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The Almighty Buck

RIAA vs The Economy 383

thumbtack writes " is running an analysis of the RIAA sales vs a number of other large corporations. It was compiled by Justin Moore at Duke University. It is really quite interesting, showing the the RIAA sales are pretty much consistent with the rest of the economy. From the analysis: I would assert, however that it does make the case in cold, hard numbers that the RIAA's claim of digital piracy ravaging their sales must be taken with a rather large grain of salt. The CEOs of Eastman-Kodak are in a nearly identical economic situation as the RIAA, yet do not have the luxury of blaming digital piracy."
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RIAA vs The Economy

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  • by Anonymous Coward on Tuesday May 20, 2003 @07:18PM (#6002662)

    I would assert, however that it does make the case in cold, hard numbers that the RIAA's claim of digital piracy ravaging their sales must be taken with a rather large grain of salt.

    You don't understand, the economy went down so quickly, it was like the equivalent of going out of business 5-6 times.

    • by Guppy06 ( 410832 ) on Tuesday May 20, 2003 @10:07PM (#6003853)
      "it was like the equivalent of going out of business 5-6 times."

      Well, if the accountants hadn't multiplied the profit margin numbers five or six times...
  • So... (Score:2, Insightful)

    by kmac06 ( 608921 )
    So you're telling us the RIAA is using the crappy economy to strengthen their monopoly?

    Since when is this news?
  • by unicron ( 20286 ) <> on Tuesday May 20, 2003 @07:19PM (#6002673) Homepage
    Go to the Boycott-the-RIAA website? Sounds like a lot of work and reading and such. Can't I just pull a few gigs of mp3's and that'll count as my part to fight them?
  • by Anonymous Coward on Tuesday May 20, 2003 @07:19PM (#6002674)
    Yeah, Eastman-Kodak blames Digital Photography instead.
    • by L7_ ( 645377 ) on Tuesday May 20, 2003 @07:31PM (#6002764)
      and dupont can blame mental patient founders

      and exxon can blame stricter environmental laws

      and honeywell can blame global warming affecting thermostat sales

      etc etc

      Companies need to evolve to the state of the world, not point fingers about causes (real or imaginary) of thier misfortune. Digital content distribution is real and it is here to stay. It can either be looked at as an opportunity or as a degression; obviously the RIAA sees a degression since it can't rely on its standard business model and can't adapt to the change.
      • by CashCarSTAR ( 548853 ) on Tuesday May 20, 2003 @07:35PM (#6002808)
        "and dupont can blame mental patient founders"

        They actually tried that before and succeeded.

        The war on pot started as a gift to DuPont to stop hemp from competing with their new product: plastic.

        • by randyest ( 589159 ) on Tuesday May 20, 2003 @07:55PM (#6002924) Homepage
          The war on pot started as a gift to DuPont to stop hemp from competing with their new product: plastic.

          Relevant, interesting, and only slightly different from the way I understand it. I thought it was actually nylon. At least that's what I surmise from the excellently supported arguments in Jack Herer's The Emperor Wears No Clothes [] . Or, maybe you mean plastic fibers, which I suppose is what nylon really is? (Is it?)

          Either way, the following excerpts are interesting examples of the inverse (converse?) of what this story is about: a company manipulating legilation to create a better market for an otherwise not-as-attractive product. Contrast this with the RIAA blaming market conditions (or technological advancement) for their lack of profits. Which is worse?

          After the 1937 Marijuana Tax law, new DuPont "plastic fibers," under license since 1936 from the German company I.G. Farben (patent surrenders were part of Germany's World War I reparation payments to America), replaced natural hempen fibers. (Some 30% of I.G. Farben, under Hitler, was owned and financed by America's DuPont.) DuPont also introduced Nylon (invented in 1935) to the market after they'd patented it in 1938.

          By using 100% hemp or mixing hemp with cotton, you will be able to pass on your shirts, pants and other clothing to your grandchildren. Intelligent spending could essentially replace the use of petrochemical synthetic fibers such as nylon and polyester with tougher, cheaper, cool, absorbent, breathing, biodegradable, natural fibers.

          It's interesting to note that on April 29, 1937, two weeks after the Marihuana Tax Act was introduced, DuPont's foremost scientist, Wallace Hume Carothers, the inventor of nylon for DuPont, the world's number one organic chemist, committed suicide by drinking cyanide. Carothers was dead at age 41. . .

          An almost unlimited tonnage of natural fiber and cellulose would have become available to the American farmer in 1937, the year DuPont patented nylon and the polluting wood-pulp paper sulfide process. All of hemp's potential value was lost.

          Nylon fibers were developed between 1926-1937 by the noted Harvard chemist Wallace Carothers, working from German patents. These polyamides are long fibers based on observed natural products. Carothers, supplied with an open-ended research grant from DuPont, made a comprehensive study of natural cellulose fibers. He duplicated natural fibers in his labs and polyamides - long fibers of a specific chemical process - were developed. (Curiously, Wallace Carothers committed suicide one week after the House Ways and Means Committee, in April of 1937, had the hearings on cannabis and created the bill that would eventually outlaw hemp.)

