Piracy not the burning issue in CD sales slide
alex james
By Colin Kruger
January 28 2003
While Australian music sales dropped last year, the Australian Recording
Industry Association (ARIA) concedes that online song-swapping and CD
burning may not be to blame.
The message is a significant one from the music industry body, given that
its international counterparts say piracy is the primary cause of a
predicted 6 per cent fall in global CD sales this year - the fourth
consecutive annual decline.
But the industry's statistics and rhetoric are starting to be challenged,
with a range of experts finding a number of factors to blame for the
down-turn - including the music industry itself.
On the surface, it looked like the global contagion of music piracy may have
finally hit Australia, with CD sales dropping almost 5.5 per cent to just
under 47 million for the 2002 calendar year.
The overall value of the music market (excluding DVDs and video) fell by 8.9
per cent from $629 million to $573 million. This compares with double-digit
sales growth of CDs the previous year, and revenue growth of 8.4 per cent.
Music piracy certainly warranted a mention, but ARIA cited economic
conditions and increased competition for the consumer's entertainment spend
as culprits. And the proof was more conclusive.
ARIA chief executive Stephen Peach conceded that the industry had recorded a
decline as recently as 1996, followed by some flat years since. On top of
that, mobile phones and gaming systems have become expensive rivals to the
music industry's crucial teenage market.
"I think it's important to recognise that there are other legitimate
commercial pressures [on music sales]," Mr Peach said.
Despite talk of market saturation, both Telstra and Optus predict that more
than 2 million new mobile phone subscribers could be signed up over the next
two years. Optus forecasts that mobiles will be in the hands of 75 per cent
of the population as early as March next year, with the vast majority
expected to be young, pre-paid users.
On the games console front, where the latest games for Playstation II will
set you back almost $100, things don't look any better. According to market
research company Inform, a record $180 million was spent on interactive
games in December 2002 alone.
CDs are also facing competition from within their own camp, from music
video/DVD sales which increased more than 150 per cent last year to more
than 2.45 million copies.
Despite the concessions, ARIA claims to be in step with its US counterpart,
the Recording Industry Association of America (RIAA), which is playing a
very different tune. RIAA has waged an aggressive campaign against
file-sharing technologies like Napster, which it finally closed down last
year, as well as CD-burning technologies which it blames for the first fall
in music sales for two decades in 2001.
"A large factor contributing to the decrease in overall shipments last year
is online piracy and CD-burning," said RIAA chief executive Hilary Rosen.
The industry has put heavyweight stars behind their push against piracy,
with Madonna, Eminem and Britney Spears finding an unlikely common cause.
Industry experts have some other ideas about what has caused the decline in
sales, including rising prices in the US and a cutback in new releases.
According to RIAA's own figures, after constantly increasing the number of
new releases through the '90s, new music releases in the US fell by 31 per
cent to around 27,000 in 1999.
In the UK, where new releases continued to climb in 1991, unit sales rose 5
per cent. US statistics also suggest that music prices rose by about 6 per
cent in 2001, compared to a rise of less than 2 per cent in the UK during
the same period.
UK sales did join the US for the first half of 2002, with a drop of 5.1 per
cent, compared to a further drop of 8.7 per cent in the US.
US-based Forrester Research pointed to economic conditions and competition
from other forms of entertainment as the culprit - much like the Australian
market.
In a report released in August last year, the firm actually reversed its
view on the threat that online piracy posed to the music industry.
Forrester contradicted RIAA's research in its report, which said consumers
who frequently download music and burn CDs still buy 36 per cent of all CDs
in the US. And the music buying habits of this high-risk piracy group aren't
expected to change much. "While 13 per cent say down-loading will decrease
their music purchases, 39 per cent say exposure to new music online
increases their CD buys," Forrester said.
These arguments certainly haven't curtailed the rhetoric or the action from
RIAA, with Ms Rosen launching a range of actions prior to her surprise
resignation last week.
Earlier this month, the organisation announced plans to charge the internet
service providers for the illegal downloading, saying that much of the
demand for high speed broad-band was driven by file sharing. And just last
week RIAA won a court case to get Verizon to reveal the name of a customer
who allegedly shared hundreds of recordings via the Australian-owned Kazaa
file-sharing system.
It's the broadband issue which has the attention of ARIA's Mr Peach.
Broadband use is just starting to pick up here and has been named as a
significant factor in online swapping in the US.
While it had been hard to quantify factors behind the decline in CD sales,
Mr Peach said the rise of broadband would help ARIA "get a better handle on
it during the current year".
One thing everyone seems to agree on is that online music downloading is the
future saviour of the industry and will help it back to growth.
Mr Peach said there were some positives from Napster and Kazaa-style
download systems which the industry had not yet been able to replicate, with
legitimate download services "very limited" at present.
The challenge will be for record companies to set up a viable online model,
which could restore sales growth in 2004, Forrester says.
"By 2007, downloads will generate $US2.1 billion, or 17 per cent of the
music business, propelling the industry to its fourth consecutive year of
growth. Like the move from LPs to CDs, the switch to digital music will
revitalise the suffering industry," the firm said.
This story was found at:
http://www.smh.com.au/articles/2003/01/28/1043534039320.html
Hazzart
server.bigpond.net.au:
> While Australian music sales dropped last year, the Australian Recording
> Industry Association (ARIA) concedes that online song-swapping and CD
> burning may not be to blame.
>
so it might just be what we knew all along: record indudtry promoting shit
music is to blame
Rod
Sounds like a joke but I think that's largely a part of the reason. It
would be interesting to breakdown just where the decline was. Are they
talking about just new releases? For example, I wonder how stable and
old acts CD sales fared..acts such as The Beatles, ABBA, The Eagles
etc...OK so they have maybe been around too long (I still love 'em)
but if their sales are stable, then it might suggest that it really is
the quality of NEW music that is dropping.
Throw in DVD sales and the other reasons mentioned and I think they
are right in that piracy is certainly NOT the main factor.
Terry
lwhite
Very good information and was presented in a very well written manner.
I agree with some of your statements. Hopefully downloading music is
not banned on the internet.
reg-john
"lwhite" <lwh...@csj.edu> wrote in message
news:c2363fbf.03020...@posting.google.com...
lwhite
> downloading copyrighted mp3s is already illegal.
>
> "lwhite" <lwh...@csj.edu> wrote in message
> news:c2363fbf.03020...@posting.google.com..
There are many sites that still let you download music and play the
music on a real one player or media player. Kazaa, WinMX, and others.
reg-john
copyright material illegal. kazaa might go down, but there are thousands of
other ways to share the material.
"lwhite" <lwh...@csj.edu> wrote in message
news:c2363fbf.03020...@posting.google.com...
Jaboki
to be very loyal to their music, if they like the artists music, then
they will buy the ablum. Though music singles I think tend to take a
dive in sales becuase of piracy. They are many people who just like
the hit single of an album and not the rest of the songs. So they just
burn the single on a cd-r. Sales do suffer becuase of file sharing.
Like it or not, this will continue, unless the record companies find a
way to police this action. Which seems inconcievable but not
impossible.
Lazarus Armageddon
> Sales do suffer becuase of file sharing.
> Like it or not, this will continue, unless the record companies find a
> way to police this action. Which seems inconcievable but not
> impossible.
Piracy is not the issue its made out to be anyway...Without piracy,
Sony et al would not now be making huge profits from (constantly
upgrades...how convenient) anti-piracy technologies
Lazarus Armageddon
--
Freelance Thinker & Memetic mAR(T)ginalIST