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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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  • the quality dropped (Score:4, Interesting)

    by Anonymous Coward on Wednesday March 21, 2012 @02:28AM (#39423907)

    While I have _a lot_ of vinyl from the 60's and 70's I slowed down buying at later years. Now the CD recordings are unpleasant to listen because of loss of dynamic range (loud mastering) I don't buy them. One reason for the growing sales of vinyl. I don't download either. If the music industry can come up with artists and quality of the past I will not buy anything (new). I believe I am not alone on this.

  • by TheLordPhantom (2527654) on Wednesday March 21, 2012 @02:33AM (#39423925)
    I have noticed the exact same thing with myself. I don't pirate, and haven't in years. Yet, I almost never buy music anymore. I do own a decent collection of music, but really, I find Pandora, Spotify, etc. to be a far more interesting sources of music, even at times more practical (as in I don't need to copy files from one piece of hardware to another). I honestly don't think that MPAA really can blame even the majority of the decline in sales on piracy. In my own anecdotal experiences, that is simply not the case. People's methods of listening to music are changing. Ultimately, the media companies will have to change the way the approach the gathering of revenue.
  • It's not piracy (Score:5, Interesting)

    by Hackysack (21649) on Wednesday March 21, 2012 @02:41AM (#39423955)

    There is a fundamental shift in the underlying business models. (Thank goodness)

    a) No longer is the only source of getting a song, buying an album. Now, if you like a song, you buy the song for 1.29, rather than the album for $20 from HMV or wherever.
    b) Social media and word of mouth trumps advertising and corporate presentation. It's much harder to convince your audience to spend the $20 for the album with 1 mediocre song, and it's much easier for your audience to talk amongst them selves and realize that the album isn't worth it.

    c) Thanks to the digital age, the industry is shrinking. Same for newspapers.

    A large portion of the size of the industry was the overhead necessary to distribute physical media. I'm not sure what %, but I'm certain it was significant. This business value is gone and/or going now. What you're left with is the value of the purely creative side, some marketing, some overhead.

    If the value of a newspaper in 1990 was $100M, and $60M of that could be attributed to the capital & overhead required to actually produce and deliver the newspaper; now it's 2012, and after inflation the same company finds itself worth $40M because they've lost the need to maintain the infrastructure to do the physical delivery. The same is true for Music (tho not yet for movies, although coming) A very large portion of the value of a music distribution company was the distribution part. That's gone now, thank goodness.

    We just need the industry to adapt to the new mode where creation is harder than delivery, because right now I feel like we're not being served well by record company A&R.

    But that's just me

  • by Anonymous Coward on Wednesday March 21, 2012 @02:51AM (#39423995)

    Look at the gaming industry. They have modified their business models to battle piracy. However, not everyone likes it and especially on Slashdot you can see many people complaining about free2play games and everything moving online. That is the only choice companies have tho. So, if everyone continues pirating games (the actual piracy rate is about 90%, even with indie games), every game will soon be something like Zynga's facebook games, mmo's or some other multiplayer games. Personally I have no problem with this, I love TF2 too, but I've noticed people complaining about this on Slashdot.

  • by Anonymous Coward on Wednesday March 21, 2012 @02:52AM (#39423999)

    I'd venture a guess that piracy is hurting them (slow down there, read the rest before you foam at the mouth and post a vitriolic reply), and that what they're doing to combat it is making it much, much worse, turning what would be an inconvenience into a death spiral.

    I don't recall the major labels being quite so vilified in my youth. Possibly there's an element there of the internet giving voice to malcontents who waste no time in airing the recording industry's dirty laundry, but I suspect the big issue people have with them in their anti-pirate tactics. Suing grandmothers is never good PR. Nobody likes DRM. Laws that shore up antipiracy measures are widely loathed by anyone who knows much about them - see SOPA/PIPA or the DMCA.

