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Businesses Math Music Piracy The Almighty Buck The Courts

The Numbers Behind the Copyright Math 311

Posted by Soulskill
from the each-song-is-worth-all-the-songs dept.
TheUnknownCoder writes "The MPAA claims $58 billion in actual U.S. economic losses and 373,000 lost jobs due to piracy. Where are these numbers coming from? Rob Reid puts these numbers into perspective in this TED Talk, leaving us even more puzzled about the math behind copyright laws. 'Ignoring improbabilities like pirated steaks and daffodils, I looked at actual employment and headcount in actual content industries, and found nothing approaching the claimed losses. There are definitely concrete and quantifiable piracy-related losses in the American music industry. The Recording Industry Association’s website has a robust and credible database that details industry sales going back to 1973, which any researcher can access for a few bucks (and annoying as I’ve found the RIAA to be on certain occasions, I applaud them for making this data available). I used it to compare the industry’s revenues in 1999 (when Napster debuted) to 2010 (the most recent available data). Sales plunged from $14.6 billion down to $6.8 billion — a drop that I rounded to $8 billion in my talk. This number is broadly supported by other sources, and I find it to be entirely credible. But this pattern just isn’t echoed in other major content industries.'"
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The Numbers Behind the Copyright Math

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  • by mpoulton (689851) on Wednesday March 21, 2012 @02:23AM (#39423879)
    I haven't pirated music in about 5 years. I also haven't bought any CD's in that time, either. I have moved almost entirely to using Spotify, Pandora, and other subscription services for my music. Music I do buy, I buy electronically. I estimate I spent about 25% as much on recorded musical entertainment now than I did in the late 90's, during the heyday of the CD. This probably results in less revenue for the content owners, but that is not attributable to piracy. An industry's decline due to changing market factors is not necessarily a problem - it's just the natural way of things.
  • Taxes (Score:4, Insightful)

    by Anonymous Coward on Wednesday March 21, 2012 @02:27AM (#39423899)

    I'd like to see these losses reported to the IRS.

  • Not due to piracy (Score:5, Insightful)

    by metacell (523607) on Wednesday March 21, 2012 @02:56AM (#39424021)

    The decline in record sales has nothing to do with piracy. It's roughly outweighed by an increase in sales of downloadable music. The only difference is that the revenues end up with other companies such as Apple (or directly with the artists), instead of with the record companies.

    Really, this is nothing new. Just comparing the raw numbers is likely to mislead you if you don't have knowledge about the music market.

  • Boycott (Score:5, Insightful)

    by thestuckmud (955767) on Wednesday March 21, 2012 @03:05AM (#39424049)
    To Whom it may concern,
    Please count the lack of revenue you are receiving from me in the boycott category. I do not pirate music, but I'm sending another dime to companies that gang up to alienate me.
    My grudge goes back a ways - highlights include: Lying to me about CD price hikes in the '80s; taxing my computer media in the '90s, intentionally distributing malware laden CDs in 2000, and now the outrageous legislative attempts.
    Sincerely,
    One bitter ex customer.
  • by future assassin (639396) on Wednesday March 21, 2012 @03:07AM (#39424057) Homepage

    consumers just gained a way to even the playing filed with not getting stuck with worthless music and movies. Now that money has shifted to help out other industries and created new jobs in those. Unless that money is taken out of the country by corporations using off shore accounts and tax heavens that money went back into the countries economy so nothing was lost.

  • One word (Score:3, Insightful)

    by vikingpower (768921) <exercitussolus@g ... m minus caffeine> on Wednesday March 21, 2012 @03:10AM (#39424081) Homepage Journal
    Correlation is not causation.
  • by Zocalo (252965) on Wednesday March 21, 2012 @03:46AM (#39424237) Homepage
    The movie studios (the MPAA & RIAA are just lobbying bodies, they don't actually make any money off media sales) have almost certainly eaten into the profits of the music studios with the advent of the market for home movies to buy/rent. The same can also be said of the video gaming industry, which didn't exist until the early 1980s and only really started making serious money by perhaps 1985 or so. OK, the video and game industries have probably also grown at the expense of other entertainment businesses - cinemas, arcades, bars, bowling alleys, etc. - but I wouldn't be at all surprised to find a correlation between the growth of movie and game sales and the music industries post-1973 decline. They are all competing for the same disposable income, after all.
  • by Anonymous Coward on Wednesday March 21, 2012 @04:05AM (#39424299)

    People like free shit

    Your cynical view of humanity is not accurate.

