2. “American businesses lose $250 billion
every year, and we have lost more than
750,000 jobs because of intellectual
property theft.”
-Introduce Intellectual Property Rights Enforcement
Legislation, 24/7/2008
2
3. “According to the Institute for Policy Innovation,
more than $58 billion is lost to the U.S. economy
annually due to content theft, including more
than 373,000 lost American jobs, $16 billion in
lost employees earnings, plus $3 billion in badly
needed federal, state and local governments’ tax
revenue.”
- 16/12/2011
3
4. “Of the total $6.1 billion in annual losses LEK
estimated to MPAA studios, the amount
attributable to online piracy by users in the
United States was $446 million”
- Cato Liberty, 3/1/2012
4
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. 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. E.M.I. R.I.P?
2007
Terra Firma pay £4.2
billion for EMI
Citigroup provides
loan of £2.6 billion
11
12. EMI’s death throws
2010
£1.56 billion net loss
2009 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. 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
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. 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
19. About IMPALA
IMPALA was established in April 2000 to represent
independent music companies. 99% of Europe’s music
companies are small or medium sized enterprises (SMEs).
Known as the “independents”, they are world leaders in
terms 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. 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. 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
42. The Long Tail (Anderson 2004)
Power law distribution curve (aka Pareto
curve)
20% 80%
head tail 42
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 content
20% 80%
head tail 43
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. 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. 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. 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. Attitude shifts
1. 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. 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. 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. 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. One down, another appears
May 2003 Kazaa: 230.3 million downloads
New user uptake of 13 million a month
(Teather, 2003)
54
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. 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
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
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. 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. 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. 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