    What does this have to do with piracy? People like free shit, and dislike feeling guilt. People can pirate music for free (we'll stick to just music, since TFA is about the RIAA), but feel guilty about the artist. They assuage their guilt by familiarizing themselves with the evils of the recording industry and "stick it to the man". And by reminding everyone who'll listen that the artist hardly sees a dime from album sales anyway, unless they're already a big name. Guilt gone, music free.

    My evidence for this statement is that when the artist is separated from the industry, when the pirate CANNOT pretend to be Robin Hood, then the musician actually can make a living selling their music online, DRM free. See Jonathan Coulton (who'd never make it in the industry) and Nine Inch Nails "Ghosts" album (which were actually made available for free, with a "please pay us if you like our music" option that made Reznor more money than he gets from his regular album sales).

    Watch now, as the entire thread below this comment devolves into exactly the same guilt deflecting "but they're evil" roundabout justification from absolutely every retard who didn't make it as far as this last paragraph. Or maybe slashdot will pleasantly surprise me (hahahhahaha).

  • Jobs and Profits (Score:2, Interesting)

    by Anonymous Coward on Wednesday March 21, 2012 @02:55AM (#39424013)

    The argument that piracy results in job losses is bunk on its face.

    Imagine that the MPAA is right, and millions or even billions of dollars really are lost due to piracy. Now imagine that piracy doesn't happen and that all that money goes where the MPAA says it should. The companies of the content industry now have extra billions of dollars in revenue and profit.

    Where does this money go?

    Do they give all their workers a raise? No, they're not a charitable organization. As publicly-traded corporations, it would even be illegal for them to do such a thing out of the goodness of their hearts.

    Do they hire more workers? No, what would they hire more workers for? The jobs they provide are already enough to make these untold billions in profit. Extra people employed (beyond the necessary few extra for shipping&handling of the increased volume in CDs, etc) would just be a drain on the balance sheet. Again, not a charity providing make-work jobs.

    Do they pay out bigger executive bonuses, pay out stock dividends, execute corporate takeovers, bribe, erm, lobby congressmen? Yeah, these things seem quite a bit more likely.

  • by Opportunist (166417) on Wednesday March 21, 2012 @03:01AM (#39424041)

    Let's take a look at the record industry's main customers: Teenagers and young adults. I hope it's no secret that the people who buy the most music are in the 14-25 age bracket.

    Now, what did teenagers have to spend their dough on before the 2000s? Well, I was in that precious age bracket just before Napster came into existence, so maybe I may talk about it: Music, fashion and ... umm.... I guess computers counted only if you're a geek. Music and fashion WAS pretty much what teens blew their money on before the millennium rolled over. Throw in a few movie tickets and the odd night out with friends in the local teen bar (yes, such things exist in Europe where you may drink before you may drive, but I digress) and you got what teens wasted money on.

    Fast forwards to the present. Now, I'm not a teenager anymore, but I "fortunately" have to suffer from having contact to them. Sidenote, never volunteer for anyone. But I digress again. So I see what they have to pay today. Cellphone bills, online gaming, gaming in general (mostly console outside of WoW, actually), iPod accessories (ok, they double as fashion, actually), ... you get the idea.

    In other words, the companies that vie for the teens' money multiplied. It's no longer Diesel jeans and Sony music alone. I don't want to claim that this, in turn, doesn't make them copy music instead of buying it ... but then again, so did we when we were young. Ok, it was tape-to-tape copying rather than downloading it, aside of that, well, you cut corners where you can when your money is tight. And there's hardly a teen who isn't short on cash constantly.