  • No agenda there... (Score:4, Insightful)

    by Anonymous Coward on Tuesday May 20, 2003 @07:22PM (#6002687)
    And Boycott the RIAA couldn't possibly have an Agenda.

    If it was MSNBC running an analysis of a study showing Linux was a bad fit for business, most of you would be all over them for the clear, obvious Pro-Microsoft Bias.
  • problem solved! (Score:5, Insightful)

    by Anonymous Coward on Tuesday May 20, 2003 @07:22PM (#6002688)

    The CEOs of Eastman-Kodak are in a nearly identical economic situation as the RIAA, yet do not have the luxury of blaming digital piracy.

    Obviously, they need to add a license agreement to their film products. Just forbid the stuff you don't like to happen, and then you can use every crooked law in the book to sue folks who switch to digital.

  • all relative (Score:3, Interesting)

    by Horny Smurf ( 590916 ) on Tuesday May 20, 2003 @07:22PM (#6002691) Journal
    Compared to some companies (VA LINUX, I'm looking at you!), The RIAA's numbers are stellar.
  • But - but - (Score:5, Funny)

    by Dark Paladin ( 116525 ) * <jhummel&johnhummel,net> on Tuesday May 20, 2003 @07:22PM (#6002692) Homepage
    Does this mean that the RIAA might be exaggerating other things? I mean, I know that every CD-ROM sale is used to pirate music, and that nobody uses them to back up documents/data/desktops/send information that's too big for a floppy or email.

    Or that people are downloading 1,000,000 songs a week illegally over their T3 Internet connections and getting the full version of the albums after connecting for 60 hours a week and not going to job/school.

    I mean, if you can't trust the RIAA, then who can you trust?
  • by krisp ( 59093 ) * on Tuesday May 20, 2003 @07:23PM (#6002699) Homepage
    It looks more like the RIAA is targeting the 1% of people who actually pirate mp3s to account for their slowing sales due to a poor economy. Atleast Kodak has a valid reason why people don't want their film products.
  • This just in... (Score:3, Interesting)

    by swordboy ( 472941 ) on Tuesday May 20, 2003 @07:23PM (#6002701) Journal
    EMI sales down 11 percent, [].

    The loss is largem but it is driven by ClearCrap, not by piracy...
  • I don't know if Eastman-Kodak's financial situation is a good marker for economic trends. I think a great portion of their market has faced the invasion of digital photography which is certainly cuts their consumer film sales down significantly. Their economic situation may be due partially because of the economy, but also partially to an emerging technology that they is taking away some of their marketshare.
    • Ah, but they too realized the benefits of technology too late. Fuji, their best comparison competitior is doing quite well, and not only slowly stealing film biz away but managing to gain a little in the digital camera arena too. You have to realize that Kodak has been in the digital camera market from the get go and COULD have made themselves a leader. Instead, they chose (at the beginning) to have NON expandable memory cameras with no LCDs while their competitor's innovated. Apple's first Quicktakes (100
    • But how much is digital photography cutting into Kodak's business? It's not as though they're exclusively committed to the film business, you know. They have excellent lines of both amateur [] and professional [] digital cameras themselves. And while they don't make film sales on the cameras, the base price is enough higher that there's a significant short-term profit potential. They also sell inkjet photo paper, online printing services, and photoCD. They were not exactly caught off guard by the switch to d

    • Kodak's fianancial situation may not be a good marker for economic trends, but it is a striking analogy to what the RIAA is currently learning/experiencing. Companies who are unable to adapt, refusing to adapt, or refusing to recognize emerging technolgies are slowing wilting away...
    • by OWJones ( 11633 ) on Tuesday May 20, 2003 @07:49PM (#6002883)

      E-K might be suffering from their own economic problems, but they're not running to Congress to get laws enacted to protect their business model, or outlaw the competition. My theory is that when new laws are proposed, the first question should be "Is there a valid problem that this is going to help fix?" I think my analysis hints that the problem might be -- not so much piracy -- but just a plain side effect of the economic downturn.


  • by sh0rtie ( 455432 ) on Tuesday May 20, 2003 @07:24PM (#6002713) []

    of course this has nothing to do with the fact that the public is tired of being ripped off and taken for idiots and now is not interested in their products.

    so instead of creating products that people actually want or investing in talent instead of boy bands and the like, they blame their outdated buisness model on piracy, sounds like sense to me.

    are you smiling yet ?

  • by Merovign ( 557032 ) on Tuesday May 20, 2003 @07:26PM (#6002732)

    I wonder what the historical relationship between the economy and low-end entertainment (movies, CDs, similar) is? Is the entertainment industry recession-resistant? I know during the 1929 depression it wasn't, but since then?

    I'm no fan of stealing, but hard times is certainly an excuse people use (should I say justification?).

    I keep hoping that some well-run online song-for-song "rights buying" project comes up, maybe subscribing to a whole catalog? Verification is a problem, but I personally would pay a moderate amount for downloadable music, especially on a song-by-song basis.

    I recognize both the interests of the artists and the argument that the industry rips off both the artist and the customer.

    I suppose this is going to be another long, drawn-out social drama, especially with politicians involved.

