense that it’s so concerned with the disappearing money.
Compound the RIAA’s bias with its conflation of correlation and causation, and the fact that music piracy might not be quite as big a problem as it has been in the past, and you get a portrait of a changing landscape in the music industry, one in which ownership of content might not be the ultimate goal and piracy not necessarily the means to achieve it.
Part of the change in the music industry has come from the increased availability of places to stream content rather than download it. Free streaming services Pandora and Spotify, for example, pay for the music by running ads every few songs and putting a cap on the amount of music someone can listen to in a month. Both services also allow for a paid, ad-free experience. With Spotify, this translates to a fair amount of subscribers.
According to Spotify spokesperson Graham James, there are currently 6 million people worldwide who pay for Spotify, either unlimited ($4.99 per month) or premium ($9.99 per month). Although specific data for the U.S. isn’t available (the company only tracks its worldwide users), the paid subscribers are only a little more than a quarter of Spotify’s 23 million users.
“What I think Spotify is, is a reaction to consumer behavior,” James says. “If you look at what happened back in ’99, you have Napster, and that gave music consumers every song imaginable for free. The problem with Napster was that it was illegal and didn’t compensate the rights holders or the artists.”
James is right that the furor over Napster’s business model—theft, essentially—led founder Sean Parker to turn it into a paid service. Though this new model compensated the artists—as anyone who has ever downloaded an album illegally knows—it didn’t quite satiate the music consumer’s need for free music.
“People want all the music in the world and they want it for free, but you have to have a service that compensates artists and writers,” James says, adding, “Our competition is piracy.”
And if a new report done by Internet security company NetNames is to be believed, Spotify has a lot of competition. The report, “Sizing the Piracy Universe,” which was released on Sept. 17, details a growing number of people stealing content, positing that the bandwidth used by those seeking copyright-infringing content grew 159 percent between 2010 and 2012.
“As well as looking at the amount of infringing bandwidth that we see online, we’re also trying to estimate the number of users who are accessing infringing content on a regular basis,” NetNames Director of Piracy Analysis David Price says in a video that accompanies the report.
But examining the study itself makes clear that it largely focuses on video piracy, and there’s a lot of guesswork involved in looking at piracy. While it details that “327 [million] unique internet users explicitly sought infringing content during January 2013 in the three regions” of North America, Europe, and Asia-Pacific, that doesn’t necessarily mean that their searches weren’t in vain. Besides, NBCUniversal—perhaps not an entirely disinterested party when it comes to making piracy appear rampant—funded the study.
On the other hand, an earlier report by The American Assembly, a group that describes itself on its website as a “non-partisan public affairs forum,” and which was started at Columbia in 1950 by then-University President Dwight Eisenhower, paints a nuanced portrait of music downloading among residents of the U.S. and Germany The study examines what it calls “copy culture,” or a culture “characterized by the copying, sharing, and downloading of music, movies, TV shows, and other digital media.”
The data for the study come from a sample of about 2,000 Americans and 1,500 Germans who were selected at random for a phone survey. (This wasn’t guesswork based on bandwidth, but rather conversations with real people.) Its most interesting finding was the fact that most of those who said they used peer-to-peer services such as BitTorrent or What.CD to download music had actually paid for more music than those who didn’t use these services. And, in general, it may not be as big a problem as Price and his report suggest.
“Overall, American Internet users buy significantly more songs than they download for free by a ratio of roughly 7:4,” the American Assembly report says. “As copying and downloading for free diminish in the 30- to 49-year-old group, purchasing remains the same, suggesting that these practices are mostly complementary to legal acquisition, not strong substitutes for it.”
And if piracy is a complement to actually buying music, the report suggests that streaming might well be the remedy for piracy that James believes Spotify to be, and might explain iTunes’ push to get people to use iTunes Radio—essentially a streaming service Apple has made native to the iPhone, including it in its latest mobile operating system, iOS 7.
“Copy culture fills the demand for a cheap, convenient, universal music library—a ‘celestial jukebox,’” the study says. “As legal streaming services become better direct substitutes for file sharing, there should be evidence of a shift toward those services.”
And this shift does appear to be taking place: Of the 30 percent of Americans who have copied or downloaded digital music files for free, “46 percent indicated that they now do so less because of the emergence of these services,” the survey says.
This attitude is especially prevalent among those in most Eye readers’ age group. According to the copy culture survey, 62 percent of the 18- to 30-year-old demographic said they copy or download less music because of streaming services. And among those who use peer-to-peer services, that number is 66 percent, with almost a fifth of that group paying for streaming services.
But for streaming companies like Spotify, the sheer number of users is enough to keep them enthusiastic about their mission. “There’ve been over a billion playlists created on Spotify, so that can give you a sense of the level of engagement,” James says.
Whether that engagement translates into fewer stolen copies of “Wrecking Ball” remains to be seen.