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Internet Piracy Concerns US Music Industry - 2003-11-14

The American music industry blames pirates for the sharp drop in sales of recorded music. These pirates don't carry swords or sail the seas. They are ordinary Americans armed with personal computers who surf the Internet.

The American music industry says that 1999 was the peak year for sales with more than 14 billion dollars in income from recorded music. Since then, according to the music industry, sales have dropped. 2003 may be the worst year in a decade with projected income at ten billion dollars.

The recording industry believes that the millions of Americans who copy music using the Internet without paying for the copies are breaking the law. Jonathan Lanny is Communications Director of the Washington-based Recording Industry Association of America, a group that represents nine-out-of-ten record makers. He says using personal computers to share music over the Internet for free violates a legal principle: “Copyright law basically empowers the creator of a work with the ability to control how it is distributed and reproduced. And, so when a piece of music is shared (on the Internet) with millions of others without the copyright holder's permission, that's a violation of copyright law.”

The spread of high-speed Internet connections in America in recent years has made sharing recorded music fast and easy. Music recorded in a language that computers understand creates a large file. Ten years ago, sharing large music files with another computer was too slow to be practical.

In recent years, however, high-speed Internet connections, which are often called "broadband connections," have become a common accessory for the average home computer user. Today, tens of millions of Americans have these connections and millions of them have used the Internet to copy music for free.

A popular site for sharing music popular at least until its legal problems began in September is KaZaa. In September and October, the music industry struck back at Americans who were using KaZaa and similar sites.

America's music industry sent out about 350 legal notices. The music industry targeted individual citizens rather than the Internet sites that promoted free music copying for two reasons. First, most high-speed Internet connections that make copying easy and fast are in U.S. homes, making extensive piracy most common in America. Second, Internet sites such as KaZaa are located and maintained by people in several countries. Enforcing American laws would have been difficult if not impossible.

Jonathan Lanny of the Recording Industry Association of America says copying music for free on the Internet does more than violate a legal principle. It hurts thousands of people: “Over the past three years, music sales have been down more than 30%. And it is actually taking a real toll on people. It is not a victimless crime. There have been thousands of record company employees who have been laid off. Record stores are closing and artists are not being signed to contracts. So it clearly is having a profound impact. We attribute a significant and primary proportion of the decline to piracy. It is clearly not the only reason, such as the decline in the economy. But if you want to draw a chart over the past year, it would look like an "X" with declining music sales on one hand and skyrocketing illegal file sharing on the other hand. So there is a strong correlation between the two.”

Others challenge the music industry's claim that the rise in illegal copying explains the drop in sales. Teenagers and college students - prime customers for the music industry - have many other distractions, such as digital video disks and hundreds of television channels to watch or new video games to play. Another explanation for the decline in sales is a change in record-buyers' tastes or a drop in the appeal of current bands. Reporter Cynthia Webb of writes a column on technology issues. She is not convinced of a link between piracy and reduced sales:

“It's really hard to say. The recording industry will, of course, point out various studies that show that their numbers have dropped directly because of illegal downloading. Critics, on the other hand, will say that it is not that at all. They say the industry has cost-prohibitive pricing. And music fans argue, for example, that 'I don't want to pay 20 dollars for that compact disc when I only like one or two of the songs.' Furthermore, some of those critics say that they have bought more CDs because of so-called illegal downloading because 'I am able to sample music before I go out and buy it.' So it really depends who is producing those numbers and which side you are talking to. And that's the big question for debate on the reason for the drop in sales.”

The recording industry's tactic of targeting computer users has raised legal and political concerns. Cynthia Webb says the recording industry's tactics look heavy-handed to some. “There's a lot of pressure from lawmakers, Congressional lawmakers in the United States, who seem to be in favor of curbing digital piracy but, at the same time, do not want to step on the toes of consumers, that is, their constituents.”

Another tactic to discourage sharing of music over the Internet is the posting of defective recordings. For example, a teenager said that he tried to gather copies of the last recordings of Johnny Cash, a singer who died in September. On listening to the copies, he found that most were corrupted. They sound all right when they begin, but 20 seconds later a nasty hiss emerges.

In the future, KaZaa users who copy music will pay a fee for each song, which will be passed along to the copyright holder. Apple and Dell computer companies have already begun Internet-based, fee-for-copy services. Apple Computer's "iTunes" service charges about one dollar for each song that the computer user copies.

Jonathan Lanny of the Recording Industry Association of America says the music industry, computer companies and Internet services need to work together: “As the level of broadband access expands; that is, as more people have higher-speed Internet connections, that is going to pose different challenges. On one count, we hope that this can be a good thing because that empowers the legitimate online services that are now out there, such as iTunes (and others), and the availability of broadband helps that.”

Companies that track Internet use report a sharp decline in recent weeks of music file sharing. So the music industry may have won its first battle against piracy. But the struggle is not over. The industry may face foes armed with weapons that haven't been invented yet.

Teenagers and college students are clever and imaginative Internet users. Cynthia Webb of says no one can predict what they will create to share music in the future: “Getting rid of the practice (music sharing) altogether is like trying to stop a flood after the gates have opened because there's so much interest in getting free music, knowing that they have been able to do it before.”

The recording industry's war on Internet piracy has begun in the United States. As we will disclose in a future report, the war on Internet piracy is about to become a global struggle.