Background and theory

Many studies since 1999 have investigated the impact of peer-to-peer file-sharing technologies on the music industry.  Findings have been contradictory and inconclusive: studies by government bodies or music trade groups (Zetner,2003, IFPI,2008) report negative effects, earlier studies (Vassileva,2002, Adar&Hueberman,2000) show a net positive effect on the then buoyant CD trade, compared to later studies (Liebowitz,2005) showing net losses on purchase patterns.

The birth of file-sharing

Downloading music boomed in popularity following Apple’s controversial 2000 ‘Rip, Mix, Burn’, campaign.  Apple’s iPod became the icon of a new generation of music consumers for whom volume, variety, and portability of their music collection was more important than its legality.  Critics noted that the iPod 40GB holds 10,000 songs – larger than most people’s CD collection – thus encouraging downloading.

Tape-sharing was a phenomena of the 1970s-90s which helped to popularise the punk and new wave moments, reflected in the 1981 song ‘C30, C60, C90 Go!’ by Bow Wow Wow, yet this song encouraged “going down the record shop”.  Digitisation allows for an immediate, low or no cost transfer of music in larger volumes by disc, portable flash drive or sharing files via decentralised bit-torrent software.  A visit to a ‘record shop’ is no longer necessary to access music.  A 2008 survey by UK Music and University of Hertfordshire of 14-24 years olds revealed 95% copied music in some way. Napster became the first martyr of the peer-to-peer generation, attracting 57 million users prior to shutdown. 50 million people use Kazaa daily, “a community of pirates” (in the words of America’s RIAA) which represents the largest music market on the planet.

Arguments for and against file-sharing

In support of file-sharing, it has been argued that it offers ‘super distribution’ of information products at minimal cost; gives access to a large customer base via networks enthusiastically supported by participants; it may increase product spend in older internet users, though benefiting obscure artists more than stars; is a marketing tool to test new music and opens the market to small artists.

Arguing against file-sharing: an IFPI study estimated that in 2008 40 billion files were shared illegally with only 5% economically benefitting the producer.  A 2003 Zetner survey showed downloading reduced the probability of purchasing music by 30% and sales of products by 7%.  Liebowitz (2005) examined CD sales in 99 US cities, finding that large young populations with internet access had reduced record sales.

File-sharing has negative internal effects within the music industry: it wastes corporate resources, makes consumers sceptical about industry claims, and encourages the industry to cling to old business models.  Consumers can also suffer: there is a cost in search and sampling in time and bandwidth; a danger in finding files which are badly compressed, incomplete, or contain viruses; and downloading is storage hungry.

Much analysis is inconclusive as to whether file-sharing has a positive or negative effect on artists and labels.  Pew Internet’s 2004 survey of artists showed over half were ambivalent, similarly Speck’s 2004 survey of 90 small labels showed less than half benefited and a third were unsure about file-sharing.  Using weekly album sales and download information, Oberholzer and Strumpf (2004) found that illegal downloading had a statistically insignificant effect on sales.

Piracy and historic context

Peer-to-peer distribution is a form of piracy. Piracy can be a virtue, getting the developed world accustomed to western music and making the market more profitable once developed which does not necessarily detract from cultural production: in India, Cuba, and Jamaica musicianship thrives despite high levels of illegal manufacture.  Piracy can be viewed as a form of sampling or testing necessary to measure interest, as the value of music is only revealed once it has been consumed.

These arguments are not new: in the 1970s the music industry attempted to outlaw private copying onto cassette tapes under the slogan ‘home taping is killing music’. Today, it is received wisdom that tape recorders helped to expand the market for music in the same way the film industry tried to ban video recorders, yet video sales and rentals now represents one of the studio’s biggest markets.

Research findings

Find out more about the research background, methodology and see the full survey findings here.

Case study: 16-year-old male music fan

“Youth instinctively understands the present environment – the electric drama” (Marshall McLuhan,1967).

To understand future trends, look at ‘digital natives’, the young music fans today.  I interviewed a 16-year-old male music fan on his patterns of music consumption.  He accesses music from several sources: Limewire (peer-to-peer network), bluetooth (mobile-to-mobile), and grabbing audio from YouTube to listen to artists he already knows or tracks he hears on the radio.  He spends his money on other entertainment products because with music “there’s always a way”.  He prefers to spend his money seeing a concert, particularly rock or heavy metal, which “is 100% better live.” Before the show he’d listen to the artist on MySpace or ‘talk’ to them there.

