IFPI: 'Ten inconvenient truths about the music industry today'

James Delahunty
31 May 2007 10:43

The International Federation of the Phonographic Industry (IFPI) has published today an article, titled, "Ten inconvenient truths about the music industry today". It is simply a list of 10 "truths" related to music piracy internationally with some familiar names. The title of the report is no doubt aimed at grabbing media attention, but a bad attempt at putting the damage of music piracy on the same level as the other topic "inconvenient truth" is associated with, Climate Change (if that was the aim of the IFPI).
So what are these ten truths?....

1. Pirate Bay, one of the flagships of the anti-copyright movement, makes thousands of euros from advertising on its site, while maintaining its anti-establishment "free music" rhetoric.
2. Allofmp3.com, the well-known Russian website, has not been licensed by a single IFPI member, has been disowned by right holder groups worldwide and is facing criminal proceedings in Russia.
3. Organised criminal gangs and even terrorist groups use the sale of counterfeit CDs to raise revenue and launder money.
4. Illegal file-sharers don’t care whether the copyright infringing work they distribute is from a major or independent label.
5. Reduced revenues for record companies mean less money available to take a risk on "underground" artists and more inclination to invest in "bankers" like American Idol stars.
6. ISPs often advertise music as a benefit of signing up to their service, but facilitate the illegal swapping on copyright infringing music on a grand scale.
7. The anti-copyright movement does not create jobs, exports, tax revenues and economic growth – it largely consists of people pontificating on a commercial world about which they know little.
8. Piracy is not caused by poverty. Professor Zhang of Nanjing University found the Chinese citizens who bought pirate products were mainly middle or higher income earners.
9. Most people know it is wrong to file-share copyright infringing material but won't stop till the law makes them, according to a recent study by the Australian anti-piracy group MIPI.
10. P2P networks are not hotbeds for discovering new music. It is popular music that is illegally file-shared most frequently.

It's not at all surprising that the Pirate Bay and AllofMP3 made the top 2. However, there is a real "inconvenient truth" here to deal with; both sites are still online. The reason for this is that neither service is considered illegal in either country (Sweden and Russia) and both claim that no laws are broken.
The truth that terrorist organizations are profiting from counterfeit CD sales is true, as do they profit from all kinds of criminal activity and the worst are state funded. However, considering the list is dominated by piracy on the Internet, it has to be mentioned that a kid at home downloading songs from a P2P network for personal use doesn't fund terrorism.
The IFPI seems to have taken a stab at Internet Service Providers (ISPs) for advertising about music while allowing P2P traffic on their networks. With iTunes, Napster and the countless other "authorized" music download sources now available, it should be considered a good thing that ISPs would advertise music availability as part of high speed connections. As for P2P traffic, it's important to note that most P2P software and networks are entirely "legal". ISPs do sometimes block or limit P2P traffic, but mostly just due to bandwidth concerns and have come under fire recently for this practice as it blocks some "authorized" video services from operating.
The 8th truth argues that piracy is not caused by poverty and cites research in China. You have to remember that in China and many other countries in the world, the markets at which counterfeit products can be found are part of consumers' daily lives and their culture. It's has also been going on so long now that most consumers in these countries don't even stop to think about whether the product is counterfeit or not, its not the same frame of thought as in the West where these pirate markets aren't so dominant.
Even in the West, many Internet pirates, or consumers buy products because they feel they are overpriced for what they are. Many file sharers are children who don't work, which the RIAA has discovered by filing thousands of lawsuits. Look at the UK and Ireland as an example, where consumers are vocal about living in a "rip off" society. In Ireland, CDs are priced often over €20 ($26) at retail, when many have about 12 songs, in which only half might be considered worth buying.
The 9th truth cites a report by the Australian Recording Industry Association's Music Industry Piracy Investigations (MIPI) showing that most people know that it's "wrong" to share music but "won't stop till the law makes them". While it is true that many people acknowledge it may be illegal to download music or buy pirated CDs, they have continued even when the law has been altered to make these acts illegal. It comes back to the point that many users simply don't see it is "a big deal" in the grand scheme of things.
Reading around these popular piracy resorts online, you often see discussion of how piracy effects artists but very little care for how it effects the record companies. This can be considered a self inflicted wound as these companies have labeled file sharers as thieves regardless of how much music they have bought in their lives, have filed lawsuits often against children for sharing music, have tried to get technology that can be used for legitimate purposes declared illegal, have included anti-fair use DRM measures on legitimate products, often dangerous to computer security (see XCP and MediaMax) and seem determined to keep a hold on the global market for music at all costs.
And finally, the 10th truth says that, "P2P networks are not hotbeds for discovering new music. It is popular music that is illegally file-shared most frequently." Of course, popular music is the most pirated, there is no doubting that. However, denying that a sudden availability to free music over a long period of time can spur a greater love for music would be inaccurate. The RIAA accuses people it sues of sharing thousands of MP3s, whereas those would most likely never have been purchased and are simply consumed because they are free.
A wider appreciation for music amongst P2P users, many of which are children, can affect sales of merchandise or concert tickets. In the case of children, they may also spur future sales of CDs simply because the kid became fond of a band after discovering them years ago on P2P networks (either in someone's shared folders or because a user associated more popular music with this particular band's material.)
I'd like to close by saying that there is nothing that the IFPI has said that can be proved wrong and piracy does, undoubtedly, show its impact in revenues of entertainment companies. I also admit that my debating points for some of these published "truths" cannot really be considered journalism but I think they reflect views of the majority of consumers.
It is however, frustrating that every press release from the IFPI groups P2P together as "illegal file sharing" or "illegal P2P networks" while in most territories, P2P networks and software are completely legal and that this industry demands respect and compliance from a large amount of people, many of whom feel that no real effort was made on the industry's part to work with newer technologies but instead, jumped the gun to lawsuits which have affected poorer families and students terribly.
Internet piracy also does not get credit for building confidence in digital music formats. Would iTunes have been so successful if it had launched and Napster never existed for people to be introduced to digital music in the first place? Also, let's not forget the market that MP3 files helped build, millions and millions of MP3 playing hardware devices sold and the market can only get bigger.
Once again, piracy is a problem and does, to a degree, affect real creative artists. But has the music industry taken the correct path in fighting piracy these days and can a little more truth about how piracy can be beneficial in cases and less false information (like saying P2P networks are illegal) really hurt?