Piracy killing US economic growth?

[Aquamarine]

Very interesting about the highly organized distribution of pirated material on the internet.

http://www.wired.com/wired/archive/13.01/topsite.html
http://www.cnn.com/2005/TECH/internet/01/03/online.underground.ap/index.html

It is strange that the FBI have not been able to shut down the limited number of "topsites". Continued distribution will stop growth in some of the areas where the US economy is the strongest. Sales of CDs and comics have been stagnating in recent years, probably due to piracy. The same thing will happen to software and movies if the trend is not broken. With the arrivals of tablet PCs, both fiction and non-fiction books could also go the same way.

 

[member 5645]

Bull**** I say:

Sales of CDs and comics have been stagnating in recent years, probably due to piracy

In the USA we have other factors, like a recession that is finally stabilizing and CD's are following the trend:
http://news.com.com/Record+sales+down,+but+seen+as+stabilizing/2110-1027_3-5169904.html?tag=nl

In the UK sales are up, and they have piracy too!
http://news.bbc.co.uk/1/hi/entertainment/music/3158767.stm


Study on file sharing NOT affecting sales:
http://news.com.com/2100-1027_3-5181562.html

Say it with me now - when the economy is down and people don't have money for basic items, they don't spend extra on things like CD's. It has nothing to do with piracy.


As for the software and movie industry, they have already done the smart thing.
1> Online play requires unique keys for games, and they are giving away the full single player version
2>DVD's are cheaper than ever before, unlike the RIAA's attempts at price gouging that push people away from buying more.

 

[Aquamarine]

Total U.S. Dollar Value of the U.S. sound recording industry (in millions):
1994 $12,068.00
1995 $12,320.30
1996 $12,533.80
1997 $12,236.80
1998 $13,723.50
1999 $14,584.50
2000 $14,323.00
2001 $13,740.89
2002 $12,614.21
2003 $11,854.40
http://www.riaa.com/news/marketingdata/purchasing.asp

A remarkable stagnation. Much worse if the effect of inflation is added, then an outright decline. And has occurred both when major growth and mild recession in the overall economy.

For comparison, GDP growth:
1994 4.0
1995 2.5
1996 3.7
1997 4.5
1998 4.2
1999 4.5
2000 3.7
2001 0.8
2002 1.9
2003 3.0
http://www.economagic.com/em-cgi/data.exe/nipa/T1t1t1l1a

 

[member 5645]

You'll have to do better than that - like eliminating other option for the cause of a decline in total sales...
Lack of new artists
Increase in price of CD's
Bad Marketing
Recession (even support by your numbers)


All the while, people like 50 cent are breaking sales records. Piracy hurting the industry? Nothing definitively says that except Carey Sherman and you.


Also, what is the "U.S. sound recording industry "? Why does the RIAA not go by their own numbers alone? Does this include non-music recording?

 

[Aquamarine]

This illegal music trade is feeding the profits of
international organised crime syndicates who are involved in
drugs, money-laundering and other criminal activities
(see pages 5-6). It is costing governments hundreds of millions
of dollars in tax revenues. It is deterring companies in intellectual
property related businesses from investing in countries they fear
are not adequately protecting their intellectual property rights.

It is also destroying – indeed in large parts of the world has destroyed – local music cultures, local record companies and the careers of local musicians. This is particularly true of the developing world where, because of the failure to enforce intellectual property rights, countries that once bred international stars now find it hard to develop successful artists even at a local level.

An estimated 35% of music CDs sold in 2003 were pirate products. When cassettes are included, piracy amounts to 40% of all music products sold worldwide.

http://www.ifpi.org/site-content/antipiracy/piracy-report-current.html

The US economy has grown every year so a recession cannot explain a decline. CD sales have stagnated or declined when considering inflation. It seems extremely unlikely that a whole competitive industry would fail in marketing, product pricing and finding new artists. Those companies doing that would be eliminated by more competitive ones. One possibility would be that people are less interested in music, preferring for example computer games instead. But the number of people who downloads music continue to increase, contradicting that.
http://www.slyck.com/news.php?story=461

Do you actually think that people will pay for something they can easily get for free? That there still would be someone willing to pay if there were no legal threats, less hassle than with credit cards sales, equivalent quality and easy to use programs? Why do assume that people are stupid?

