27 February 2013

Music Sales and IP

The record business might actually be on a bit of an upswing, if two new studies are any indication. According to the International Federation Of The Phonographic Industry, global music revenues rose .3 percent last year, to about $16.5 billion. That change might seem kind of piddling, but it's the first genuine upward movement since 1999. The same study also says that subscription service use is up, with about 20 million people (Out of 7 billion, but who’s counting?) paying regularly to stream music online.

A couple of thoughts jump out.  First, the uptick in music sales might be due to streaming subscriptions.  The report was poorly laid out and not particularly informative.

Second, there might not even be an uptick at all.  A lot of data is necessary for precision when dealing with numbers this large, and a 0.3% uptick could just be noise (no pun intended).

Third, such a minor uptick isn’t really much to brag about.  Perhaps copyright enforcement is helping, but I tend to doubt it.  My guess is that streaming is more responsible.

Also, I wonder how much of the uptick in sales is simply due to a larger supply of music.  The number of music artists seems to increase year over year, so perhaps this minor uptick in sales simply represents a massive increase in music supply.  If there was a massive increase in music supply, then the subsequent minute increase in sales should indicate that the market is reaching saturation.

In another study released this week, the NPD Group (whatever that is) found that music file sharing declined “significantly” in the past year, with only 11 percent of Internet users above the age of 13 seeking out music illegally online. That’s down from 13 percent in 2011 and a peak of 20 percent in 2006. The amount of music that's actually available for illegal download also declined by about 26 percent, thanks in part to the shutdown of services like MegaUpload and the industry’s crackdown on sites like Mediafire.

This seems to be where IP enforcement, for better or worse, is making a difference.  I don’t know if I would accept the narrative that copyright enforcement is mostly responsible for the decline in piracy.  For starters, there are alternative ways to pirate music.  One need not rely on the main sites, especially since Google tends to be helpful in finding alternatives torrent channels.

Additionally, the increasing amount of internet bandwidth makes it easier to stream music on YouTube instead of pirating to store on your local drive.  Some might pirate less music simply because it’s easy to find on free streaming sites like YouTube.  Since YouTube offers playlist capabilities, one need not even have a local media player.

Also, the music market is likely approaching saturation.  Not all pirated music is relatively new (i.e. produced in the last ten years or so).  As such, you would expect a lot of popular old stuff, like the Beatles or Bowie, to have diminishing piracy returns as people don’t feel compelled to download them over and over again. If you download “Space Oddity” in 2007, you don’t really need to keep doing so each year after that.

Plus, there are ways to pirate music without going online (flash drives, CDs, other similar media), and ways of file sharing that don’t require a web browser, so maybe an increasing amount file sharing is not being reflected in the general statistics.

My point is not that copyright enforcement doesn’t make a difference, or that streaming isn’t making a difference.  My point is that reality is more complicated than a couple of reports make it appear.  Thus, there is not necessarily any reason to, say, dump a bunch of money into investing in streaming services.  Nor would there necessarily be any reason to view IP enforcement as an effective policy.  We need to know more before can say whether the current state of affairs is meaningful, and whether streaming and copyright enforcement are really making that big a difference in music sales.