    • I keep hoping that some well-run online song-for-song "rights buying" project comes up...I personally would pay a moderate amount for downloadable music, especially on a song-by-song basis.

      Jesus, nobody told you? [] The Windows version will be out by year's end. And Roxio is planning a clone under a familiar name []. Probably others will follow. It's a race to Windows with this model.
    • by The Cydonian ( 603441 ) on Tuesday May 20, 2003 @09:03PM (#6003337) Homepage Journal
      I wonder what the historical relationship between the economy and low-end entertainment (movies, CDs, similar) is? Is the entertainment industry recession-resistant? I know during the 1929 depression it wasn't, but since then?

      At work, so a quick comment:- As I've pointed out before on this site, RIAA's own research over the last 60 or so years (includes the Great Depression), suggests that demand for their products ebbs towards the end of the recession. Haven't seen the site so far, but if it says that music sales (as opposed to growth in music sales) is decreasing, then it is a good thing.

  • In conclusion... (Score:4, Insightful)

    by $$$$$exyGal ( 638164 ) on Tuesday May 20, 2003 @07:26PM (#6002733) Homepage Journal
    Here is an excerpt of the conclusion:

    This particular analysis does not tell us exactly how accurate the rest of the model is, and several other professional statistician shortcomings. Remember, there are lies, damned lies, and statistics; this is just another statistic.

    In other words, they are saying their numbers are also probably wrong. At least they admit it.

  • When challenged to explain the fact that they're doing well despite the growing popularity of file sharing, the RIAA will simply claim that it's due to the success of copy restriction on CDs managing to balance the (blatantly inexistant) drop of sales.

    And boy bands are of course getting as increasingly popular as never before while consumers could not possibly be hungry for more varied and less commercialized content - which means that the sales in the RIAA's eyes ought to have accelerated upwards and that
  • by t0qer ( 230538 ) on Tuesday May 20, 2003 @07:33PM (#6002788) Homepage Journal
    I am hated.
    I am one of "those" dot commers responsible for screwing up the economy.

    This is the attitude I get from a lot of people. Since the crash all the non-tech people I know have taken every oppertunity to take a cheap shot at me, "Ya told you it wouldn't last forever" or my personal favorite, "It's never coming back"

    "Bullshit" I say to myself as I try to keep my temper from flaring up.

    This type of thinking perme-ates (sp?) our society simply because nobody likes being replaced by younger newer models. This is the way it's been since the dawn of time. Someone makes technology (Castles) and someone else makes a technology that makes the former irrelevent (gunpowder) With both the RIAA and Kodak, it's the same problem. Someone came up with technology that quickly made the foundation of these organizations obselete.

    In the case of the RIAA, the combination of internet with Mp3 compression made the old models of music distribution obselete. I worked for a local music magazine for a few years, and often I would hear rockers cry about how Mp3's are sending them all to the poorhouse crying because they can't sell CD's anymore. No matter how many times I would try and tell them website+thawte+oscommerce=mp3 online store they just wouldn't listen because they were all brought up to believe that the RIAA method was the only way. Now apple sells songs 99cents apiece and is making a fortune. With all the money and power the RIAA has, it's a shame they didn't adapt the way apple did and just give their customers what they want.

    A good sign of how well CD distribution is dying is the ill fated "Wherehouse" music stores. To my knowledge here in san jose, they are all gone. CD sales just slipped into the toilet and all their stores have just vanished.

    Kodak isn't much different. For years they depended on film technology as the cornerstone of their business. By the time they entered digital photography other players had already developed cheaper and more mass producable camera's with higher quality than kodak. I suppose kodak never thought that digital technology would catch up with film, they should have paid closer attention to moores law.

    Both companies are old hats, trying to milk every dime out of innovations that are already 100 years old. Let them die already so the new upshots can give us better, faster, cheaper.
    • A good sign of how well CD distribution is dying is the ill fated "Wherehouse" music stores. To my knowledge here in san jose, they are all gone. CD sales just slipped into the toilet and all their stores have just vanished.

      Countering anecdote with anecdote: We had a Wherehouse or three here, and they're gone, but I didn't take it as a sign that CD sales in general slipped into the toilet, but rather that the store I checked out was a few blocks from a Best Buy whose prices were several dollars cheaper o
  • by Ryu2 ( 89645 ) on Tuesday May 20, 2003 @07:34PM (#6002792) Homepage Journal
    I'm a frequent traveller to various countries in Asia for both business and personal trips, and I frequently encounter vendors of pirated movies, music, and software, and partook in buying their wares (warez?). Now, if one wanted to take a moral absolute, all of us should really be branded as hypocrites... But is piracy totally evil, without justification? Just like Communism, for example, a lot of people in the West seem to have a one-sided, black and white viewpoint of something which is a complicated issue.

    As an example, look at many countries in East Asia -- piracy, for all its evils, helps build a base of demand for your products and fuels the sales of hardware, without which your stuff is useless anyhow.

    What do I mean? There needs to be a established base of music listeners/movie viewers/software users and owners of hardware, like CD players, etc first. Without evil piracy, sales of PCs/CD/DVD players in Asia would have been much less than what it is now, and most people would not have heard of most Western software movies or music, if they had not been ubiquitously available.