  • by Lyrata (1900038) on Wednesday March 21, 2012 @03:08AM (#39424071)
    I think one of the main issues with F2P games and other new business models is the realities that come with it that gamers aren't used to. Take Heroes of Newerth (HoN), for example. That game used to cost $30, with additional content for sale after that. League of Legends (LoL), free from the beginning (supported by paid content), became wildly successful and easily eclipsed HoN in terms of revenue and player base. The interesting part is when HoN changed to a F2P model in response. The floodgates were open, if you will, to a much larger - and much different - player base. A huge influx of foreign players (in this case, foreign being non-US) quickly and fundamentally changed the community. There is now a great deal of acrimony between players based on their nationality and style of play (they are linked, by the way, Starcraft 2 being a prime example). The game and metagame underwent changes that weren't nearly as significant in the older paid model. TF2, as you mention, is another example. Open to anyone, the average skill level has declined (my opinion) and the focus of the players is strongly leaning towards collection and customization instead of the original, fundamental concept of the game. Whether or not this is a good thing is up for debate, of course. I feel that it's an effective business model and definitely has potential, but you can tell how I feel about some of what I perceive as downsides.
  • by bzipitidoo (647217) <bzipitidoo@yahoo.com> on Wednesday March 21, 2012 @03:35AM (#39424189) Journal

    People like free shit

    Your cynical view of humanity is not accurate. There is such a thing as altruism. Charities somehow manage to persuade people to donate. 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.

    You also attribute piracy to the desire to "stick it to the man". Yes, but that's not the whole story either. I am offended that these psychopathic dinosaurs insist on wasting all kinds of resources and then insist on PASSING THE COST OF THAT WASTE ONTO THE CUSTOMERS. We should pay all this extra money to cover the costs of producing millions of plastic disks and delivering them to thousands of bricks and mortar retail locations, just so those miserable bastards can feel more comfortable that all this extra and needless friction makes piracy more difficult? When we can have the same music delivered via the Internet for a fraction of the cost and time? Why should anyone choose to pay for someone else's gross stupidity? Because if we refuse to do it their way, they try to force and browbeat us into it, that's why. They trash us all as evil pirates, threaten to sue us all, keep cooking up extremely offensively stupid legislation and laughably pathetic DRM schemes, lie through their teeth about the amount of piracy and damages allegedly suffered, cheat artists, manipulate the public with things like Payola, and seriously think they have the moral high ground and the justification to do all this and almost any other reprehensible act to preserve their very dead business model. They should have been ashamed that Sony tried to rootkit PCs, instead they defended it! They pay lawyers to go after the very most vulnerable and helpless citizens. If they had no power, we could just ignore them. But they're old and established, and still have enough power to hurt a lot of people. The revolution is ongoing, and they're throwing themselves against the wall. They're acting like Capt Bligh-- "it's mutiny I tell you, mutiny", only they say piracy in place of mutiny. Don't point the finger at us for rebelling, point the finger at them for causing the whole thing, for calling us all thieves and rebels whether or not we really are.

  • Re:Jobs and Profits (Score:4, Interesting)

    by Pentium100 (1240090) on Wednesday March 21, 2012 @03:37AM (#39424191)

    A better question is where the money comes from.

    I mean a 160GB MP3 player can hold about 40k songs, so that's $40k if you buy them on itunes. So, the guy with a mp3 player full of pirated music:
    1. Has spare $40k in his drawer (or safe),
    2. Has spare $40k in a bank account,
    3. Bought something else with those $40k.
    (or the money was divided between the three options).
    So, if it's #1 then great - more money in the economy. If he takes te $40k from his bank account, then it's a loss for the bank (not a big one though). If the guy decides to fill his mp3 player with legal music instead of buying something else then it's a loss for the whatever industry that has his money now (when he decided to pirate the music and buy something else instead).

  • by Skapare (16644) on Wednesday March 21, 2012 @03:51AM (#39424251) Homepage

    Actually, I have never pirated. But I have downloaded. What I did was use the downloads to preview the music. Then I discarded them. The only downloads I still have are ones from a few artists sites that were intentionally giving them away. I used the preview downloads to make decisions on which CDs to buy, and actually did buy CDs based on the previews. The rate was about 8%. That is, if I had bought a CD corresponding to every downloaded tune, that would be 100%. But most of it I didn't like, such as Electronica that had vocals injected somewhere (I much prefer instrumental music, but I do have some vocal music I like, too). The downloads helped me to actually buy CDs. Had the downloads NOT been available, these are CDs I would likely never have.