    Yes, it is accurate, and there's nothing cynical in his statement.

    There is such a thing as altruism. Charities somehow manage to persuade people to donate.

    People donate for a few different reasons. Yes, some people are actually just nice and like giving back when they can. But most people who donate do it to deflect guilt, to look good to other, to get a tax break, or other reasons which are more selfish when you really look at it.
    But that has absolutely nothing to do with people liking free shit.

    There are actually many people who do NOT like free shit, because we don't believe it really is free, we're suspicious there's some catch.

    Right, you're suspicious because you don't think it's free, and you want free shit not shit with hidden costs.

    You also attribute piracy to the desire to "stick it to the man".

    No he didn't. He pointed out that people use that as a rationalization so they don't feel guilty. They're doing it because of point #1: They like Free Shit.

  • Uhm, yes, but... (Score:5, Insightful)

    by Black Parrot (19622) on Wednesday March 21, 2012 @04:08AM (#39424307)

    The Recording Industry Association’s website has a robust and credible database that details industry sales going back to 1973, which any researcher can access for a few bucks (and annoying as I’ve found the RIAA to be on certain occasions, I applaud them for making this data available). I used it to compare the industry’s revenues in 1999 (when Napster debuted) to 2010 (the most recent available data). Sales plunged from $14.6 billion down to $6.8 billion — a drop that I rounded to $8 billion in my talk. This number is broadly supported by other sources, and I find it to be entirely credible.

    OK, you find it credible twice. Any particular reason?

    Also:

    Are you claiming that Napster has something to do with this? If so, how much, and how do you know?

    How do you take the economic melt-down into account?

    How do you account for aging Baby Boomers who are losing the ability to justify shelling out for yet another remastering of LPs they bought 40 years ago?

    Why calculate on revenues rather than profits?

    How much of those revenues are the inherent cost of pressing a CD and putting it in a plastic box, which was *much* more common back then?

    Who's losing jobs? Are musicians giving up because they can't find a gig and a sharecropper contract? Or do executives just need to hire fewer people to count their money?

    These raw numbers are meaningless.

  • Re:It's not piracy (Score:5, Insightful)

    by thegarbz (1787294) on Wednesday March 21, 2012 @04:23AM (#39424371)

    Except singles weren't released for $0.99. No you couldn't just buy the song. You had to buy the Single, which had 5 different versions of the same song for about half the price of the entire album if the single was still in the charts, and still about $5 if it was not.

    There's nothing good to be said about the overpriced distribution methods the industry is trying to hold on to. The fundamental problem is that these like many things were priced as high as the market would bare, however the market changed, as did consumer expectations and the price did not.

  • by nukenerd (172703) on Wednesday March 21, 2012 @05:48AM (#39424719)
    I believe it is similar in the USA, but in the UK the story went like this :-

    1) First the motorcycle manufacturing industry was in trouble. The Government told them to f#@k off.

    2) Then the electronics industry was in trouble. The Government told them to f#@k off.

    3) Then the shipbuilding industry was in trouble. The Government told them to f#@k off.

    4) Then the mining industry was in trouble. The Government told them to f#@k off.

    5) Then the railway equipment and train building industry was in trouble. The Government told them to f#@k off.

    6) Then the car making industry was in trouble. The Government told them to f#@k off.

    7) Then the steel making industry was in trouble. The Government told them to f#@k off.

    BUT

    8) Then the entertainment industry was in trouble and the Government said "OH MY GOD WE CANNOT ALLOW THE ENTERTAINMENT INDUSTRY TO FAIL! We must give them tax breaks, subsidies, knighthoods and do everything we can to keep this luvvly bunch of luvvies in the manner to which they are accustomed!"

    I put this down to the fact that the vast majority of politicians are "humanities" people. They have degrees in history, English, fine art, psychology, PPE; hardly ever science and technology. They (like most people) see entertainers face-to-face, they are charmed by them. Unlike ships, cars and electricity which are "just there".

    So politicians love the entertainment industry, which is why its pronouncements are so dangerous.

    PS: Some might point out that Mrs T , about the worst offender in this, had a science degree. Very unusual for a politician. There is a different explanation for her. Having changed careers she wanted to justify it by destroying what she left behind, and getting her own back for being the junior in the lab etc.

