Piracy: Economic Crisis or A Good Thing?

Let’s go back to the 1990s for a moment, when music was still being recorded on tapes and mp3s were just being introduced.  Back then piracy was a lesser topic in society, even though it was still happening.  Songs were being recorded on to tapes off of the radio.  But was it really all that bad? Some will argue that this is where seeds of our piracy issues today where planted.  However, there is also another view on this; piracy has the ability to increase sales revenues, in a few simple steps.  For example, a song is illegally downloaded or shared, next one of two things happen, either the user does not enjoy it and does not continue to download anymore content from that artist or they do enjoy it, see the artist as a promising one and are therefore motivated to buy the actual music and support the artist.  The artist gets the money they deserve and the user does not have feel ripped off for buying an album that turns out crappy.  This “process” could be used to get rid of the music industry middleman or at least the advertising aspect, thus saving heaps of money that are uselessly spent and that could go to the artist instead.

Piracy is not necessarily make musicians lose money, but rather the fat cats that sit atop label companies and such.  So is piracy making our economies lose money, or is someone just not making the amount of millions they would want? Even if sales for music have dropped, their loss  is being made up by other types of media. In the Guardian, Charles Arthur makes a very important point: the money being lost in the [UK] music industry is being made up in by the video game industry and even DVD purchases, as shown in the information graphic from his post here.

In the USA there was a MPAA (with the help of the IPI) claims that piracy costs the US economy around $58 billion. That number along with the loss of jobs associated with that were found to possibly not be entirely true. As discovered by Businessweek that IPI was not an entirely honest organization and that an IPI employee admitted to taking bribes and fabricating material.

The exact reasons as to why the number of $58 billion seems entirely unreasonable is explained by Rob Reid in his quick “The $8 billion iPod” Ted Talk:

So why are music industries making this seems like an economic crisis?  It is their own salaries.  This infographic “The Music Industry and Online Piracy” offers a great visual breakdown for what is really happening to the money.  To sum up, music sales have decreased over time, but the salaries keep going up.  It is not the artists that are making more money, for every album sold the artist will get about $1-1.60 (depending on the album cost).  Where as the retail/label overheads and marketing/promotion will get double or triple that amount and these are the main group who complain about piracy and its damage to the economy.

Personally, I think piracy could come to some good, but if and only if they middle man was cut out.  If we got rid of the labels, who think they deserve more money than the artists themselves and money from purchasing an album (be it as a CD or digital) mostly went to the artist rather than the measly 1-2% they get today.  Even so with how everything is now in the music industry there is no way it affects the economy as it has been claimed to.  Simply put music is becoming an old form of entertainment.  As it loses revenue, video games for example, have an immense revenue and can easily replace the losses of the music industry.

If we ever do come to a conclusion on piracy as a society, I hope we will see a decrease in music industries presence (and salaries) and an increase in support of good artists and their work.

The internet creates a whole new world of power for the music industry, but that has yet to be properly harnessed.

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