 

[Locrian]

Aha yea, piracy is destorying local music scenes. Is whomever wrote that incredibly ignorant or just interested in spreading cheesy propoganda?

Local music scenes do not depend on the sale of copyrighted material. Local musicians do not depend on the sale of copyrighted material. They almost universally depend on ticket sales and live shows.

Piracy is undoubtedly doing some damage to music companies. Suggesting that piracy is damaging US economic growth is just comedy. What's the rationale? That not spending money on movies or CD's lowers productivity? That not spending money on movies or CD's lowers national income? Does it reduce investment, stagnate savings or create inflation?

You know, hollywood would like us to believe that every movie that is stolen damages the US economy and sends cash straight to terrorists. That doesn't mean we must be so gullible as to believe it.

 

[Aquamarine]

Read the country descriptions. In many third world countries the local music industry have been erased. Pirate CDs have increased enormously in just a few years and legal sales have gone in the opposite direction, often halved or more.
http://www.ifpi.org/site-content/library/piracy2004.pdf

Or look at a more developed country, South Korea, from the same source:

The market in Korea for recorded music has almost halved in the past two years, down 44%. This is principally due to the exponential growth of internet piracy, fuelled by one of the highest levels of broadband penetration in the world and weak legislation to regulate e-commerce in copyrighted materials. It has been estimated in media reports that the number of unauthorised peer-to-peer (P2P) file sharing sites in Korea may be as high as 500. The largest P2P site in Korea has an estimated 10 million members, and permits 1,000 to 15,000 simultaneous connections.

 

[wasteofo2]

Bull**** I say:



In the USA we have other factors, like a recession that is finally stabilizing and CD's are following the trend:
http://news.com.com/Record+sales+down,+but+seen+as+stabilizing/2110-1027_3-5169904.html?tag=nl

In the UK sales are up, and they have piracy too!
http://news.bbc.co.uk/1/hi/entertainment/music/3158767.stm


Study on file sharing NOT affecting sales:
http://news.com.com/2100-1027_3-5181562.html

Say it with me now - when the economy is down and people don't have money for basic items, they don't spend extra on things like CD's. It has nothing to do with piracy.


As for the software and movie industry, they have already done the smart thing.
1> Online play requires unique keys for games, and they are giving away the full single player version
2>DVD's are cheaper than ever before, unlike the RIAA's attempts at price gouging that push people away from buying more.

Phatmonky, I agree with you 100%.

I have downloaded thousands of songs off of P2P programs, and in the time in which I've been downloading music, I've been exposed to way more artists much faster than I could have otherwise, and as a result, I've also bought way more CD's than I ever had in the past.

 

[wasteofo2]

Total U.S. Dollar Value of the U.S. sound recording industry (in millions):
1994 $12,068.00
1995 $12,320.30
1996 $12,533.80
1997 $12,236.80
1998 $13,723.50
1999 $14,584.50
2000 $14,323.00
2001 $13,740.89
2002 $12,614.21
2003 $11,854.40
http://www.riaa.com/news/marketingdata/purchasing.asp

A remarkable stagnation. Much worse if the effect of inflation is added, then an outright decline. And has occurred both when major growth and mild recession in the overall economy.

For comparison, GDP growth:
1994 4.0
1995 2.5
1996 3.7
1997 4.5
1998 4.2
1999 4.5
2000 3.7
2001 0.8
2002 1.9
2003 3.0
http://www.economagic.com/em-cgi/data.exe/nipa/T1t1t1l1a

You know what?
Music that the RIAA has been putting out lately SUCKS BALLS. Have you heard the new Avril Levine album? What about the Ja-Rule's latest release? Incase you haven't, THEY ARE HORRIBLE. It amazes me how few people stop to think that if the product is bad, less people will buy it.

C'mon man, it's called goddamned CAPITALISM! If people don't buy the product of a company, the way to fix it is NOT to keep prices extremely high and then whine to the government that no one is buying your products, the way to fix it is drop prices and/or put out a better product. We live in a competitive society, and if the RIAA isn't turning enough profit, then they will die out as an industry. That's how Capitalism works, and if the RIAA doesn't like it, they can move to goddamned China.

