Piracy is a very prevalent part of modern society and there is a widely held belief that piracy has an adverse effect on the music and film industries. However, this is simply not true.
Many people like to make the assumption that the decline in record sales over the past decade was due to the increase of P2P file sharing technologies. But correlation does not imply causation. Just because two variables are observed to move together, does not imply one is causing the other.
Piracy is not killing the music and film industries.
There is however, a very questionable approach to research, and the ensuing statistics, that the media thrive on when it comes to piracy. These figures and statistics are mostly based on assumptions, guesswork and extrapolation.
According to IBRS analyst Guy Cranswick, in relation to questionable piracy research the quality of data and analysis is very weak as its political objective is so clear. The main objective of these statistics is to lobby politicians and to scare the public into compliance.
Most statistics that relate to the cost of piracy work off the equation that one downloaded movie or album equals one lost sale. Therefore, the Motion Picture Association of America (MPAA) state that as a result of piracy they have lost revenue ranging from 6–21 billion $US. Furthermore, the Australian Content Industry Group (ACIG) has claimed that piracy costs $900 million a year, and 8000 jobs.
These statistics cannot be seen as fact as the methods used are based on assumptions and there are many factors that have not been taken into account. Furthermore, local music and film industries are not suffering as a result of piracy. In fact, in 2010 the Australian box office set its third consecutive revenue record reporting income of $1.128 billion, a four per cent increase from the previous record.
The music industry is changing more so than the film industry, and as a result music sharing can actually benefit a wide variety of music professionals.
The concept of music piracy, or sharing, benefiting bands and artists may seem preposterous. However, music sharing can allow for small bands and artists to gain a following whilst playing live shows at venues across the country. One of the first bands to take advantage of music sharing was alternative rockers, the Arctic Monkeys.
It should also be noted that research conducted by Columbia University shows that ‘pirates’ spend more money on legal downloads than non-pirates. It appears that the pirated copies actually serve to market the legitimate versions, and can increase sales.
During early performances they would give away CD’s, which fans would burn and share on the internet over websites such as MySpace. Therefore, in 2006 when the Arctic Monkeys released their first album, it sold over one-third of a million copies in its first week. This made it the fastest selling album in UK history, dwarfing the combined sales of all other albums in the UK top twenty that week.
Piracy should be looked upon as a relocation of income and not a loss to the national economy. According to Colin Jacobs, the chairman of Electronic Frontiers Australia (EFA), money not spent by downloaders on movie tickets and albums are almost certainly spent elsewhere on other goods and services that may be more efficient at creating jobs in Australia.Research from Holland and Canada has shown that piracy was actually beneficial to their economies.
The development of the internet has permanently changed the way people buy music. Over the last 10–15 years recorded music sales have declined. However, there are many other factors that have brought about this drop, not simply piracy.
Streaming services and programs like Spotify, that allow people to buy and listen to as many songs as they want without having to purchase the album, are factors in the drop of sales. In actuality, the biggest factor involved in the piracy and drop of sales discussion is the high price of music.
The music industry has maintained unrealistic prices, particularly in Australia where customers are paying 50 per cent more than US counterparts. As a result, people are less inclined to purchase music, which has caused a shift in how music is consumed, and ultimately how artists approach their revenue systems.
Today, the modern consumer will spend less on purchasing music, but will spend more on attending concerts and festivals. Due to this ‘shift’, many artists, such as Madonna, are signing contracts with promoters rather than record labels. These contracts allow artists to offset their losses from declining record sales by increasing their revenue from live shows, merchandising and other rights.
Piracy and other factors have allowed the music industry to be a far more open system, where new artists can more quickly and more directly connect with their audience. As a result, there are more artists recording more music, sharing a similar sized ‘pot’ of money with a more enthusiastic listening culture.
For a large number of people, music and film piracy is a part of everyday life, that the media believe is killing the respective industries. However, when looking at high quality data and analysis, it is evident that this simply not true. File sharing and piracy may be responsible for the development of the music industry, by allowing artists the opportunity for more people to hear their music.
Nevertheless, we are not condoning piracy, as it is a criminal offence. We are merely pointing out several flaws in the evidence presented in the media, and stating that piracy is not killing the music and film industries.