I don't buy the thing about music at all, the record industry said exactly the same when home cassette recorders came out, and again when cd writers came out.. I think they should be looking inwards to themselves for the real reasons behind slow sales and piracy, namely too high prices and low talent acts.
I download music, if it's rubbish, I won't bother buying, if I like it, I will probably buy the album if I can get it cheap enough (sub £10), I never buy singles simply because they're a waste of money.

The Malasian Government has recently advised people to not buy cds and dvds in order to force the various companies to reduce the prices.

With movies I'll watch stuff at the cinema if I can, if I can't I'll download it from the net, if I like the film, I'll buy the DVD, again if I can find it cheap enough.

Whether and how much the record industry has been damaged by piracy is open to debate. See for example this article I linked in the music forum a few months ago. "27,000 titles [were released] in 2001, down from a peak of 38,900 in 1999." And they wonder why they're selling less CDs?
Of course, there's no doubting there is a great deal of music piracy, but that doesn't translate straightforwardly into lost sales. There's no way to tell if people pirating music would have bought a CD otherwise, or even whether they already own the music on some other format - downloading an MP3 is a hell of a lot easier than ripping music from vinyl. Plus, ongoing accusations of price-fixing by the major labels, etc.

As for movies.. Firstly, let me say that I personally don't download films. This is not a moral position, rather that, yes, I could have downloaded and watched the Matrix Reloaded before it was released in cinemas here, but given that the main attraction of the film is the spectacle, what would be the point in seeing it in low resolution on my TV?
Anyway, yes, there is unauthorised copying and distribution of films. Yes, it will probably increase as more people have access to high-speed internet connections. Will this kill the industry? Of course not. Hollywood has been crying wolf about this ever since the release of the home video recorder. Prerecorded cassette sales subsequently became a source of a great deal of their income. DVDs are doing even better, being the fastest growing consumer electronics product ever. I think they're pretty safe for the moment.

I think both of you are missing two critical points here...

1) There is not a direct analogy to tape recorders or video recorders because those were analogue systems where the quality of the product degraded through duplication. With digital sources, the quality remains consistent so there is no incentive to pay money for a superior product.

2) How does this work... If you can't afford something at the market price then it is ok to steal it? I can't afford a Mercedes Benz but I'd like one... maybe I should just take one from the showroom? After all, if they made it cheaper then I could buy it.

Or is it ok because as Dan says it won't bring the industry to its knees... in other words a sufficiently high number of other people will pay for this product, so I should get away with taking it for free.

As far as releasing less titles, there is a chicken and egg argument there. Record companies cross subsidise... the profits from Eminem pay in part for the development of new talent and less successful artists. Piracy won't stop the release of Eminem albums, they will still make profits. What it will do is reduce the scope for cross subsidisation leading to a reduction in album releases and new band signings. As profits decline, Record Companies will play it safer and safer. In the long run, everybody suffers because there is less new music and less variety.

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by Incandenza
1) There is not a direct analogy to tape recorders or video recorders because those were analogue systems where the quality of the product degraded through duplication. With digital sources, the quality remains consistent so there is no incentive to pay money for a superior product.

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Very few people can afford to replicate the quality of a decent cinema in their own homes... In any case, the fact that it's digital is somewhat misleading. Yes, there is no loss of quality as copies are made, but on the internet things are generally encoded to lossy compression formats. Also, no it's not a direct analogy, but it is the best one we have. We've seen what happened with the advent of the tape recorder/VCR/CD/DVD, and for the most part it has been vastly increased profits for the industry once they worked out how to exploit the technology. Saying 'Oh, but it's digital' is not enough to convince me that things will be different this time.

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2) How does this work... If you can't afford something at the market price then it is ok to steal it? I can't afford a Mercedes Benz but I'd like one... maybe I should just take one from the showroom? After all, if they made it cheaper then I could buy it.

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The key difference for me is that if you download a film because you're too cheap to go to the cinema/buy or rent the DVD no-one has lost anything. This is why I have a problem with calling the unauthorised reproduction and distribution of copyrighted works stealing, especially when it's not done for profit, as is the case with the vast majority of internet 'piracy'.

