Is copyright theft destroying the music industry?

Notes on copyright and whether it is destroying the music industry.

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  • Created by: Hannah
  • Created on: 02-05-12 09:15

Copyright and Royalties

The label owns the actual sound recording - the performance of the song as recorded in the label's studio.

A publisher works on behalf of the song's composer (the person who arranged the music) and songwriter (the person who wrote the lyrics).

If you want to use a song for any reason, you have to pay royalties to the publisher, and/or the label.

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When you have to pay...

You have to pay royalties to the publisher and/or label when:

  • If you are putting on a school musical
  • If you want background music on your media coursework
  • If you want to sample someone else's music on your track
  • If you are an aerobics instructor using music in class
  • If you are a street musician
  • If you are making a commercial and you want to use a song
  • If you own a restaurant and background music
  • If you are making a toy and you want it to play a song when a child pushes a button...

In other words, about the only time you do not have to pay to use music is when you are listening to the radio or TV (or a legal internet site).

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Radio stations/music channels

The station pays for you to hear the music with 'blanket licenses' and you pay by listening to the station's commercials or by paying a subscription fee.

Every other possible use of music legally requires the payment of a licensing fee. If you do not pay and you get caught, you can be sued.

The fines are pretty steep.

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Copyright Crisis

Despite all the hype about the digital revolution, the music business - as represented by the major record labels - is in serious financial trouble.

Sales were down in 2010 by 7% in the UK and nearly 10% in the USA.

It has been a decade since the arrival of iTunes and MP3 players - which destroyed the notion of an album in favour of singles, downloadable tracks - but the music business has found nothing to repair lost CD sales.

The decline in CD sales had been attributed to widespread piracy.

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In 1999 the music industry was booming.

However, few people were aware that at a University in Boston, student Shawn Fanning was creating an online music file sharing service that would transform the music landscape forever.

Napster allowed people to easily share their MP3 files, cutting out the record labels and paying little heed to copyright.

For a music industry which had long complained that home taping was killing music, this was bad news.

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History continued...

Napster was soon followed by similar websites like KaZaA and Gnutella, and as the potential of file sharing to undermine the record sales became clear, the music industry's reaction was quick and brutal.

In 2001 Napster was shut down by a US court order, but it had paved the way for other peer-to-peer file-sharing programmes, which continue to plague the record labels today.

The launch of the iTunes store in 2003 providing a legal online store for people to buy digital music was arguably too late. Profits were plummeting.

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History continued...

New ways of getting music online began to appear. MySpace debuted in 2004, providing a new platform for bands to interact directly with fans, allowing them to post music that could be listened to instantly.

In the same year, digital single sales surpassed physical single sales for the first time.

In 2005 YouTube was launched.

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The problem

There has been an explosion in file sharing in the last decade.

The film, game and now the newspaper industry have also faced loss of income from the Internet. (The Murdoch papers now charge for online editions).

The media industry had little effect with anti copyright theft campaigns on the public.

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UK government strategies

Mandelson's Digital Economy Bill of 2009 is 'on ice' at the moment due to the change of government.

Basically, it means the involvement of government, law and Internet service providers like Virgin, Sky or BT (ISP's) clamping down on illegal files sharing in the notoriously hard-to-police online world on behalf of the media giants.

It proposes ISPs spying on individuals, sending out letters to offenders and suing them. Three strikes and you're out, internet cut off...

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Not everyone agrees...

A number of artists and their organisations oppose the threat of disconnection for persistent file sharers.

The plans have been attacked by privacy campaigners, internet service providers and a range of MPs.

"The problems the music industry faces will not be dealt with effectively through legislation. We can't support these proposals because we don't think they will work, it will cost too much and is far too blunt a tool."

This is the dawn of a new era in the entertainment industry.

Opponents say Mandelson's Digital Economy Bill is dangerously undemocratic, pro big media business, and stuck in the pre digital age.

They say the (ex) business secretary who proposed the bill was influenced by secret meetings with senior figures from the music and film industry.

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Not a problem?

Perhaps piracy isn't always in direct competition with the music industry...

File sharing on web 2.0 has lead to an explosion in the music scene, with lots of new music.

"Without YouTube I'm sure a lot of artists would be considerably poorer and & some would be as unknown as they were before their videos/songs were uploaded."

"Embrace the free publicity!"

Research suggests that people who file share also buy more music.


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Not a problem?

The music industry complains of a billion illegal downloads every year, but has yet to prove that any significant economic damage is inflicted on it.

This is partly because we wouldn't be able to afford all the music on our iPods, so we just wouldn't have it anyway and we may not be listening to many of those we do download.

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Pirate Bay

The Pirate Bay is a Swedish website that indexes BitTorrent files. It is 'one of the world's largest facilitators of illegal downloading', and 'the most visible member of a burgeoning international anti-copyright or pro-piracy movement'

Seperate but sympathetic to it is The Swedish Pirate Party, a political party which wants to reform the copyright system and protect individual freedom from the 'surveillance state'.

In the 2010 Swedish election, the Pirate Party increased their percentage of the vote to a total of 0.65%, remaining under the required amount to gain a seat, but becoming the biggest party outside of Parliament!

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Adapting to the 21st century

The music industry in the digital age is changing.

Big reord labels pushing CDs are a thing of the past, they must accept that the glory days are over.

Now music is discovered, popularised and distributed via the Internet.

Economic Darwinism: adapt or die!

"The big labels need to adapt to the new environment instead of whining on about piracy."

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There are a variety of new ways forward:

  • Merchandising
  • Live music and festivals
  • Ringtones
  • Alternative markets - we are in a period of transition, and traditional business models are being reassessed. Money can be made from 'The Long Tail'
  • Video games - Guitar Hero has boosted music sales for some artists (synergy)
  • Legal music streaming sites - e.g. Spotify
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In conclusion...

  • The way people are listening to music is changing
  • Illegal downloading is still theft but the clock cannot be put back and enforcement is tricky
  • The recorded music industry has a promising future in a whole range of alternative business models like downloads and streaming sites - if it can take a smaller cut per song and accept the financial glories of the past are gone.

Argue either:

  • copyright infringement is illegal, stealing, depriving the artist and the label their due payment, and money for investment in artists
  • OR the music industry must adapt to the 21st century, there are alternative revenue streams, the labels have exploited the audience for too long and indeed many artists are against copyright.
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