    Perhaps the lesson is that there can never be intelligent support for technology in government, except in wartime or for fads like wind generators, the workings of which any humanities guy thinks he can understand more than a nuclear power station for example
  • by Bert64 (520050) <bert@@@slashdot...firenzee...com> on Wednesday March 21, 2012 @05:52AM (#39424741) Homepage

    I used the preview downloads to make decisions on which CDs to buy, and actually did buy CDs based on the previews.

    And this is exactly what the RIAA don't want, they would much prefer you to buy CDs, and then find out that you don't like them... If people can try before they buy, then they have to actually make an effort to produce decent music that people will like.

  • by Bert64 (520050) <bert@@@slashdot...firenzee...com> on Wednesday March 21, 2012 @05:59AM (#39424763) Homepage

    Approach it from another point of view...

    As you point out, people hate DRM and the various laws being pushed by these groups...

    Any money you spend on buying music from RIAA affiliated labels will be used to push the above... How can you justify purchasing music, knowing that your money will be used against you in this way?

  • by Sique (173459) on Wednesday March 21, 2012 @06:08AM (#39424795) Homepage

    The underlying problem is, that creating (nearly) perfect copies of a work used to require a high investment first in the copying machinery, be it the printing press or the vinyl press or the polycarbonate press, and then in creating the master copy, be it a proofread typesetted one or the matrix for pressing vinyls or CDs. But the actual copy, once the copying machinery was installed and the master copy created, was cheap.

    Thus there was a business model in investing heavily in copying machinery and then look for works of which a large number of copies could be sold. The only risk was that one created a master copy of a work which didn't sell. Everyone was thus looking for works which were already bestselling and created their own copies of them. Because of that the copying enterprises which first started to copy a work seeked protection from competition, thus the institute of copyright (or imprimatur) was installed already at the end of the 15th century. Before one could start selling copies, one had to get the permission from the authorities to do so. Only in the 18th century, with the Statute of Anne in 1710, it was recognized that not only the people investing in copying equipment and creating master copies should profit from a work, but also the actual creators, which then could either be hired to create the work or license their own works for copying.

    Now the business model was complete. It was founded on the fact that creating a single copy of a work was nearly as difficult as creating hundreds and thousands of them, thus people creating multiple copies could always undercut people creating a single copy in price, making it thus attractive for nearly everyone interested in a copy not to copy themselves, but buy a cheaper copy from a copying enterprise. And it encouraged people creating works which were easily to copy and thus being sold in large numbers. Finally a legal framework was created to fend of competitors by making it unattractive to invest heavily in copying equipment and copying exactly the same works that were already copied by others.

    But this whole business model of being able to create cheaper copies than those interested in actually owning a copy is shaky, because now the investment necessary to create a single copy is less than go out shopping for a copy. Copying equipment is cheap, $100 will be sufficient, and can be used for as many works as one likes. Every copy can be a master copy. The big price advantage of the guys with the copying machines is gone. And thus also the main income stream for creators of copyable works breaks down. They had a quite strong negotational position as long as there were only a few entities able to create affordable copies, because they could sell exclusive copyrights to only one of them and were able to police all the others trying to create unlicensed copies. Now they have to basicly negotiate with each single person interested in a copy, because each person can create the copy for themselves, and policing unlicensed copies is nearly impossible.

    It might be, that the business model of creating an easily copyable work and then selling as many copies as possible is gone forever, because creating copies itself is no longer a business model. There is no compelling reason anymore for the consumer to have the act of copying done by someone else, because everyone can create perfect copies for cheap.

  • by rtb61 (674572) on Wednesday March 21, 2012 @06:44AM (#39424933) Homepage

    The whole story is one steaming pile of bullshit and crap. It's only aim to take over the internet and create a 1980 mass media version of it, where half a dozen corporations control what is allowed on it and 7 billion people are censored 24/7/365.

    Want proof, http://www.castanet.net/news/Canada/72606/Experts-worry-over-household-debt [castanet.net], http://biz.thestar.com.my/news/story.asp?file=/2012/3/20/business/10946706&sec=business [thestar.com.my], http://www.whocrashedtheeconomy.com/blog/intro/household-debt/ [whocrashedtheeconomy.com], http://www.abc.net.au/unleashed/27880.html [abc.net.au]. Stories from all over the world of household debt at record unsustainable levels.

    Just were in the fuck is are those RIAA and MPAA dickwads meant to be getting that money from, who are the imaginary folk left to spend money on content instead of food, or rent, or clothing or medical expenses.