As a side note, I lack sympathy for the recording industry making ONLY 11 BILLION DOLLARS A YEAR. The amount of money it costs to make a CD is ridiculously small, the profit margin is huge, and the fact that there are still so many millions of morons that will buy the garbage they're putting out just shows how easy they have it and how majorly they're messing up.

 

[Locrian]

Read the country descriptions. In many third world countries the local music industry have been erased.

Well I feel you are making a rather odd use of the word "local." Piracy really only has the abillity to be very damaging to very large distributers of music with very widespread demand. If when you use the word "local" you mean an entire country of tens or hundreds of millions of people, then yea, piracy is hurting the "local" scene. That is not usually how the phrase is used.

Besides, you haven't made a case that damaging the music industry is a bad thing at all. To do that you will have to try and make an argument other than economics; if industries are outdated, they should be eliminated, because that is good for the economy.

Can an argument be made that piracy is bad for society and that it should be stopped? Absolutely. However, economics is not one of them. The idea that piracy is causing damage to economies is absolutely laughable. Any government intervention in the form of patent protection, licensing and copyright protection hurts the economy. The argument that is made to keep those things is that although it may cause small damage to the economy, it is worth it due to its positive effects on society.

The entertainment industries would like us to believe that if they go down, they'll drag us with them. However, just because they are clinging to outdated sales systems and are suffering from severe cases of intelectual stagnation is no reason for us to worry. They can beat piracy, but it is going to take more than beating the pirates to do it.

By the way, for the record, I do not use any file sharing programs currently. A few years ago I used napster to download a half dozen songs to see how it worked, but didn't really care for any of them. I'm no saint, I'm just trying to be transparent about my motivations.

 

[russ_watters]

You know what?
Music that the RIAA has been putting out lately SUCKS BALLS. Have you heard the new Avril Levine album? What about the Ja-Rule's latest release? Incase you haven't, THEY ARE HORRIBLE. It amazes me how few people stop to think that if the product is bad, less people will buy it.

C'mon man, it's called goddamned CAPITALISM! If people don't buy the product of a company, the way to fix it is NOT to keep prices extremely high and then whine to the government that no one is buying your products, the way to fix it is drop prices and/or put out a better product. We live in a competitive society, and if the RIAA isn't turning enough profit, then they will die out as an industry. That's how Capitalism works, and if the RIAA doesn't like it, they can move to goddamned China.

Actually, I have heard (and saw stats somewhere...) that the recording industry altered their business model in the 90s and capitalism is indeed what is killing them. They are putting less money into new artists and only backing big names, which sell, but don't necessarily mean they are quality acts (Kelly Clarkson? Gimme a break). As a result, they are putting out less albums and the overall quality is lower. Yeah, a handful of superstars can sell a ton of albums, but drop a tier and there isn't much else selling. On the other hand, every band in the local bar has a table-full of CD's to hand out or sell - and would sell nationally if the RI would give them a chance.

Add to all that the massive profit the RI gets on individual cd's (and the artist generally gets screwed and the death of the single), price fixing in music stores (ever wonder why you never see a sale on new releases?), and I'm perfectly happy to see the RI suffering.

It doesn't cost much to give a garage band a week in a recording studio to see if they can sell some albums - the RI just isn't doing that anymore. Bottom line, the RI and artists are not on the same team.

 

[franznietzsche]

Actually, I have heard (and saw stats somewhere...) that the recording industry altered their business model in the 90s and capitalism is indeed what is killing them. They are putting less money into new artists and only backing big names, which sell, but don't necessarily mean they are quality acts (Kelly Clarkson? Gimme a break). As a result, they are putting out less albums and the overall quality is lower. Yeah, a handful of superstars can sell a ton of albums, but drop a tier and there isn't much else selling. On the other hand, every band in the local bar has a table-full of CD's to hand out or sell - and would sell nationally if the RI would give them a chance.

Add to all that the massive profit the RI gets on individual cd's (and the artist generally gets screwed and the death of the single), price fixing in music stores (ever wonder why you never see a sale on new releases?), and I'm perfectly happy to see the RI suffering.

It doesn't cost much to give a garage band a week in a recording studio to see if they can sell some albums - the RI just isn't doing that anymore. Bottom line, the RI and artists are not on the same team.