    So, in developing countries like China, piracy, by fueling a demand that would not have otherwise been there, and ensuring a base of owners with appropriate hardware, lays the foundation for a consumer base. Then, as economic conditions improve, companies move in there, leverage those customers and sell legit products while adding value (better manufacturing quality, etc.) at locally-affordable prices (this is a key point -- no one in any part of the world will pay the equivalent of a week's salary for a CD, for example). Look at places like Japan and Korea that are considered "developed" now. Of course, there's still some piracy in those places -- you can't eradicate it completely, but because you have these people now clamoring for music/movies/software, you now have a thriving music industry and market, both for local artists and for foreign corporations. As a country moves from developing to developed, so will piracy gradually decrease, if companies first build off the existing base of consumers which have been created by pirated material, and market to them (through the selling points of higher quality, etc.) rather than alienating or antagonizing them.

    And of course, many times, piracy is the only option, if a company doesn't release their product there. One corollary and positive effect of it has been movie studios, for instance, releasing movies nearly simultaneously worldwide, whereas in the past, in Asia, one would often have to wait for months for a release, if it was to be released at all. In being a stimulus to create buzz and hype -- and ultimately, demand for more -- in countries where the American media juggernaut hasn't reached yet, piracy has been wonderfully successful in this regard.

    Essentially, the blunt, hard, truth in much of the developing world is this: without piracy, you would not have had that base of potential consumers to begin with. It's a win/win situation, for the people, for the hardware makers, and ultimately (while it may take time) for the software and content makers as well. Sadly, the myopic vision of most of the corporations fail to grasp this fact.
  • Whenever there is a thread about music, someone will bring up the argument that most current CDs only have 2 good songs on it, therefore necessitating downloads (nobody wants to pay $18 for 2 songs).

    So use this thread to post CDs you have bought or heard that only had 1-2 good songs on it. Personally, I think that experience is rare. In most cases, if you like a particular song, there are other songs on the album that are similar in style and should be liked by you as well. The exception would be a situatio

    • So use this thread to post CDs you have bought or heard that only had 1-2 good songs on it. Personally, I think that experience is rare.

      About the only CDs I buy now are 'complete studio recordings of X' boxed sets, so this doesn't really apply to me. On the other hand, I rarely listen to any music recorded in the last 30 years, figuring that anything that's survived that long must have some merit and a lot of the noise has been filtered out by economics.

  • by WickedClean ( 230550 ) on Tuesday May 20, 2003 @07:35PM (#6002809) Homepage
    Maybe the RIAA should sue the people who make shows like American Idol! People are at home watching people sing when they should be out buying records. What if people are using their evil VCR to record American Idol? HOW DARE THEY! That is piracy! They must burn.
  • by darkov ( 261309 ) on Tuesday May 20, 2003 @07:37PM (#6002821)
    The economy dipped becuase of the the overwhelming piracy. That's how bad it gotten. Next will come pestilence, famine, floods and your chickens will stop laying. We must stop priacy now to save the world.
  • by Newer Guy ( 520108 ) on Tuesday May 20, 2003 @07:39PM (#6002836)
    Of course they do!! The RIAA KNOWS that the reason their sales are down is because the economy sucks....See, they're LYING...when they claim that p2p is hurting sales. p2p threatens their distribution model like nothing before and they'll do anything to kill it. They'll lie, cheat, steal, sue, bribe (mostly Congress) and do whatever else is necessary (whether ethical or not) to keep the mother lode they (now) exclusively mine. the things I've described above aren't new either...they've been doing every one of them for many years (back in the 70's and 80's the record company radio reps used to be known as SNOWMEN and I'm not talking about the weather here!).
  • by OutRigged ( 573843 ) <rage@outr i g g e d . com> on Tuesday May 20, 2003 @07:44PM (#6002860) Homepage
    In a move totally unrelated to the story above, the RIAA has filed a lawsuit against Duke University student Justin Moore, demanding $427 Billion USD, or 50 cents for every song he has shared on the underground hacker network known as 'Kazaa'.
  • by Animats ( 122034 ) on Tuesday May 20, 2003 @07:45PM (#6002867) Homepage
    That's not a very good analysis. The subject deserves a better one.

    First, CD sales and concert attendance are both down. That's an indication of a problem other than CDs.

    Second, rather than looking at music alone, look at overall retail sales of prerecorded entertainment media. This includes videos, music, and games, but not downloaded content. The same outlets that used to carry mostly music now sell DVDs and games, all of which now come on very similar disks. The same players often play all three types of content. There's no longer a big distinction between "videos", "music", and "games".

    Third, it's worth looking at discretionary income of people in the RIAA's demographic. If that's down, one would expect their sales to decline.

    Fourth, the consolidation of radio station ownership has resulted in major changes in the way music is promoted. That effect has been inadequately analyzed. Clear Channel is quite open about the fact their business is selling ads, not music.

    Given that, the suprising thing is that CD sales are only down 8%. Car sales for 2002, for example, were about 13% below car sales in 2001.

