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Queen Elizabeth College music industry presentation
 

Queen Elizabeth College music industry presentation

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    Queen Elizabeth College music industry presentation Queen Elizabeth College music industry presentation Presentation Transcript

    • 1
    • “American businesses lose $250 billionevery year, and we have lost more than750,000 jobs because of intellectualproperty theft.”-Introduce Intellectual Property Rights EnforcementLegislation, 24/7/2008 2
    • “According to the Institute for Policy Innovation,more than $58 billion is lost to the U.S. economyannually due to content theft, including morethan 373,000 lost American jobs, $16 billion inlost employees earnings, plus $3 billion in badlyneeded federal, state and local governments’ taxrevenue.”- 16/12/2011 3
    • “Of the total $6.1 billion in annual losses LEKestimated to MPAA studios, the amountattributable to online piracy by users in theUnited States was $446 million”- Cato Liberty, 3/1/2012 4
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    • Context 6
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    •  Vivendi-Universal $12.5 billion loss in the first 3 financial quarters of 2002 (Economist, 16 Jan 2003) EMI £54.4 million loss in the first 2 quarter of 2001 (£138.4 million profit over same period in 2002) (Economist, 18 Jan 2003) 9
    • E.M.I. R.I.P? 2002 EMI sack Mariah Cost = $28 million 2004 EMI sack 1,500 staff 2007 Axe boss, Alain Levy Profits -10% on ‘06 £50 million loss 10
    • E.M.I. R.I.P? 2007  Terra Firma pay £4.2 billion for EMI  Citigroup provides loan of £2.6 billion 11
    • EMI’s death throws 2010  £1.56 billion net loss2009  Forced to write down the  £412 million net loss value of its catalogue  Global economic crisis  £1.04 billion impairment  Problems restructuring charge debt  Debt of £2.6 billion 12
    • EMI today?Recorded music M usic publishing Back catalogue  Improving top-line operating profits  from £56m to £163m  Overall profits: ~£300 million  Source: Pratley, 2010 13
    • EMI reborn?2011-12 Business broken up EMI + Universal = 36% of recorded music sales globally 14
    • Percentage of total global musicrevenues 15
    • Causes The Internet Peer-2-Peer (P2P) transfer Digitisation of music as files Broadband growth/penetration (up 23% since 2006: IFPI, 2008: 5) 2002: 1 billion illegal files (Sanghera) 2007: ratio of illegal-legal tracks: 20-1 (IFPI, 2008) 16
    • Industry voices RIAA (Recording Industry Association of America)  http://www.riaa.com/ IFPI (International Federation of the Phonographic Industry)  http://www.ifpi.org/ BPI (British Phonographic Industry)  http://www.bpi.co.uk/ UK Music  http://www.ukmusic.org/ 17
    • 18
    • About IMPALAIMPALA was established in April 2000 to representindependent music companies. 99% of Europe’s musiccompanies are small or medium sized enterprises (SMEs).Known as the “independents”, they are world leaders interms of innovation and discovering new music and artists -they produce more than 80% of all new releases.The independents also produce 80% of the sector’s jobs. 19
    • Singles market 1970s until 1999:  annual UK singles sales = 70 million  Since 1999, this has more than halved.  (BPI, 2005: p8) 2008: growth of 33%  115 million + sales  (BPI, 2009) 20
    • Album market Down 3.2% in 2008 Digital albums = 10 million sales  65% increase on 2007 (= 7.7% of market) Optimism?  UK Grammy success (Radiohead, Coldplay)  New digital services? 21
    • UK music market 1997-2011 (millions) 22BPI
    • UK music market 1997-2011 (millions) 23BPI
    • Yet… 24BPI
    • Digital music to save the industry? 25
    • Digital music to save the industry? 26 Source: BPI
    • Digital music to save the industry? 27 Source: BPI
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    • UK music industry growing!  Revenues up by 4.7% 37