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Or is it ok because as Dan says it won't bring the industry to its knees... in other words a sufficiently high number of other people will pay for this product, so I should get away with taking it for free.

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No. What it does mean is that the measures taken to prevent it should be reasonable.

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As far as releasing less titles, there is a chicken and egg argument there. Record companies cross subsidise... the profits from Eminem pay in part for the development of new talent and less successful artists. Piracy won't stop the release of Eminem albums, they will still make profits. What it will do is reduce the scope for cross subsidisation leading to a reduction in album releases and new band signings. As profits decline, Record Companies will play it safer and safer. In the long run, everybody suffers because there is less new music and less variety.

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In principle, it's certainly possible. In practice, I'd have to see some evidence that this is the case. It seems to me that what is actually happening is that the music & film industries are exaggerating their losses due to piracy in order to gain tighter control over what happens to their copyrighted works.

(Edited by In a State of Dan 04/06/2003 18:16)

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by Incandenza
I think both of you are missing two critical points here...

1) There is not a direct analogy to tape recorders or video recorders because those were analogue systems where the quality of the product degraded through duplication. With digital sources, the quality remains consistent so there is no incentive to pay money for a superior product.

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Although subsequent copies don't degrade further, the vast majority of music available to download is of inferior audio quality to the CD from which it was ripped.

Here is a nice aricle about music, pricing and black markets...

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by In a State of Dan
The key difference for me is that if you download a film because you're too cheap to go to the cinema/buy or rent the DVD no-one has lost anything. This is why I have a problem with calling the unauthorised reproduction and distribution of copyrighted works stealing, especially when it's not done for profit, as is the case with the vast majority of internet 'piracy'.

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I accept the point about digital compression, however I don't think comparing downloading to going to the cinema is valid. The only reasonable comparison is to renting or buying the movie on DVD.

I cannot agree with you about the idea that 'no-one has lost anything' and here is why.

A piece of music or a film, like a novel,a poem or other piece of creative work is 'Intellectual property'. The fact that it has no physical form does not prevent it from being an asset representing the investment of resources such as time. Novels are written, songs sung and movies made because there is a market for them. For the most part, a corporation acquires the 'Intellectual Property' and then exploits it for a profit. If they did not think that people would pay for it, they would not buy it from the artist. When you download something for free, what is lost is the foregone income that the individual or corporation might reasonably have expected to derive from your 'fair use' of the property.

By not paying, in the short term, you are stealing that revenue from the content provider. You may have little sympathy for corporations and it is easier to steal from a faceless institution, but when company profits fall, so do share values and dividends. By not paying, you are stealing from every investor in the company whether they be private, corporate or (for example) pension schemes.

Assuming the asset is being exploited by a corporation, that corporation no longer generates the expected return and as a result the value of the contributions of the original artist(s) declines. Their future income falls, so by not paying you are stealing from the artist (and from future artists who have yet to sell their work).

However, to simplify the illustration, lets say that Mr Artist spends a year of their life creating an album or movie, investing time and effort, foregoing revenue, buying materials and at the end of it they have a product... a piece of art.

Now lets say they put in the market to sell and suddenly it is being copied for free by the people they were counting on to pay for it.

How can you say that they have not suffered, that they have not been the victim of theft of their property?

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by The Noid
Here is a nice aricle about music, pricing and black markets...

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It's a nice piece, but it's economics is ridiculously flawed.

Whilst the marginal cost of producing a cd may be low (the cost of raw materials and production processes), there are significant fixed costs. Off the top of my head, these would include:

Royalties to the artist
Advertising
Employee salaries
Recording costs
Rental of offices and studios
Light, power, heat
Tax

If it were as simple as a 1000% markup:

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Compact discs and their immediate substitutes are being sold at approximately 10 times their marginal cost of production, and therefore a black market has arisen, exactly as predicted by classical economics.

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then record companies would make a net profit 10 times their overall cost. Since they clearly don't, the logic is flawed.

The cost of an album does not equate to the cost of producing the medium for storing the information!