    • by OWJones ( 11633 ) on Tuesday May 20, 2003 @07:53PM (#6002911)

      That's not a very good analysis. The subject deserves a better one.

      I agree completely. But no one had done anything of the sort, so I figured I'd give it a shot. If you can do better, please do. Hard numbers are much better than wild claims. :)


    • I think you've touched on something there that's right on. Personally, I think CD sales would be down regardless of the economy, and regardless of online file swapping.

      First, CD sales and concert attendance are both down. That's an indication of a problem other than CDs. . . . exactly, which has a lot to do with Fourth, the consolidation of radio station ownership has resulted in major changes in the way music is promoted. That effect has been inadequately analyzed. Clear Channel is quite open about the fact their business is selling ads, not music.

      I would argue that it's not just the consolidation of radio stations, but the entire way music is discovered, packaged and promoted. Music is a business, and the larger a business gets, the more they will focus on profit.

      The current process of "launching" bands resulting from the increasing commercialization of the music industry has become an expensive investment. No longer can an A&R scout use his better judgment, hear a band he finds 'good', throw them in the studio to cut a few tracks and put them on the radio to see if they stick.

      Instead he faces a well defined marketing procedure that starts in the millions of dollars, and is faced with the question of "Will this band sell?" instead of "Is this band any good?" while that question of "Will this band sell?" is increasingly being answered by businessmen who have little to do with music.

      So more and more over the last 10 years, that process of discovery, packaging and promoting has become boilerplate. The end result (and this is arguable), is that music has just become more bland.

      For quick proof of this, note the explosion of specialty radio stations catering to very specific sub-genres of dated material like "Classic Rock" or "All 80s". Again, this is arguable, but personally this seems to be more of a reaction of people just not liking what's being produced these days. Or at least they are finding older, more familiar tracks a better alternative to the new stuff.

      Of course, I'm not a music insider, and my opinions are simply based on my own impressions of the music industry. I mean, somebody has to actually go out and buy this crap that is played on the radio. Otherwise the RIAA would be gone over night. So it's easy to assume that at least somebody has to like it. But what I'm afraid of is the average consumer makes his music buying decisions based on targeted marketing and perceived impressions of bands rather then his own actual tastes.

      And I believe this ultimately is the reason the RIAA is so scared of file sharing: That eventually a globally connected peer group on the Internet will supersede the music marketing machine in influence over buying practices.

      When you can suddenly discover new bands from recommendations from those with similar tastes and preferences completely outside of the sanitized and tightly controlled world of the radio or chain record store, you're going to take them out of the loop all together. And consequently, their profits.

      This hasn't happened . . . Yet. At least on a large scale. But eventually, hopefully in a few years, some band will rise out of relative obscurity to become a household name due to the power of massive word of mouth on the Internet. And they will do so outside of the "system".

      I can't wait.
  • Hmm (Score:4, Insightful)

    by smoondog ( 85133 ) on Tuesday May 20, 2003 @07:50PM (#6002891)
    It looks like to me that this report does not prove that the decline is due to the economy, it simply suggests that the decline is statistically consistant with it. It is possible however that both arguments are correct. The decline may be due to the econonmy and therefore (because of the economy) consumers are turning to piracy as a reasonable alternative. I really think the underlying problem is that the big media companies need to take a course in basic economics and lower their prices! Used CD's, gnutella (etc), and the economy all play a role in declining sales. They should lower their prices with the decline in the economy and revenues will increase!

  • you know, people here in Italy are really rave on DVDs. These are even sold at newspaper shops ( It. 'giornalaio') while the audio CDs are only available in less ubiquitous stores. Paradoxically, in my opinion, these video products are even more massmarket crap than the CDs are. Infact they are seasonal products as two months after a film goes off the siver screen, it pops up @ rentals and in a couple of months more it's everywhere, ready for replacement in just another bunch of weeks.
    So, back on topic, on
  • Be honest (Score:3, Insightful)

    by Lust ( 14189 ) on Tuesday May 20, 2003 @07:59PM (#6002956) Homepage

    I have few close friends that buy CDs. They are mostly over 30 with well-paying jobs and extensive CD collections from the pre-Napster era, yet they do not buy CDs anymore. Instead they download (bootleg) all their tunes, including entire albums. Tell me you're surprised.

    I recognise that the existing entertainment sales model is a dinosaur, but to suggest that music downloading hasn't affected the industry's bottom line is absurd. Granted, they may have made MORE by switching to a different model, but that says nothing about the source of their current state in this transition period. I don't believe the hype.

  • Oh No! (Score:3, Funny)

    by coene ( 554338 ) on Tuesday May 20, 2003 @07:59PM (#6002963)

    "The CEOs of Eastman-Kodak are in a nearly identical economic situation as the RIAA, yet do not have the luxury of blaming digital piracy."

    Just Announced: Online Photo Sharing Prevalent, Photo Lab Revenue Down, Kodak Blames Kazaa!