    That said, CDs are today very impractical. It's physically too large. No one carries a player anywhere near that size. The RIAA needs to get that clue bashed into their stupid heads and figure out better marketing. Still, I have bought a couple CDs in the past few years ... and "ripped" them so they could be a part of my collection. If I can't "rip" them I can't play them. If I can't play them, what's the point in buying them.

    Today, most of my music collection comes from Magnatune [magnatune.com], a site I do believe the RIAA has tried to shut down by means of illegal tricks, because it's a business model (not be evil) that they don't like. One of the great things with downloads from Magnatune is that I can modify and remix them. A lot of the music has a faster beat than I want, and I can actually slow it down in mplayer (I have my own wrapper program to do it). I can't do that with music played by some proprietary player program. And I doubt it hurts the feelings of the artists if I play their music in a different way or even remix it for my own playing as they get their bits either way and they can't hear how I might have corrupted their art.

    Sales of CDs has gone down for reasons very similar to the reasons that vinyl has gone done ... there's something better out there. Unfortunately for most big corporations, they didn't figure it out soon enough ... to actually give people what they want. The vinyl format was industry produced. The CD format was industry produced. Music files that can be downloaded was not, and they just can't stand that they didn't invent it.

  • by FireFury03 (653718) <slashdot@nMOSCOWexusuk.org minus city> on Wednesday March 21, 2012 @04:08AM (#39424309) Homepage

    They may not necessarily feel any guilt about piracy to begin with. The younger generations certainly don't

    I don't recall feeling guilty about copying tapes when I was young... maybe the guilt is something that is acquired with age as we learn how the world works - if that's the case then I fully expect the RIAA's actions to counteract this tendency for people to acquire guilt.

  • by Black Parrot (19622) on Wednesday March 21, 2012 @04:14AM (#39424317)

    I don't recall the major labels being quite so vilified in my youth.

    I dunno how old you are, but they weren't exactly popular in my youth! The Sex Pistols song "EMI" kinda embodied the way people felt about them in the 70s.

    And Pink Floyd, "By the way, which one's Pink?" And others.

    However, I think they became much more reviled when the technology for production and distribution made them utterly useless middle-men (compared to the LP era), who insisted on maintaining their stranglehold on the market and their profits despite changing times.

  • Re:It's not piracy (Score:4, Interesting)

    by amck (34780) on Wednesday March 21, 2012 @05:27AM (#39424651) Homepage


    Possibly the Slashdot demographic isn't the run-out-and-buy-the-latest-top-40-hit crowd. I probably bought one single for every 10-20 LPs I bought.

    Is there still a Top40? I mean, that people can name musicians on, rather than a manipulated sales list up on a website somewhere?
    Once upon a time, "Top of the Pops", giving the top40, was one of the biggest programs on BBC TV. Ok, it lost its market to MTV,
    but really it died when the labels dropped their midlists in the late 1990s -early 2000s. They dropped over 80% of their _profitable_ artists, concentrating on the few big earners. Now, there aren't enough new songs out there to stage a Top40 show every week, least one that people want to watch (rather than fill the hours on MTV).

    If RIAA gave me vouchers for 4 new albums from 2011 or 2012 for free, I couldn't name any music I would want.

    So, I go to gigs and buy CDs there if the band is any good. RIAA should be ashamed of themselves for how bad a job they are doing at promoting and selling music. Their top-5 only model collapsed on them, and they should stop blaming piracy.

    Now, I may not like X-factor, etc. but there would have been _something_ out there. I used to cringe at some of the "oldie" material that made the Top40 in Ireland etc when I was growing up, but it was bought by people. The equivalent music isn't there for someone who doesn't want the top 3 songs that make RIAA the most profit.

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