But that doesn't mean that the conclusion is flawed though.
The RIAA think that albums have a certain value, and as the common saying goes, an object is only worth what someone wishes to pay for it. Yes, you could make an absurdism about comparing it to a thief not agreeing with retail pricing, but that's the easy way out of the argument.

There will always be people that don't want to pay for anything period, no matter how cheap something is, but the various companies will never sell to them in the first place so they aren't actually losing anything on those sort of people.
I think there is little doubt that the music industry makes a lot more profit from an album than they wish to let on.
If internet companies can afford to sell cd's for around the £8.99 mark and still make a profit, that means that someone along the line is inflating the price somewhat..
I dare say a lot of the alleged piracy would be greatly reduced if the retail price was reduced substantially.
I really feel that this is more a case of people voting with their feet more than any great public moral corruption as you seem to be suggesting.

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by Incandenza
The cost of an album does not equate to the cost of producing the medium for storing the information!

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The medium cost of mass production of a CD is in the order of cents, not pounds. So even including all non-material costs, combined with the larger scale posible because of a lower price, prices can go down a lot.

I'm the same as Stoo. If I download something and I like it, I'll buy the album. 90% of my CDs are bought on the basis of one track.

If I don't like it, I won't simple as that.

CDs cost too much as do DVDs. Other countries have them for sale legitimately for less, I'm just glad it's a global village and all that.

I think musicians should make more tracks freely available for evaluation purposes, it'd encourage folks to buy their whole albums, but which ever way you look at it, unless you're morally deficient,

Theft is theft is theft.

Sorry, but it is.

I am not making an argument for any price level being appropriate or inappropriate. As Stoo says, what people will pay is the right price.

However, feeling that the prices are too high is no justification for ripping off the providers.

Software is slightly different to music but ultimately is also an intellectual property issue. The Business Software Alliance estimates that 40% of software across the world is pirated and that even a 10% drop would create millions of jobs and boost economies by many billions of dollars.

wwwpub.utdallas.edu/~liebowit/knowledge_goods/records.pdf

This guy has studied trends in record sales over 30 years and concludes that the downloading of MP3s will lead to an overall fall in music sales of 20%.

There are some frightening statistics about music piracy here:

www.ifpi.org/site-content/antipiracy/piracy2002.html

Ultimately, I don't see how you can dispute the logic that taking something for nothing disrupts the revenue streams that motivate the industry to produce. If you want cheaper cds, buy them online or wait til they are in a sale (they will be, they always are).

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by The Noid
The medium cost of mass production of a CD is in the order of cents, not pounds. So even including all non-material costs, combined with the larger scale posible because of a lower price, prices can go down a lot.

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I looked up the last financial statements for EMI.

www.emigroup.com/news/20020521_Announcement.pdf

From turnover of $2.4bn, their operating profit was $245m... a return of 10% before tax and amortisation. This is hardly excessive.

Looking at figures for Sony and Universal online, a net profit of around 5% seems the norm.

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by Inc
Ultimately, I don't see how you can dispute the logic that taking something for nothing disrupts the revenue streams that motivate the industry to produce. If you want cheaper cds, buy them online or wait til they are in a sale (they will be, they always are).

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Depends who you are talking to really, I cannot see where I am depriving anyone profits, and I would suggest that the vast majority are in the same boat - using internet downloads as a try before you buy to decide if you really want to spend your money on product xyz.
Sure there are a few hardcore downloaders that would never buy anything, but I think that comes under my previous point.
Would you buy a car without taking it for a test-drive? Or a sofa without sitting on it, or a miriad of other things? No, you wouldn't.

Rather than villifying Internet users as evil hell spawn, the Music and Film industries would achieve better results and increased profits from larger sales figures if they reduced the prices.

Company finance figures can be massaged as you will know, so just looking at their overall profits could be misleading too, it entirely depends on what they are getting the accountants to do.

(Edited by Stoo 05/06/2003 00:28)

To broaden the point slightly, I think its worth examining what we MEAN by theft. A lot of people take the rise of 'media' theft as an indication that people morally have less of a problem with 'theft' than they used to (especially with it being from big faceless corporations)

In my opinion the problem (if there is one) is that theft, is not so much a 'learned concept' as a primeval one. Theft, if you like was when the other tribe came into your valley and nicked your mammoth. We are almost born knowing that taking people property away from them just isnt 'right'...

