Monday, March 8, 2010

The Music Industry And Legal File Sharing

The music industry is still sticking to the old CD paradigm and apparently will go kicking and screaming into Music 3.0. The Telegraph recently ran an interesting article regarding a recent survey that exposed some major flaws in the current strategy of the majors.

Before we get to the numbers in the survey, the conclusion was that the best way for the music industry to combat online piracy was to promote legal online sales, something that the industry so far has failed to do. These numbers are startling:
  • Of the almost 2000 people surveyed in the UK, 4 in 10 couldn't name a single online music service (there are about 20)
  • 9 out of 10 consumers that are aware of online music services are only aware of 2: iTunes and Amazon.
  • The IFPI (the UK music trade organization that's the equivalent to the US RIAA) estimates that 95% of music downloaded last year was illegal, a figure that seems way high to me, but whatever the real figure is, it's certainly high.
Now the reality is that the CD is still pretty profitable when a sale actually occurs, a lot more so than the single song download that predominates today, and even though CD sales are down some 55% since 2000, it's still a really big business that won't go away soon. Yes, I know, CD's are dying, they're old technology, they're not hip, etc., but they're still sold in huge numbers, so the last thing the music establishment wants to do is to hasten it down the road out of town.

The other thing is that the major labels generally hate the fact that they've lost the battle of distribution to a computer company, namely Apple, which still calls the shots on pricing. I have a feeling that some of the people that run the majors would rather drink tainted milk than give in to Steve Jobs again, so the idea of sending business his way probably makes them wretch just as much.

I'm not sure how much merit the idea of promoting legal file sharing to prevent piracy really has though, since the 40% who couldn't name a single online service probably aren't computer hip enough to illegally download either. But sooner or later, it will behoove the record industry to finally promote online music, so it might as well be sooner.

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