Frankly 90%(RNPOMA) of music released today is utter crap. The RIAA doesn't deserve a dime with the drivel they put out. I refuse to buy any artist cd, unless I've heard the full cd already and know i like it, or its a band I've been a long tim fan of that isn't corrupted. And that's only one band, and they're Canadian, so the RIAA doesn't get squat from them. The only other Cds i own are some Van Morrison ones and a bunch of Tarantino and Rodriguez sound tracks, because its the only stuff worth listening to.I hate looking for a cd in stores, because it takes to long to find anything good buried in all the crap.

 

[Aquamarine]

Besides, you haven't made a case that damaging the music industry is a bad thing at all. To do that you will have to try and make an argument other than economics; if industries are outdated, they should be eliminated, because that is good for the economy.

Can an argument be made that piracy is bad for society and that it should be stopped? Absolutely. However, economics is not one of them. The idea that piracy is causing damage to economies is absolutely laughable. Any government intervention in the form of patent protection, licensing and copyright protection hurts the economy. The argument that is made to keep those things is that although it may cause small damage to the economy, it is worth it due to its positive effects on society.

That is a very interesting discussion. I will start a separate thread for that.

However, even if copyright is not good for the world economy as a whole, it may still be good for the US economy. Software, movies, television, sound recordings, pornography and books are areas where the US dominance is overwhelming and a major source of income.

So looking at the decline of the sound recording industry in the US and the more recent outright slaughter in the third world due to CD burners and Internet, will the same thing happen to the other industries? And technology may only increase the problem in the future. For example, increasing penetration and development of broadband may make downloading moves and software as fast as songs.

 

[Smurf]

Frankly 90%(RNPOMA) of music released today is utter crap. The RIAA doesn't deserve a dime with the drivel they put out. I refuse to buy any artist cd, unless I've heard the full cd already and know i like it,

Agree 100%, besides, most people who pirate music wouldn't buy the CDs anyway, so I don't see how any 'major' disruption can be rationalized.

Just to throw in the moral argument, is it right to pirate music that someone else has put in effort to make and then you click a few buttons and get it for free? Isn't it the same as stealing!?

or its a band I've been a long tim fan of that isn't corrupted. And that's only one band, and they're Canadian, so the RIAA doesn't get squat from them.

Who? who? who? who? who?

So looking at the decline of the sound recording industry in the US and the more recent outright slaughter in the third world due to CD burners and Internet, will the same thing happen to the other industries?

It already is happening to every industry of 'intellectual material', Movies and Video Game pirates are available pretty much anywhere you can pirate music.

 

[member 5645]

Agree 100%, besides, most people who pirate music wouldn't buy the CDs anyway, so I don't see how any 'major' disruption can be rationalized.

Just to throw in the moral argument, is it right to pirate music that someone else has put in effort to make and then you click a few buttons and get it for free? Isn't it the same as stealing!?

Only if you can prove that the person who downloaded said intellectual property would have paid for it otherwise.

(the DMZA says it's stealing regardless, but I think your question was meant to gain personal answers, not letter of the law answers.)

 

[russ_watters]

Only if you can prove that the person who downloaded said intellectual property would have paid for it otherwise.

Actually, legally and morally, it doesn't matter. Its like stealing a car: I doubt very much that a car thief would buy a car if he couldn't steal it.

Now that said, whether they'd buy the music if they didn't steal it does affect the profit/loss calculation.

 

[member 5645]

Actually, legally and morally, it doesn't matter. Its like stealing a car: I doubt very much that a car thief would buy a car if he couldn't steal it.

Now that said, whether they'd buy the music if they didn't steal it does affect the profit/loss calculation.

Making a copy of something, thereby not removing the original object, is far different than taking something tangible. You and I both know the debate of itellectual property is not nearly the same as standard theft


Oh and just some more fodder, I regularly purchase CD's from the bands I find through MP3. I could get it all for free, but apparently (accordiing to earlier posts in this thread) I and others are stupid for doing this.

 

[wasteofo2]

Oh and just some more fodder, I regularly purchase CD's from the bands I find through MP3. I could get it all for free, but apparently (accordiing to earlier posts in this thread) I and others are stupid for doing this.

I think everyone does this. I'm in high school, so needless to say, I know lots of people who download music from P2P programs. I also don't know anyone who doesn't regularly buy cd's of bands they like.