  • The history of music (Score:5, Interesting)

    by iso ( 87585 ) <slash AT warpzero DOT info> on Tuesday May 20, 2003 @08:07PM (#6003001) Homepage
    One thing I don't see mentioned very often is the very fact that music hasn't been illegal to copy for very long. Hell, in the grand scheme of things, recorded music hasn't been around for very long. The RIAA only exist because of what, historically, amounts to a "technological glitch." That is, the technology was available to make recordings of music available for sale, but copying of that music difficult. It wasn't until about the 1970s that music became illegal to copy, and recordings have only been around since the late 1880s. Music existed long before records, and it will exist long after records are gone.

    So really, music existed for thousands of years. For a breif moment in time a technological inequality meant that recordings could be made, but not easily copied. Now, in a sense, technology is working itself out (removing the glitch) and music is back to the way it's been for thousands of years. Just because it's been this way since you were a kid doesn't mean it's been this way forever. The time for being able to charge for recordings is over.

    I don't feel sorry for the RIAA--their time is up. The technological glitch is gone and music can get back to being music for music's sake. In the end people will look back at the time when people used to be able to charge for music and laugh. Paying money for nothing but a *recording* of music? What a silly concept.

  • other major factor (Score:5, Interesting)

    by u19925 ( 613350 ) on Tuesday May 20, 2003 @08:07PM (#6003008)
    other major factor affecting sales data of RIAA is that CDs are digital and it is the only digital product with no upgrade in 21 years! My 1985 CD is as good as new. So while in the past, people used to buy a new copy of the album to replace used one, it is no more necessary.

    Also, many people who had vinyl, tape etc, replaced such things with CD. The replacement is largely complete. During the replacement period, people not only bought albums they didn't have, but also bought albums they had. Now, people only buy what they don't have.

    To analyze the above points, the RIAA should publish data of sales of new CD albums only and see if there is any decline. My guess is that it is actually increasing. By means of new, I mean never published before.

    The third major factor is legal copying. IANAL, but I think it is allowed by law to make duplicate copies of album for personal use. It was hard to make such copies for tape and impossible for vinyl, but this is trivial for CDs.

    So, it is doubtful that piracy is the cause of declining RIAA sales.
  • Proof! (Score:5, Funny)

    by MongoMike ( 557889 ) on Tuesday May 20, 2003 @08:20PM (#6003098)
    Finally, proof that illegal file trading is the cause of America's weak economy! This report shows that RIAA isn't the only one affected by this plague.

    Wouldn't really be surprised if RIAA eventually sports this argument. :)

  • by santos_douglas ( 633335 ) on Tuesday May 20, 2003 @09:26PM (#6003561) Journal
    As a student who has sat through countless hours of economics lectures, I'd like to float my own theory on file sharing and declining music sales. In economics, a perfectly competitive market has the following characteristics:

    1. Many buyers and sellers

    2. Low barriers to entry and exit

    3. All buyers and sellers are price takers(unable to affect price)

    4. Homogenous product/service

    And most relevant here:

    5. Perfect information

    Before people were unable to properly sample a music product before purchasing it, and therefore made their purchasing decision based on incomplete and often misleading information - often by factors that had nothing to do with the quality of the music (hype, etc). File sharing has created near perfect information for consumers, and the results suggest that with this information consumers have decided that they were not getting their money's worth in value. Also, and this has been proven in court, the small number of large recording companys have effectively created a cartel - and have and continue to collude to inflate prices. This behavior is expected in a market with such conditions. How else can one explain the inflated price of music despite obvious and significant efficiencies and cost reductions in the production, distribution, and manufacture of recordings?

  • by Anonymous Coward on Tuesday May 20, 2003 @09:36PM (#6003653)
    This article is merely stating the obvious. It's a sad state where you have to explicitly state the obvious in order to debunk the utterly twisted view of any organization.

    That said, I'll state the obvious from my perspecitve, the consumer. I only have so much money I can spend on CD's. I love music, and I'm pretty sure I buy more music than the average person, roughly 5 albums a month. If I could, I would buy more, but after losing my job and taking up a new job that didn't quite pay as much as my old one, having car payments, rent, insurance, utility bills, and a spouse to feed, there's only so much left to spend on what is essentially a luxury item. I don't think this is much different than most average people.

    That said, I normally don't pirate software, I don't steal from people, and I consider myself to be a good citizen and neighbor. HOWEVER, I do download mp3's. Is it legal? Hell no. But so are a lot of other things that otherwise good citizens do which really doesn't harm anyone.

    My CD buying patterns are strongly influenced by my economic status, and have never been influenced by p2p file sharing. (I can't buy 10 $15 CD's when there's only $75 in my posession.) I don't feel like it's morally wrong to copy something "virtual" (digital data) that I otherwise wouldn't have purchased anyways. The only thing that has changed with the arrival of p2p file sharing is that I listen to a wider variety of music, and make better purchases. (I buy more of what I like, and have fewer CD's I regret purchasing.) In short, I'm what would otherwise be known as an "informed customer" which is usually viewed as a "better customer" in most other industries.