If you asked people what was intrinsically wrong with 'theft' id say the answers would be

1) You no longer have usage of the car/jewellery/walkman (delete as appropriate) etc
2) Emotional trauma of a physically robbery or house 'violation'
3)Cost to the owner of replacing.

Neither of which apply to 'media theft'.

The idea of 'information' as property is, culturally speaking very very new, so its no surprise that people dont put 'theft by duplication' on the same level as 'conventional theft'.

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by Incandenza

I can't afford a Mercedes Benz but I'd like one... maybe I should just take one from the showroom? After all, if they made it cheaper then I could buy it.

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Isnt the analogy, "if I cant afford one (and had a duplication ray handy) and 'copied' one in the showroom and drove it away... "

Now think, honestly, all of you opposed to 'theft' like all decent people, would you feel as guilty about doing that? Deep down I think most of us still define theft as the 'denying the owner of an object the access to or usage of said item by removing it without permission'.

Until society catches up with technology, the kazaas of this world will, for better or worse be running overtime.

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by Stoo

Company finance figures can be massaged as you will know, so just looking at their overall profits could be misleading too, it entirely depends on what they are getting the accountants to do.

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I *so* knew this was coming. Yes, of course they can be misleading... however, as a general rule, PLC's don't attempt to massage their figures downwards. All the major scandals of recent years have been companies attempting to put a positive gloss on problems, not successful companies trying to look like underachievers.

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by Incandenza
Software is slightly different to music but ultimately is also an intellectual property issue. The Business Software Alliance estimates that 40% of software across the world is pirated and that even a 10% drop would create millions of jobs and boost economies by many billions of dollars.

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All the money not spend on software/music/movies is spend on something else. If more money was spend on s/m/m less money would be spend on other things. Stopping copiright infringment doesn't suddenly produce money out of nothing, so that economy point is nonsense. It would only shift the money stream in the direction of the media/software conglomerates and away from somewhere else.

Apple can offer songs for 99 dollarcents and their store was a HUGE success. This shows that people don't mind paying for music, if it's offered in the right way. It's a lot easyer to start kazaa and download that song you want to hear then going to a music store, only to find that they don't have the cd you want.

Why don't all the big media companys start online music stores?

And who started using piracy for copyright infringement?

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Piracy Pi"ra*cy, n.; pl. Piracies. Cf. LL. piratia, Gr. ?.
See Pirate.
1. The act or crime of a pirate.

2. (Common Law) Robbery on the high seas; the taking of
property from others on the open sea by open violence;
without lawful authority, and with intent to steal; -- a
crime answering to robbery on land.

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(Edited by The Noid 05/06/2003 10:39)

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by The Noid
All the money not spend on software/music/movies is spend on something else. If more money was spend on s/m/m less money would be spend on other things. Stopping copiright infringment doesn't suddenly produce money out of nothing, so that economy point is nonsense. It would only shift the money stream in the direction of the media/software conglomerates and away from somewhere else.

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Again this is a nice idea but when examined false. People do not spend their entire disposable income and do not automatically buy something else. They save their money when they have nothing specific to spend it on.

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Why don't all the big media companys start online music stores?

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No idea. If it is, as you suggest, a fantastically successful business model then they may well do. They may however feel (can't imagine why) that making commercial quality downloads available for a small price is a dumb idea when people will then distribute them for free.

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And who started using piracy for copyright infringement?

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No idea. And what difference does it make? Language evolves with popular usage and piracy has been used to describe the duplication of intellectual property for as long as I can remember (certainly back to the introduction of home video machines). Perhaps they felt that the analogy to the 'open sea' was appropriate given the slightly amorphous nature of 'intellectual property'.

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by Incandenza
Again this is a nice idea but when examined false. People do not spend their entire disposable income and do not automatically buy something else. They save their money when they have nothing specific to spend it on.

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They have something to spend it on, more music.
Eventually the money will be spent. It may take some time for people to ajust their spending habbits, but they will once they notice their bank balance going up. While it isn't spent, it's in the hands of the banks, who use it to make more money too.