    Quite simply there is no money left in the economy especially for parasitical parts of it. It is gone and based on current economic realities it is more than gone the ability to generate further personal debt is gone. So the question to bullshit politicians and governments exactly which parts of the economy do they wish to crash to feed the insatiable greed of the pigopolists.

    These corporations are basically trying to launch an economic and political war on the majority of humanity. Establish a global big brother internet, where the monitor, censor and control every man women and child that is not part of their elite circle of psychopaths.

  • by Ihmhi (1206036) <i_have_mental_health_issues@yahoo.com> on Wednesday March 21, 2012 @06:57AM (#39425035)

    Yet, I almost never buy music anymore.

    I buy loads of it, both MP3s and CDs.

    And the RIAA doesn't get a cent, because all of the local bands I support are smart enough to realize that a) they don't need to get involved with the RIAA anymore to sell albums (if they don't give away the music outright) and b) they're going to make the vast majority of their money off of touring (which you can't really "pirate" anyway, scalping and counterfeit tickets notwithstanding).

  • by flyneye (84093) on Wednesday March 21, 2012 @07:11AM (#39425123) Homepage

    I'll tell you how to increase income amongst the unemployed and shit-workers!
    Quit buying music altogether. Sound counter intuitive?
    Here's how this works so you can imagine how many can prosper:
    Everyone finally gets a blast of intelligence and quits funding the corrupt ,thieving music industry and it languishes.( I wish)
    Musicians promote themselves by distributing their recordings, free, take over their own publicity via modern resources (internet).
    Musicians make money playing live. the biggest moneymaker, this time tour is funded and profited by musician not industry.
    Imagine talented musicians rising like cream for all to see rather than getting the powdered creamer from industry picks.
    Picture prices for live shows dropping with no industry cut. Pepperland will fill with music again if you only get rid of the Blue Meanies.
    There is no need for a parasitic, unwelcome, unneeded industry for this scenario and so many MORE people will find a new avenue of income doing what they actually LIKE to do. The world needs a bit more of that, don't you think so.
    The industry, just let it die. Quit buying music. Music is free (intangible). Performance/labor is paid (concrete).
    Wanna see why musicians need the industry like worms need jet engines? http://www.negativland.com/albini.html [negativland.com] Educate yourself and understand the true nature of the industry we fight to kill.

  • by arth1 (260657) on Wednesday March 21, 2012 @07:15AM (#39425159) Homepage Journal

    And this is exactly what the RIAA don't want, they would much prefer you to buy CDs, and then find out that you don't like them... If people can try before they buy, then they have to actually make an effort to produce decent music that people will like.

    Of course you can try before you buy. Record stores have headsets (or similar) and will let you listen before you make a decision. While you examine at the nice 12.4" cover.
    And if you only like one or a few songs, why, you can buy a single or a maxi instead.

  • Losing Money? (Score:5, Insightful)

    by whisper_jeff (680366) on Wednesday March 21, 2012 @07:21AM (#39425197)

    So, claims are regularly made suggesting that the music industry is failing, usually followed by claims that tougher laws are needed to protect the hard working people in the music industry.

    Small problem - it's not true.

    The music industry is not in as bad a situation as claims would suggest. Here are some interesting statistics:

    Music publishing revenues are on an upward trend.
    Worldwide Music Publishing Revenues (2006 - 2011)
    http://grabstats.com/statmain.asp?StatID=69 [grabstats.com]
    $8.0 billion (2006)
    $8.3 billion (2007)
    $8.6 billion (2008)
    $8.9 billion (2009)
    $9.1 billion (2010)
    $9.4 billion (2011)

    Live music (concert) revenues are on a upward trend.
    Worldwide Live Music / Concert Revenues (2006 - 2011)
    http://grabstats.com/statmain.asp?StatID=70 [grabstats.com]
    $16.6 billion (2006)
    $18.1 billion (2007)
    $19.4 billion (2008)
    $20.8 billion (2009)
    $22.2 billion (2010)
    $23.5 billion (2011)

    The entire industry's revenues (*) are on an upward trend.
    Worldwide Music Industry Revenues (2006 - 2011)
    http://grabstats.com/statmain.asp?StatID=67 [grabstats.com]
    2006 ($60.7 billion)
    2007 ($61.5 billion)
    2008 ($62.6 billion)
    2009 ($65.0 billion)
    2010 ($66.4 billion)
    2011 ($67.6 billion)

    * The "entire industry" is defined as "Revenues are for record labels, music publishers, recording artists, performing artists, composers, concert venues and merchandise, companies; includes revenues from sales of physical recordings, digital music services (online and mobile), music publishing and live music."