He listens to music everywhere: at the gym, walking to school – even doing the washing-up using a (digital) Walkman Player.  He defines music ownership as having unlimited access, “…so I can play it wherever I want.”   He owns few CDs, merely carry-cases for digital files, which are a status symbol: “Some of my posher mates, they will go and buy CDs because they can.” ‘Tape-swapping’ consists of borrowing – and ripping – stuff from friends. If he had more money he would pay for music: “If you’ve got an iTunes account it’s just easier to click ‘Buy’ and then it’s there.”

Although he knows artists personally, the loss of their income in choosing to take rather than pay for music “doesn’t go through my head”, though in principle he believes consumers should pay and creators should be rewarded because making music is “very time consuming.” He has a powerful response listening to music, which “changes your mood”.

His experiences demonstrate that music is still an important, emotive, part of a young person’s life, however, whilst access to free music is so prolific, its financial competitiveness against other harder to duplicate media is difficult to maintain. Models to develop tangible, experiential products – either in the form of live music, collectable products, or alternative funding models e.g. ISP tax – are means of monetizing a young audience, who still have the passion, if not the pocket-money, to enjoy music. Bill Drummond believes digitisation and the ubiquity of “two-dimensional 20th-century” recorded music will inspire new means of producing music which cannot be downloaded.

The ‘devaluation’ of music

The phrase “devaluation of music” has been used frequently since the RIAA claimed file-sharing “reduce(s) the value of music to free”, echoing Sousa’s view that gramophones devalue music.  ‘Devaluation’ was frequently repeated by participants in differing contexts.  Devaluation described their perception that today’s consumers ascribe less value to collecting and discovering “throwaway”(Junga) music products.  Dubber argues music is more integrated into people lives as many carry their whole collection in their pocket; devaluation is an excuse for those earning less in the digital economy. Giving away music for free potentially “devalues the label and the music” (Simian).  Shillingford felt the majors’ CD price reduction strategy was “devaluing music…you can’t sell something that cheaply,” and bit-torrenting stimulates theft in a vicious circle as “stealing something isn’t devaluing it, it’s stealing it”, where people ‘steal’ music software from bit-torrents, then their music is ‘stolen’ in the same manner.

The majority disagreed that bit-torrenting has ‘devalued’ music, yet many felt the wide availability and convenience of downloads negatively affects production, their “heartfelt investment being reduced to a tiny drop in a huge iPod ocean” where ease of access decreases value.  Tapes require a time and asset investment, bit-torrenting happens with little investment.  Some thought devaluation occurred through commoditisation – used as background media, music’s value is decreased by newspaper giveaways.   Supporters believed higher access creates higher quality standards, greater access to potential paying audiences, and a passive worldwide distribution where access heightens cultural value.  The greatest threat was the expectation that young people expect music to be free (five citations), because “free music has become the norm”, devaluing the contribution of the artist.  File-sharing affected “Tesco music” more than independents, as you have to know an artist before seeking to download their tracks.

Devaluation – the reduction in value of music goods – affects the wider music industry, however, for independent music entrepreneurs, ‘devaluation’ is an emotive term which describes the commoditisation of high volumes of music production and consumption where the individual work becomes homogenized, potentially losing its sacred status. File-sharing was in the media spotlight throughout the 2009 trial of Swedish peer-to-peer site  The Pirate Bay,  which was criticised by Bjorn Ulvaeus from ABBA for giving users “the ‘freedom’ to be lazy and mean“.  The defendants positioned themselves as liberalists and crusaders against copyright for the benefit of society, a stance common amongst peer-to-peer advocates.

The government, through strategies like Digital Britain, want a regulatory role in educating consumers about copyright, yet with popular music this may be intrinsically flawed as it’s an industry built on getting in trouble with your parents.  David Lammy, IP Minister, compared teenagers downloading music to stealing a bar of soap not a TV from a hotel, sending mixed messages about the severity of copyright infringement.

Read part 3: The changing values of copyright
Independent music online research index