 

[mattmns]

I actually plan on buying a few cds this week (I do not buy cds regulary, or download them for that matter). I hate to buy cds because I think it is a huge rip off, but I think everything is a rip off. How many people have a "pirated" copy of photoshop? I know I do. If the program did not cost so much I would have probably bought it. However, I think many of these companies want to be "pirated." Or at least photoshop and macromedia products. Here I will give you the full version for 2 or 4 weeks, please do not take the 1 minute needed to find/make a time crack. But this is different in the music industry right? There is some sort of way that cds are burned now to where you cannot put them on your computer? Protected or something like that (probably a work around for this too though). Personally I hope all of these musicians go broke. Maybe they will start selling their cds for cheaper, or maybe for free (or the cost of the actual cd). These musicians make millons every year and are still whining.

 

[chroot]

I personally am not concerned about the recording industry crashing and burning. I wouldn't mind it at all, frankly. They've managed to thoroughly alienate their audience, which they long believed they could just keep captive forever. Their business model sucks, their product sucks, and their attitude towards their customers sucks. The RIAA has distorted itself into a propagandist menace of desperate, empty threats and general bad vibes. If people loved the record industry, felt it served a purpose, and wanted to keep it going -- they would. The customers have spoken, and the RIAA is going to die. Good riddance.

Let's not talk about the high-school kids with empty pocketbooks who steal a copy of the latest Britney ****pile. Let's not talk about the high-end pirates who make flawless fake discs and sell them to gullible people on the street in China. Those are small segments of the pirate population, at least in the US, and they don't factor into the loss equation anyway -- the kid couldn't pay for the CD, and the high-end pirate just wouldn't.

Let's talk about the middle 95% of the pirate population -- the informed, adult consumers like me, or the millions like me. I love music. I love bands. I love concerts. I don't buy many CDs anymore except off the tables at the end of a great concert. I have stolen a lot more music than I would ever have purchased. I have made a decision not to support the grotesque media machine whose sole interest in my money is to bolster their efforts to get everyone else's money. I do not feel guilty about my decision. I support only the artists I deem worthy of my support, in proper American, capitalist fashion. I choose to deny the record companies the significant fraction of their CD sale price that would go into creating vacuous new teen idols I'll hate anyway. I have no sympathy for the people who want to invoke government protection and threaten litigation because I won't pay $20 for an album I don't feel is worth more than $2. **** 'em. They need to find new jobs.

- Warren

 

[wasteofo2]

Personally I hope all of these musicians go broke. Maybe they will start selling their cds for cheaper, or maybe for free (or the cost of the actual cd). These musicians make millons every year and are still whining.

It's not even the Musicians who are *****ing and moaning the most. Most big artists get about 50 cents for each CD sold, it's mainly the big corporate phat cats who are complaining that their huge-ass profit margin is being cut dramatically. Musicians make most of their money from touring anyway.

 

[mattmns]

It's not even the Musicians who are *****ing and moaning the most. Most big artists get about 50 cents for each CD sold, it's mainly the big corporate phat cats who are complaining that their huge-ass profit margin is being cut dramatically. Musicians make most of their money from touring anyway.

Ohh I was thinking of that one guy from metalica who is always talking about stopping p2p piracy. You are probably right, and in that case: I do not care if all those "phat cats" go broke either

 

[member 5645]

I actually plan on buying a few cds this week (I do not buy cds regulary, or download them for that matter). I hate to buy cds because I think it is a huge rip off, but I think everything is a rip off. How many people have a "pirated" copy of photoshop? I know I do. If the program did not cost so much I would have probably bought it. However, I think many of these companies want to be "pirated." Or at least photoshop and macromedia products.

I run a "special" copy of photoshop at home. As such I taught myself the program and in turn we use it at work (where legal copies are a must!) Piracy is half the reason MS is the standard OS in homes. Mom and pop used to load it up on whatever number of computers for the cost of one copy, and as such they were proficient. A standardization was created through piracy, and businesses paid the comapnies when they employed people to run this software.

 

[member 5645]

Ohh I was thinking of that one guy from metalica who is always talking about stopping p2p piracy. You are probably right, and in that case: I do not care if all those "phat cats" go broke either

That would be lars. I will reserve my comments on him right now as it's not totally relevant to this thread.

 

[Aquamarine]

Some arguments for and against patents and copyright.
https://www.physicsforums.com/showthread.php?t=59500