    So the bottom line is, yes, people download mp3's. Yes, people still buy CD's, whether or not they think $15 is a rip-off or not. And finally, yes, there are a (probably small) handfull of people who have likely stopped purchasing music completely since they've been able to compulsively download all their favorite music. On the other hand, there are also people that walk into record shops and shoplift CD's, which probably does much more damage. Either way, the number of shoplifters and p2p thieves are likely little more than static noise in the overall sales figures. Think about it, even if record shops all of a sudden stopped "tagging" the CD's and removed all surveilance cameras and tag sensors at the door, most people would STILL pay for the CD rather than pocket it. (Admittedly, the same shoplifters would probably steal even more hard cold physical products such as CD's are, if these surveilance systems weren't in place, but that's a bit different than stealing the data.)

    So, the RIAA's claim has little basis, I'm preaching to the choir, stating the obvious, posting AC, and otherwise enjoying another day of bashing the favorite enemy in genuine /. fashion. :-)
  • by Art_Vandelai ( 596101 ) on Tuesday May 20, 2003 @10:54PM (#6004182)
    There's been so much talk that the old business model - sell a CD at 18 dollars a pop, is dead.

    What I'd like to see discussed is how the recording industry actually stands to make more from net-based services than they ever could have from the old way.

    Think of a central server, similar to what Apple has set up, but with the following features:

    extensive back catalogs of all of the major labels, going back as far as recorded history can go. (MP3 downloads arent killing the Top 40 artists nearly as much as they're affecting catalog and "Best Of" compilation sales.)

    $10 annual "membership fee". That fee gets you access to the system, and software that allows you to set up playlists, etc. that the RIAA can use the data from to aggrgeate stats on most popular tunes played and burned (with respect for individual privacy, of course). You also get powerful search software that can search by artist, song name, lyrics (so you can list every song that goes "...all of my love..."), year, and whatever other search types you can think of.

    $0.75 per song, 128 kb MP3 downloads. All files have the proper artist & track name in the ID3 tag. Correcting misspelled, and incorrectly labelled p2p download file & track names is just such a pain in the $$hole. It sounds cheap - but your average 12 track LP would be $9.00 USD.

    special "premium fan content" - if you're a fan of a particular artist, you might be more than happy to pay $2.00 or even more for a rare, out of circulation B-side tune, or an MPEG concert video, even tracks played on tour or even whole concerts can be recorded (as cheaply as possible) and sold track by track to the hardcore fans that want more. If the Grateful Dead could do it, why not every other band out there? We could follow our favourite artists across the country like the Deadheads from the comfort of our living rooms! If I want to have 15 different versions of "Satisfaction", why not just sell them to me and make some money! Get this stuff out in the public.

    no restrictions on copying, burning to CD or DVD, or encoding in a different format. I'm sure many would scoff and say "if someone shares the stuff on P2P we'll be pirated". If you make the economics (time + low cost + low user base) work, P2P will die naturally. Yes, a few people will still pirate stuff, but at least it will be out of the mainstream.

    powerful servers that allow fast downloading, and reconnect at no charge if the server went down in the middle of a transfer. This kind of raw power would leave Gnutella, Kazaa, etc. with few users who are willing to waste time searching through scads of crap files and downloading at 2KB/sec. Fewer users for P2P services = fewer available files, and more customers willing to pay.

    since the product is somewhat inferior, you still want to recommend to your customers purchasing the actual CD's. Provide links to allow purchase, make it visible but not annoying to the individual who is content to download.

    add to the premium content by selling liner notes, CD cover art (for those who are willing to print the CD cover) so that the total price of a 12 song CD is about $10.00. Add to that the cost of making, distributing and retailing the CD, and subtract the cost of the server infrastructure & staffing - the profit margin is roughly equal.

    Now, granted, the record retailers and the people at K-Tel would suffer if this kind of a service were available, but the music industry as a whole would survive and grow under such a plan.

  • Here's a Doozy. (Score:3, Insightful)

    by Funksaw ( 636954 ) on Tuesday May 20, 2003 @11:22PM (#6004331)
    Here's a doozy.

    I got these numbers from the Blockbuster website:


    ANALYZE THAT / Original Sound Track

    That's right. The SOUNDTRACK costs more than the VHS version (and only slightly cheaper than the DVD)

    Now, let's not go into the fact that the DVD costs nealy as much and gives you more value... let's also go into the fact that people aren't *Nearly* as resentful about movie prices as they are about CDs.


    You can RENT DVDs. If you just want to see the movie, you can fork over $4 and see it... no problem.

    The RIAA could have had the benifits of File Sharing before File Sharing... Like only the one song on the radio? Not sure about the other 9? Rent the album for $2. If you don't like it, don't buy it.

    Unfortunately, the RIAA isn't even keeping up with the business models of the late 1980s, let alone the business models of the 21st century.
  • by Anonymous Coward on Wednesday May 21, 2003 @12:57AM (#6004817)
    In Russia, the major local game publishing companies like 1C, Buka, and Russobit sell their own games and foreign games licensed for localised release in jewel boxes at about 1.5 as much as what the pirates ask for the pirated CDs of the same titles. Just like the pirate releases, it's el cheapo jewel boxes with no manuals or whatever, only a cute label. They also release an expensive box version, which, unlike this cheap version (about $2.5 per disk usually) costs three or four times as much, and comes with manuals and the whole shebang, but it doesn't see just as much light.

