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Piracy may be commonplace, but music’s outlook is improving

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Making headlines today is a report that puts some big numbers on the piracy problem.

More than three billion songs were downloaded illegally around the world via torrent in the first half of 2012, according to the Digital Music Index published by Musicmetric, a company that sells its torrent tracking services to content owners.

That is a huge number. This being the virgin index, however, Musicmetric cannot supply historical numbers with which to compare.

If it had, they would likely show unauthorised downloading is on the wane. The industry itself, in its 2012 Digital Music Report earlier this year, cites “progress” and says “the needle is moving” on the issue.

Last year, global music trade revenue fell by only three percent. In the U.S., the fall was just 0.1 percent. In other words, the decimation with which the business has become familiar has bottomed out.

Over the last year, several labels crossed the threshold at which digital gains are making up for physical losses. Here is why:

1. Legal services are blossoming

The number of easy-to-use legal, licensed music offerings, many of them offering free music to users, is growing fast, now numbering around 500 in 78 countries. Labels and policymakers alike have long believed that attractive legal services are the best antidote to piracy – and they are finally flourishing in number.

2. Governments are supportive

In countries like the UK, France, New Zealand and South Africa, labels have won government support for introducing graduated-response measures against persistent infringers, ranging from warnings to disconnection from the internet. When Sweden introduced a law under which freeloaders’ details would be shared with copyright holders, torrent traffic plummeted, albeit temporarily.

3. Labels are winning court support

Individual court decisions are also going labels’ way. Like in the UK, Finland, Denmark and Austria, where the country’s top ISPs block The Pirate Bay. In Britain, other sites pointing to unauthorised hosts are also getting taken down via injunction.

4. Intermediaries are playing ball

Search giants like Google and Baidu, enticed by the prospect of operating their own music services, are now making efforts to filter from search results links to illegally-hosted material. Likewise, payment processors like MasterCard, PayPal and Visa are working together with police to prohibit payments to unauthorised music sellers in Russia.

Several studies show freeloaders would stop downloading upon receiving just one warning. In France, where the controversial notifications agency Hadopi has been introduced, P2P use has reportedly dropped by 26 percent, pushing up iTunes Store singles sales in France by 48 percent, according to one study.

The music industry has long been engaged in a multi-pronged response to the decimation. To flourish like it did in the heyday of CDs, it needs legal adoption, piracy reduction and a range of other factors to happen all at the same time. That’s why it won’t take its foot of the anti-piracy pedal.

But, though numbers show unauthorised downloading is still commonplace, it is worth pausing to observe the industry has begun to go in the direction it wants.

9 Responses to “Piracy may be commonplace, but music’s outlook is improving”

  1. What’s the real number of illegal music downloads worldwide? the Musicmetric research says 3 billion in the first half of 2012, but Sean Parker (Spotify investor, former Facebook president) says anywhere from 4 to 10 TRILLION per year globally! So what’s the real number?

  2. EthicalFan

    Neither music nor motion pictures have started to rebound and continue to decline in revenues. US Home video sales (DVD, BluRay, PayTV, VOD, Streaming) are down 25% to $18.5B in 2011 from $25B in 2006. The first BitTorrent search engines debuted in 2004. Recorded music revenues are down worldwide from $27B in 1999 (Napster) to $15B in 2011. All citations at ethicalfan dot com.

    • Ron Miller

      There are lots of factors beyond piracy contributing to these lower numbers. Illegal downloads is just one factor. The fact is the way we consumer media has changed dramatically since 1999 and there are plenty of legal ways to consume media that don’t involve piracy. I personally buy far fewer DVDs than I did in the late 90s because I subscribe to Hulu+ and Netflix instead. I get a lot of my music through legal channels such as Spotify. Yes, the profits are lower than they were in the recording industry’s hey day, but that has to do with the impact of disruption and the industry’s failure to react to that change as much as it does to illegal downloads. It’s simplistic to suggest there is one to one correlation to these numbers you cite.

      • EthicalFan

        It is not simplistic to correlate 24% of all worldwide internet traffic being used to “share” movies and music with a 50% decline in music revenues. Its amazing that with that much stolen product circulating that there are any revenues left.

  3. Agree that piracy, as estimated by various analyst houses/industry bodies, is likely on the wane. The individual regional downloads figures from Musicmetric seem to be much lower than the numbers put about the BPI/RIAA/etc, though a direct comparison is still difficult.