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“American businesses lose $250 billionevery year, and we have lost more than750,000 jobs because of intellectualproperty t...
“According to the Institute for Policy Innovation,more than $58 billion is lost to the U.S. economyannually due to content...
“Of the total $6.1 billion in annual losses LEKestimated to MPAA studios, the amountattributable to online piracy by users...
5
Context          6
2   7
8
 Vivendi-Universal $12.5 billion loss in the first 3 financial  quarters of 2002                    (Economist, 16 Jan 2...
E.M.I. R.I.P? 2002  EMI sack Mariah  Cost = $28 million 2004  EMI sack 1,500 staff 2007  Axe boss, Alain Levy  Pro...
E.M.I. R.I.P? 2007   Terra Firma pay £4.2    billion for EMI   Citigroup provides    loan of £2.6 billion              ...
EMI’s death throws                                               2010                             £1.56 billion net loss2...
EMI today?Recorded music     M usic publishing Back catalogue    Improving top-line                     operating profit...
EMI reborn?2011-12 Business broken up EMI + Universal = 36%  of recorded music sales  globally                          ...
Percentage of total global musicrevenues                                   15
Causes The Internet Peer-2-Peer (P2P) transfer Digitisation of music as files Broadband growth/penetration (up 23% sin...
Industry voices RIAA (Recording Industry  Association of America)    http://www.riaa.com/ IFPI (International Federatio...
18
About IMPALAIMPALA was established in April 2000 to representindependent music companies. 99% of Europe’s musiccompanies a...
Singles market 1970s until 1999:   annual UK singles sales = 70 million   Since 1999, this has more than halved.      ...
Album market Down 3.2% in 2008 Digital albums = 10 million sales   65% increase on 2007 (= 7.7% of market) Optimism?  ...
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
28
29
30
31
32
33
34
35
36
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%        ...
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          ...
The Long Tail (Anderson 2004)   Selling more of the ‘tail’ may be the    future for the music industry business    model ...
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 Leysh...
Business model To ‘find, fund, record, promote and  market music. Record companies fund  that process by retaining the ri...
What changed? ‘a set of broader cultural forces … have  changed the role of music within society, and  relegated its imme...
Scale of music industry ‘no more than 10 percent of records actually  recoup the money the record industry invests  in it...
Attitude shifts1. Recent developments within the music   industry    Context (clubs; festivals; merchandise)1. Synergetic...
The blame game? Industry business model has been in trouble at  least since the 1980s.   Temporary delay via CD back cat...
Responses ‘Instead of exploring P2P exchange as a  business opportunity, they defined it as a  piratical threat. In doing...
Metallica vs Napster (April 2000) Name and shame users Maximum fine of $150,000 per mp3 downloaded 2007: OiNK.cd and TV...
One down, another appears May 2003 Kazaa: 230.3 million downloads New user uptake of 13 million a month  (Teather, 2003...
BitTorrent protocol 1 in 3 broadband users are pirates?   Torrentfreak, 3 Feb 2009 uTorrent user base: 28 million month...
Busted? RIAA PR own-goal: prosecution of 12 year old Brianna  LaHara (BBC, 10/9/2003) Illinois Senator Dick Durbin: ‘Ar...
Sue your customers?File-Sharers Buy 30% More Music Than Non-P2P Peers                                                     ...
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  world...
60
61
62
Conclusion The traditional music industry business model  is under threat and forcing the industry to  react:     prosec...
 The industry has been partially responsible for  its problems:    it didn’t adapt to change quickly enough    multinat...
Selected sources   BBC, 10/9/2003, ‘Music firms target 12 year old’ at http://news.bbc.co.uk/1/hi/entertainment/music/309...
Image sources   P1,2, 5, Automania, 2005, “Christmas Music”, http://www.flickr.com/photos/automania/74037479/   P6, hc g...
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Queen Elizabeth College music industry presentation

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Transcript of "Queen Elizabeth College music industry presentation"

  1. 1. 1
  2. 2. “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
  3. 3. “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
  4. 4. “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
  5. 5. 5
  6. 6. Context 6
  7. 7. 2 7
  8. 8. 8
  9. 9.  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
  10. 10. 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
  11. 11. E.M.I. R.I.P? 2007  Terra Firma pay £4.2 billion for EMI  Citigroup provides loan of £2.6 billion 11
  12. 12. 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
  13. 13. 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
  14. 14. EMI reborn?2011-12 Business broken up EMI + Universal = 36% of recorded music sales globally 14
  15. 15. Percentage of total global musicrevenues 15
  16. 16. 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
  17. 17. 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. 18. 18
  19. 19. 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
  20. 20. 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
  21. 21. 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
  22. 22. UK music market 1997-2011 (millions) 22BPI
  23. 23. UK music market 1997-2011 (millions) 23BPI
  24. 24. Yet… 24BPI
  25. 25. Digital music to save the industry? 25
  26. 26. Digital music to save the industry? 26 Source: BPI
  27. 27. Digital music to save the industry? 27 Source: BPI
  28. 28. 28
  29. 29. 29
  30. 30. 30
  31. 31. 31
  32. 32. 32
  33. 33. 33
  34. 34. 34
  35. 35. 35
  36. 36. 36
  37. 37. UK music industry growing!  Revenues up by 4.7% 37
  38. 38. UK music industry growing again!  Revenues up by 5% 38
  39. 39. UK music industry levelling out?  Revenues down by 4.8%  Global decline of 11% 39
  40. 40. The new marketplace? UK album sales (2008) 40
  41. 41. The Long Tail (Anderson 2004) 41
  42. 42. The Long Tail (Anderson 2004)  Power law distribution curve (aka Pareto curve)20% 80%head tail 42
  43. 43. 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
  44. 44. History 44
  45. 45. History  1970s: home taping and organised crime 45
  46. 46. 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
  47. 47. 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
  48. 48. 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
  49. 49. 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
  50. 50. 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
  51. 51. 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
  52. 52. 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
  53. 53. 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
  54. 54. One down, another appears May 2003 Kazaa: 230.3 million downloads New user uptake of 13 million a month (Teather, 2003) 54
  55. 55. 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
  56. 56. 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
  57. 57. Sue your customers?File-Sharers Buy 30% More Music Than Non-P2P Peers 57Source: American Assembly, via Torrentfreak, Oct 2012
  58. 58. Digital Rights Management (DRM) 58
  59. 59. 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
  60. 60. 60
  61. 61. 61
  62. 62. 62
  63. 63. 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
  64. 64.  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
  65. 65. 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
  66. 66. 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
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