    What is most interesting about these numbers is it supports what I have felt for a long time - the major players in the music industry have realized that CD sales are nice but that's not how to get rich - the big money (almost 2.5 times the money...) is in concerts. That is why acts like 'N Sync and Britney and Beiber and U2 and Lady Gaga and damn near everyone are regularly on tour. They've realized that people are spending more and more on actually going to the concert to experience the music. They realized that the be financially successful means touring a lot. CD sales makes one wealthy but a concert tout makes one rich.

    These numbers show that the music industry isn't failing. It isn't even shrinking. The _industry_ is growing, across the board. Yes, there are individual companies that might be suffering and there are individual bands that are suffering and there are probably specific geographic regions that are suffering but the industry, as a whole, is thriving - it is growing.

    One thing I do agree with the music industry, however, is that the internet is a big reason for this - we just disagree on the direction their profits are headed...

  • Kids have changed (Score:5, Insightful)

    by clickclickdrone (964164) on Wednesday March 21, 2012 @07:33AM (#39425285)
    When I grew up, everyone I knew as music mad, we spent every penny we could on vinyl and later CDs. It was the soundtrack to our lives and it meant something to us. We bought the best HiFi we could afford to play it and would just sit in each others bedrooms playing our new stuff and reading lyrics etc.

    Fast Forward to 2012. All my nephews, nieces and they friends barely care about music. It's just something they dance to in clubs or listen to on a tinny mobile phone speaker. None of them have a HiFi, none buy any music, none care. As someone said, in the rare case they want to hear a track, they'll fire it up on YouTube.

    Most older people have all they want, having bought the same albums on LP, CD and maybe SACD. They rarely buy anything new.

    IMO, the reason music sales are down is because the world has changed and NOT because of piracy. Music habits have changed.
  • by MickyTheIdiot (1032226) on Wednesday March 21, 2012 @07:37AM (#39425307) Homepage Journal

    However, with the fact that the RIAA has just a broad definition of "piracy" (a word that has been misused to the point it is now meaningless for any precise usage) this becomes the classic slippery slope problem. The *AAs can just as easily start to call *in store* usage piracy as well. It would been shooting their own foot, but they have essentially already shot their own foot with demonizing music lovers with piracy witch hunts.

    Copyright isn't about "intellectual property." It's about telling people what they can or can not do with property the legally bought or otherwise aquired. It's about controlling something that has made it out to the world.

  • by i_ate_god (899684) on Wednesday March 21, 2012 @08:38AM (#39425807) Homepage

    "Musicians make money playing live. the biggest moneymaker, this time tour is funded and profited by musician not industry."

    I guess you've never performed live, or had to deal with venue owners/managers in any capacity whatsoever.

    For large scale productions, you need large venues that charge well over $10,000/night to rent. That's JUST the rental fee.
    For small scale performances, you need to deal with owners/managers who feel that by giving you the privilege to play, they are doing you a favour, sometimes CHARGING YOU to play at THEIR venue.

    Do you know why small venue owners get away with it? Because everyone wants to be a rock star and they'll do anything to achieve that status.

    life is not as simple as you make it out to be

  • by Fauxbo (1393095) on Wednesday March 21, 2012 @08:50AM (#39425913)

    For small scale performances, you need to deal with owners/managers who feel that by giving you the privilege to play, they are doing you a favour, sometimes CHARGING YOU to play at THEIR venue.

    Do you know why small venue owners get away with it? Because everyone wants to be a rock star and they'll do anything to achieve that status.

    If everyone wants to be a rock star and they only let you play that night, aren't they doing you a favor?

  • by madison_hotel (2466834) on Wednesday March 21, 2012 @11:12AM (#39427705)
    An owner doesn't have a reason to let any garage band kid play in their establishment (is that the word?), in their venue I mean, just because someone thinks he should be paid to do it. If you really should be paid to play, then the job offers will fall all over you (yes, playing music is also a job), because owners know you move a large crowd. If you're nobody, you need to show yourself to the world, and pay for the time and infrastructure you're using. I don't see anything wrong with this. It is not a favour: it is business.

A committee is a group that keeps the minutes and loses hours. -- Milton Berle

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