    This policy has effectively killed off the piracy of locally published titles. Nobody does it anymore. People only duplicate games which are out of print. I can just go to the exact same CD retailer and buy the game I want from among the pile of the pirate releases of games they couldn't license.
  • by PotatoHead ( 12771 ) <doug&opengeek,org> on Wednesday May 21, 2003 @02:24AM (#6005121) Homepage Journal
    tell me much. Stats are stats are stats. I did enjoy reading it, but feel the answer is elsewhere.

    CD sales have dropped for me recently and this is why.

    DVD movies now occupy that under $20 knee jerk purchase price point. Everyone knows a DVD is better than a CD in general, so how come the CD is still so expensive? I don't think twice about $16.99 for a DVD, that's a nice deal really. So what does that do for the same pricing on the CD? All I know is that $16.99 number on a CD is pretty unattractive in general these days. To pay as much for a CD as I do a movie, it had better be a damn good CD.

    The current buttload of music being pimped via the usual Clear Channel right now is garbage plain and simple. Sure, there is plenty of good music, but it sure is hard to find, unless...

    One can sample! Maybe that $16.99 is worth it. (It sometimes is.) I am willing to look and consider the purchase, but nobody is showing. Wonder why they don't sell product? Duh!

    Currently I don't download anything. Thought I would make the change and see what happens with me and my family.

    I must say that without P2P, I am missing out. All the radio stations here play the same (crap) music. There is little to get excited about. I know there is a lot of music that I would be interested in buying, but I can't find it easily!

    P2P is costing the RIAA something in the young market though. If they (kids)have the money they will buy the CD, even if they have downloaded it. But if they have a (better) choice they won't. These days there are more good choices, so kids buy fewer CD's because they know they can get the music somehow later, but can't easily repeat a spur of the moment movie trip. So, the RIAA is losing sales here in my view. In a twisted sort of way, they might be right with the younger crowd. They can squeeze more out of their latest boy band if there is less P2P, but at what cost?

    On second hand they might already be hosed. When I shut down the P2P, my kids ended up doing the same thing I did. They go to school, talk about the music, find out who has it and why, and copy it if it fits.

    There are more CDRs laying around the house now than when P2P was running.

    Now, I do get excited about movies and guess what? That is what I buy. The movie market appeals to everyone at some level. There are several layers to the whole thing that make it easy to sell to those looking to buy that music just does not have today.

    The RIAA is currently trying like hell to milk everything they can from the kids. (Remember the point earlier about cost?) Problem is that those same kids also have DVD, subscription TV, cell phone plans and other new things to worry about. With all those new choices offering different values, is it any wonder CD sales are not as attractive given their low value proposition in comparison?

    Your average teenage girl can get a cell plan for the cost of many CD's that will provide way more bang for the buck than that CD will...

    I think the RIAA is getting squeezed right out of their prime market because of these things and their own ignorance.

    Now here I am sitting with my disposable income looking for something to buy. Does it take much of a stretch to see that I am going to buy something from those people willing to entertain my business?

    Whatever problems the the movie companies have with digital are not getting in the way of moving product. They are showing me lots of pricing options, good content and good value across the board. I can easily find blockbusters along with interesting smaller films.

    What do I get on the music side of things?


    The majority of the content is aimed at people half my age. I cannot realistically sample using the radio because they are all but owned by the big boys, so they mostly play the same things. Going into the music store to sample is a joke really. All they do is put the same tracks on the in-store boxes that I just got d
    • > Everyone knows a DVD is better than a CD in general, so how come the CD is still so expensive?

      I've seen this train of thought brandished around every time something of this nature crops up and I still don't get it.

      Music has a much higher replay value that that of a Movie. I mean for the average person how many time do you want to watch a movie? Music on the other hand is listened to many times, and is often also put on in the background.

      So please help me out and justify this reasoning.

      Myself I havn
      • "Music has a much higher replay value that that of a Movie. "

        I agree for the most part. I still listen to my first CD often. Movies do have some repeat value, it is just different from the CD in some ways.

        For me the issue of music price has been a sore one for a while. New vinyl was about $8.00 Singles were $3-4.00. The price of a CD has never dropped even though the medium promised great cost reductions. That first CD was $21.99. In 1985 dollars that was a lot. --It still has the sticker on it!
  • Kodak (Score:3, Insightful)

    by Trolling4Dollars ( 627073 ) on Wednesday May 21, 2003 @08:56AM (#6006451) Journal
    The CEOs of Eastman-Kodak are in a nearly identical economic situation as the RIAA, yet do not have the luxury of blaming digital piracy.

    No... they have digital photography to blame. If people are happily making their own photos with Sony digital cameras, working on them in "digital darkrooms" with Photoshop, PSP or the GIMP and printing them out on Epson printers using photo paper made by Epson, that means fewer people using Kodak products. Sure the current lineup of digital cameras isn't ready to compete with real film for someone who knows the difference, but for "Joe America" they are "just as good" is not better because of how much cheaper it is to take a digital photo.

Nothing succeeds like the appearance of success. -- Christopher Lascl