    • UK music industry growing again!  Revenues up by 5% 38
    • UK music industry levelling out?  Revenues down by 4.8%  Global decline of 11% 39
    • The new marketplace? UK album sales (2008) 40
    • The Long Tail (Anderson 2004) 41
    • The Long Tail (Anderson 2004)  Power law distribution curve (aka Pareto curve)20% 80%head tail 42
    • The Long Tail (Anderson 2004)  Selling more of the ‘tail’ may be the future for the music industry business model  Value no longer in the hits but in the volume of content20% 80%head tail 43
    • History 44
    • History  1970s: home taping and organised crime 45
    • History Early IRCs 1990-94 Evolved into the P2P networks Napster Gnutella Morpheus Kazaa Grokster Leyshon et al (2005: 180-1) a ‘musical gift economy’ 46
    • Business model To ‘find, fund, record, promote and market music. Record companies fund that process by retaining the rights in the artist’s sound recordings’  (BPI, 2005: 27) stop piracy, increase profitability? 47
    • What changed? ‘a set of broader cultural forces … have changed the role of music within society, and relegated its immediacy and importance among many of its consumers’  (Leyshon et al, 2005: 181) 48
    • Scale of music industry ‘no more than 10 percent of records actually recoup the money the record industry invests in its production’ with some companies stating that the real figure is closer to 3 %  (Leyshon, 2005: 187) How does this fit against sales/profits? 49
    • Attitude shifts1. Recent developments within the music industry  Context (clubs; festivals; merchandise)1. Synergetic marketing of music  Cross platform tie-ins (X-Factor, Pop Idol)1. The inability to sustain consumer attention  Competition for income (games, DVDs, mobiles, Internet subscriptions) 50
    • The blame game? Industry business model has been in trouble at least since the 1980s.  Temporary delay via CD back catalogues  (Breen, 1995) It is easier to blame an external process (piracy) than to admit the industry itself made a series of errors 51
    • Responses ‘Instead of exploring P2P exchange as a business opportunity, they defined it as a piratical threat. In doing so, they inadvertently implied that they had the right to determine how people apply after-sales use of intellectual property by re-asserting commercial copyright in a set of relations that were effectively deregulated.’  (Rojek, 2005: 359) 52
    • Metallica vs Napster (April 2000) Name and shame users Maximum fine of $150,000 per mp3 downloaded 2007: OiNK.cd and TVLinks closed down 2011: Mega Upload taken offline 53
    • One down, another appears May 2003 Kazaa: 230.3 million downloads New user uptake of 13 million a month (Teather, 2003) 54
    • BitTorrent protocol 1 in 3 broadband users are pirates?  Torrentfreak, 3 Feb 2009 uTorrent user base: 28 million monthly users  Torrentfreak, 25 Dec 2008 55
    • Busted? RIAA PR own-goal: prosecution of 12 year old Brianna LaHara (BBC, 10/9/2003) Illinois Senator Dick Durbin: ‘Are you headed to junior high schools to round up the usual suspects?’ 56
    • Sue your customers?File-Sharers Buy 30% More Music Than Non-P2P Peers 57Source: American Assembly, via Torrentfreak, Oct 2012
    • Digital Rights Management (DRM) 58
    • Apple’s CEO “DRM’s haven’t worked … to halt music piracy … In 2006, under 2 billion DRM-protected songs were sold worldwide by online stores, while over 20 billion songs were sold completely DRM-free and unprotected on the CDs by the music companies … So if [they] are selling over 90 percent of the music DRM-free, what benefits do they get from selling the remaining small percentage of their music encumbered with a DRM system?”  Steve Jobs, 2007 59
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    • Conclusion The traditional music industry business model is under threat and forcing the industry to react:  prosecute major uploaders  prosecute downloaders randomly  develop anti-piracy measures, such as DRM  pressurise ISPs (3 strikes?)  new innovations? 63
