As many of you, I've been following the case in Sweden involving The Pirate Bay. I recently came over an article which argues the industry's main point in that filesharing technology has been killing the industry off. Jens Roland argues in this article that it simply isn't the case and I think his points are very well laid out.
- First, the explosive rise of computer and console gaming. This competitive ‘third element’ has appeared in the entertainment landscape, beaten both music and movies to the curb and taken a huge cut out of the music industry’s revenues. Consumers don’t have infinitely-deep pockets, and billions of ‘recreation dollars’ that used to go almost exclusively to music, are now going into gaming.
- International trade agreements have allowed consumers to buy their music across borders, rather than accepting local prices on music based on the ‘relative wealth’ of nations, rather than the actual value of the product.
- New forms of distributable media, most notably MP3s but also CDs, have become mainstream. These new media don’t degrade over time and rarely break at all, making music rebuys a thing of the past, and allowing the second-hand market for music to thrive and expand - both of which take a cut out of the music industry’s former revenues.
- Radical technological innovation has taken place in the field of music creation, processing, mixing, and mastering. Recording hardware, CD burners, music software, and media encoders have evolved to the point where most artists can actually afford decent-quality equipment to do their own recording and producing. Furthermore, this has fostered literally thousands of smaller, specialized studios that are challenging the ‘Big 4′ with lower prices, better terms for artists, genre-specific expertise, etc. Successful artists can now leave the big labels and start their own recording outfits on relatively modest budgets. Naturally, super stars like The Beatles or Frank Sinatra have always had this option, but the recent technological advances have lowered the bar drastically. This development is depriving the ‘Big 4′ of many of their former cash cows, who now use the major labels for their advertising and distribution infrastructure alone.
- The World Wide Web has become an omnipresent force in the world, allowing cheap, end-to-end distribution of digital music, increasingly cutting out the corporate music distributors, who deal in trucks and CD covers, rather than bytes and bandwidth. With iTunes leading the way (very successfully ‘competing with free’, I might add), billions of songs are now purchased digitally rather than physically, no longer necessitating the big labels’ distribution networks.
- The total number of radio stations, music television networks and other ’streaming’ sources of music has grown exponentially, giving music fans a huge selection of free (and legal) music options. Satellite radio, DAB, and internet radio broadcasts have made it trivial for consumers to simply tune into a channel broadcasting the exact sub-genre of music that they feel like listening to (they can even have a stream created for them dynamically, e.g. on Pandora), making the *purchase* of music entirely optional for the casual listener.
- A massive selection of entertainment alternatives (home computing, console gaming, mobile devices, etc.) have appeared in the home, effectively marginalizing music as an activity. 15-20 years ago, youths would regularly visit each other just to listen to music together; today, that is virtually unthinkable without some form of activity involved, such as playing Guitar Hero or Rock Band, or dancing at a concert.
- And finally, the music industry itself has embraced the opportunities of digital media, at last letting consumers buy *single* tracks at a time rather than forcing entire albums full of ‘fillers’ on them. Looking at the RIAA’s own sales figures for the past 10 years, there is a *direct* correlation between the break-off in album sales and the introduction and increase in single track digital sales. Looking at the actual numbers, it is abundantly clear that the vast majority of consumers never wanted to buy full albums in the first place, but were merely forced to by the lack of affordable single-track media. Now that the digital revolution has arrived, countless millions of 16-track album sales are being turned into 1- or 2-track sales, *decimating* the former revenues on music. THIS is the real reason why the music industry is hurting.
. The way I see it, if they really want to earn their money, they wouldn't rest on their laurels, and they would go out on tour, that's where the real money is.
