The Double-Edged Sword of Music Piracy

"The Double-Edged Sword of Music Piracy"
by Ryan Izant

With the advent of the Internet, the music industry entered a new age, where it has both flourished and become threatened. With the ease of digital downloading, whether legally or illicitly, more fans can access more music. Musicians likewise have increased independence in producing and distributing their money. However, with decreased profits and less reliance on traditional big record labels, alternative means of advertising have become necessary. Record companies have no incentive to promote the sale of CDs if they don’t stand to make any money off of them. Other ways of making money, like concerts, become necessary to ensure the survival of the music industry. On the same note, other innovative means of sharing music will shape the future of the industry. Radiohead’s recent release of a free online album provides a model that other musicians can follow to take advantage of new technology and the Internet.

Of course, the concern over illegal downloading is just another chapter in the long war between technology and the music industry. Before the age of the Internet flourished, CDs could be copied, tapes could be made, and concerts could be recorded. In fact, in the mid-1990s when the music industry suffered a slump, “The Big Five [recording companies] reinforced their standing through the outright suppression of digital audiotape (which offered higher quality duplication than audio cassettes) for the consumer market, and began phasing out pre-recorded cassettes in favor of CDs, which return higher revenues at a lower manufacturing cost per unit” (McCourt and Burkart 335). Similar concerns about each of these technologies have been voiced in turn—and proven ill founded in retrospect. The increase of technology has certainly never destroyed the music industry, as much as it has changed it. In fact, online distribution of music has in some ways been a boon to the recording companies; by eliminating raw materials, storage and shipping, record companies have been able in some ways to increase the ratio of production to profit (Strauss B3). In this sense, the debate about music piracy has always existed, and will likely never go away; there will always be new technology that threatens to disrupt prevailing business practices, and as always, the music industry must adapt or face its own irrelevancy.

This is not to deny that the downloading of music has not had a significant impact on the music industry, even at times a negative one. Before the prevalence of services like iTunes, there was little option to download music legally. Even with the variety of choices now available, no doubt a large portion of music download is illegal. According to a report in The New York Times, pirated recordings initially cost the domestic recording $300 million per year in losses, and by 2002, this amount increased to $985 million, or 16 percent of all music sales. (Foege BU4). The question becomes one of who is being hurt—the music companies or the artists?

With the ease of online distribution, a musician is no longer as dependent on a recording company to sell records. Internet access brings the consumer and the musician into the same room; the music store is no longer needed. Music companies no longer hold the only keys to the musical kingdom. One thing remaining in the hands of the recording companies, however, is the power of advertising. Musicians who seek to go it alone online still face the problem of recognition. They can produce a CD and put it online, but there is no guarantee any one will listen to it. For established names this is not as much of an issue, but certainly for new artists there is the fundamental challenge of branding themselves. Indeed, the Internet has resulted in a sort of democratization of music; never before have there been so many choices to listen to, and never before have so many of them been unknown. The irony of music sales declining in the digital age means that the old-fashioned means of concert revenues—the communal experience of listening to music—is more important than ever. Since such large-scale gatherings of fans are relatively difficult for independent musicians to organize, the big recording companies are needed more than ever to ensure that this aspect of music—the concert—continues to flourish, and musicians continue to become famous. Without these rallying points, concerts may decrease in attendance, and I for one wouldn’t want to go to a concert that wasn’t thronged with fans.

It seems then that for the time being, record companies will stay play a vital, if increasingly marginalized role in the music industry. While more and more musicians will have the means to produce music, less and less will have an opportunity to gain fame on their own. A financial solution to this problem seems unlikely to occur in terms of enforced legal downloading. The answer seems to lie in creating other moneymaking forms of demands.

Radiohead’s newest album, In Rainbows, is a good example of new attempts at a solution. The album was released October 10, 2007, exclusively online. The band produced and released the album independently, and instead of selling the album online, offered it for any price. The purchaser could enter a price at their own discretion, and besides paying a slight transaction fee, instantly download a ZIP file of ten tracks encoded in DRM-free MP3 format. The album was later released with significant bonuses for a price, ensuring that fans of the traditional CD format could still purchase the music. Radiohead guitarist Jonny Greenwood, in an interview with Rolling Stone, said: “It’s fun to make people stop for a few seconds and think about what music is worth, and that’s just an interesting question to ask people” (Hiatt). In a Wired interview, Yorke said, "every record for the last four — including my solo record — has been leaked. So the idea was like, we'll leak it, then" (Byrne). Of course, Radiohead is by no means an obscure band. Although not a pop phenomena, they have retained a loyal band of fans over their musical tenure. How well this promotion would have worked had they been a no-name band is another question. It remains to be seen if new bands can offer similar solutions without the initial public clout recording companies can provide.

The viability of Radiohead’s unique approach to the questions of Internet downloading is still unclear. The verdict seems to vary depending on who is asked. According to Wired: “It turns out the gambit was a savvy business move. In the first month, about a million fans downloaded In Rainbows. Roughly 40 percent of them paid for it, according to comScore, at an average of $6 each, netting the band nearly $3 million” (Byrne). Doubtless many fans paid little or nothing for the album, and others still may have downloaded it illegally. Is the former a workable solution? While it provides increased control of distribution, it doesn’t necessarily mean increased profits. Perhaps Radiohead is in the position where they will sell enough copies to survive regardless, but for beginning, less financially stable bands, such a solution may spell their death-note.

My question is: Will the rise of Internet-based music downloading and sales lead to the end of traditional music companies and their methods ("The Big 5")? Also, was Radiohead's idea an example of where the music industry should go? If your favorite band gave you the option to download their album for free or pay any price for it, how much would you pay (if anything)? I'd love to hear what people think will be the main medium of music sales twenty years from now.

Byrne, David. “David Byrne and Thom Yorke on the Real Value of Music.” Wired 18 Dec. 2007. 2 Jan. 2008 .
Foege, A. “Record Labels Are Hearing an Angry Song.” New York Times 11 June 2000: BU4.
American Music 17.3 (1999): 318–53.
Hiatt, Brian. (2007-10-10). “Radiohead's Jonny Greenwood on ‘In Rainbows’: ‘It's Fun to Make People Think About What Music is Worth?’” Rolling Stone 10 Oct. 2007. 29 Dec. 2007 .
McCourt, Tom and Burkart, Patrick. “When Creators, Corporations and Consumers Collide: Napster and the Development of On-line Music Distribution.” Media Culture Society 25.3 (2003): 333-50.
Strauss, N. “Digital Music, Chapter 2.” New York Times 2 Aug. 2000: B3.