    •  The industry has been partially responsible for its problems:  it didn’t adapt to change quickly enough  multinational business interests are split into smaller divisions which are partially responsible for the encouragement of consumer banditry  hardware/software advances destabilise the traditional role of the industry 64
    • Selected sources BBC, 10/9/2003, ‘Music firms target 12 year old’ at http://news.bbc.co.uk/1/hi/entertainment/music/3096340.stm BBC, 21/02/2006, ‘Broadband growth speeds forward’ available at http://news.bbc.co.uk/1/hi/technology/4736526.stm BPI, 2005, Illegal Filesharing Fact Sheet BPI, 2009, ‘UK reports resilient music sales in 2008’ press release http://www.ifpi.org/content/library/full-year-2008.pdf M. Breen, 1995, ‘The End of the World as We Know it: Popular Music’s Cultural Mobility’ in Cultural Studies¸ 9 (3): 486-504. ‘Lights! Camera! No profits!’, Economist, 00130613, 1/18/2003, Vol. 366, Issue 8307 ‘How to manage a dream factory’, Economist, 00130613, 1/18/2003, Vol. 366, Issue 8307 Malcolm Gladwell, 2000, The Tipping Point: How Little Things Can Make a Big Difference, Abacus IFPI, 2007, ‘Digital Music Report’ available from http://www.ifpi.org/content/section_resources/index.html IFPI, 2008, ‘Digital Music Report’ available from http://www.ifpi.org/content/library/DMR2008-summary.pdf Steve Jobs, 6/2/2007, ‘Thoughts on music’ available at http://www.apple.com/hotnews/thoughtsonmusic/ Andrew Leyshon, 2003, ‘Scary Monsters? Software formats, peer-to-peer networks, and the spectre of the gift’ in Environment and Planning D: Soceity and Space, 21 (5): 533-58. H. Parker et al, 1998, Illegal Leisure: the normalization of adolescent recreational drug use, London: Routledge. H. Parker et al, 2002, ‘The normalisation of “sensible” recreational drug use: further evidence from the North-West England Longitudinal Study’ in Sociology, 36 (4): 941-64. Chris Rojek, 2005, ‘P2P Leisure exchange - net banditry and the policing of intellectual property’, in Leisure Studies, 24: 4, 357-367. Sathnam Sanghera, 2002, ‘Rock ‘n’ Roll Suicide: How Napster, TV-created Pop and a Dearth of Talent are Killing the Record Industry’, Financial Times, 15 November, p19. David Teather 23/7/2003, ‘Music firms on pirates’ tails’ in The Guardian, available at http://business.guardian.co.uk/story/0,,1004030,00.html Sarah Thornton, 1995, Club Cultures, Cambridge: Polity. Griffin Mead Woodworth, 2004, ‘Hackers, Users and Suits: Napster and Representations of Identity’ in Popular Music and Society, 27: 2, 161-184. Richard Wray, 13/01/2007, ‘EMI sacks music boss as profits drop’ in The Guardian, available at 65 http://business.guardian.co.uk/story/0,,1989490,00.html
    • Image sources P1,2, 5, Automania, 2005, “Christmas Music”, http://www.flickr.com/photos/automania/74037479/ P6, hc gilje, 2007, “EMI Electola”, http://www.flickr.com/photos/hcgilje/501769056/ P7, 8, aus_chick, 2006, “EMI”, http://www.flickr.com/photos/hcgilje/501769056/ P10, 25, 34, myuibe, 2008, “copyright and digital culture”, http://www.flickr.com/photos/myuibe/2132305949/ P11, 12, 16, 17, _ambrown, 2006, “Music Millenium, Portland Oregon”, http://www.flickr.com/photos/dietpoison/195288442/ P18, p_kirn, 2007, “Handmade Music 8/23/07 with Etsy Labs, CDM, and Make”, http://www.flickr.com/photos/p_kirn/1218971167/ P31-3, karola riegler photography, 2009, “Vinyl kills the mp3 industry”, http://www.flickr.com/photos/karola/3639759076/ P35, 37, Ferrari + caballos + fuerza = cerebro Humano, 2009, “Musica comprimida – Compressed Music”, http://www.flickr.com/photos/gallery-art/3497849677/ P38, GabryPk, 2008, “Music Is My Drug pt. 2”, http://www.flickr.com/photos/gabrypk/3107000631/ P47, Selma90, 2009, “Apple” http://www.flickr.com/photos/selma90/3675162262/ 66