Music Piracy: Is It Killing the Music Industry?

Music piracy has long been blamed for the declining music sales over the years. And the music industry has taken action, either by policing their own works by installing digital management rights software in their music to suing organizations like The Pirate Bay and other similar sites that offer a peer-to-peer platform that facilitates the sharing of pirated music and other media forms, to arresting a college student for downloading from these sites.

One cannot help but ask if the $60-billion industry is right on target. Music industry experts have long said that music piracy cannibalizes the physical sales of record labels. In its latest figures, the Recording Industry Association of America reports that total retail unit sales fell by 25% year on year, while total units sold fell by 26%. More telling is a 2002 statement from the RIAA that on top of the economic slump in 2001, music piracy was a factor to a 4% decrease in the total sales of record companies. The RIAA also pointed out that 23% of consumers did not buy their music because they are downloading or copying their music. More statistics from the Institute for Policy Innovation found that on the whole, piracy is siphoning off more than $12.5 billion in lost output including $2.7 billion in lost sales, leading to the loss of 71,060 jobs.

Losing $2.7 billion to piracy is not a laughing matter, that is why record labels have taken a more active and drastic stance to combating piracy.

All this doom and gloom, however, may be putting the blame on the wrong shoulders.

For one, supporters of peer-to-peer sites are highlighting the fact that there is no evidence that the lost sales are all due to music piracy. In fact, with the economy at its lowest point ever, people are cutting down on buying music whether physically or digitally -- among other expenditures. What this means is that, how can the music industry pin all of these lost sales on music piracy alone when other factors could be at play that hinders people from buying music?

More than this, the Journal of Political Economy published a study that monitored 1.75 million downloaded songs. The authors of the study concluded that having a song available on peer-to-peer networks did not necessarily affect music sales. In fact, an increase of one standard deviation only reduces that song's sales by only 368 copies. This would hardly support the multi-billion lost sales case put forward by the RIAA.

Proponents of music piracy also say that there is nothing wrong with music piracy per se: it is just like making your own copy of Madonna's debut album on tape and then distributing it to your friends. Others are saying that because you bought it, you have all the rights to do whatever you want with the music.

Other people base their arguments on their own experience. Columnists like Time's Lev Grossman points out that instead of hindering sales, having a copy of your song on peer-to-peer networks actually help sell it. Grossman relates that on the strength of one song, he bought two albums from the same artist and went to their concert. Grossman even declares that the black market supports the legitimate one.

Moreover, musician and long-time file-sharing advocate George Ziemann says that he considers an mp3 version of his songs as advertisements, meant to sell his albums. He says that the quality of mp3s does not make it a suitable buy for serious music lovers, but it is a great way to introduce his music to people.

The ethics of downloading from file-sharing sites differ on which side of the fence you are on. But the general rule is, if you use it either for business or for personal enjoyment, then you must pay for it. That is a clear cut black and white situation that is easy to argue with. But to take it further and accuse music piracy as killing the music industry in general introduces a whole new issue with a lot of grey areas. With two sides of the coin presented here, the final decision to download bootleg copies will rest on the consumer, and ultimately, he or she will have to deal with the consequences of one’s actions.