Crying Wolf ?
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What do video games, blank audiocassettes and the Internet have in common? They have all been at one time blamed for lost sales by the music industry - Video games and blank audiocassettes in the late 70’s and the Internet in the late 90’s.

According to the Canadian Recording Industry Association, the major labels have had their shipments to retailers reduced 26% from 2001, the net value of sales dropping 23%. And like their American counterparts, our industry has simply decided to blame the Internet and CD burning for their problems, levying new technologies to compensate for the alleged losses.

Everyone agrees that the net can and has been used to distribute unauthorized copies of material. The Internet has enabled individuals to send and receive copies of material in a relatively short amount of time and this is a problem. But are the majority of individuals who use this technology choosing piracy over purchasing music? According to a 2002 survey by Massachusetts based Forrester Research, the answer to that question is NO.

Of the 1000 online consumers this company polled, 20% said they used the Internet to obtain files and/or burned music to CDs. But 36% also claimed these new technologies had not changed their purchasing habits, this 36% including the aforementioned 20% of consumers who use the new technologies.

The economy and the industry’s failure to provide material to a large percentage of consumers, both on CD and via adequate online services, are blamed for the industry’s financial problems by to this report. The Recording Industry Association of America’s own 2001 annual consumer profile states that 44% of their consumers are aged over 40 yet the industry still chooses to concentrate their efforts on a minute amount of acts whose appeal is limited to a concentrated number of consumers. And the Canadian music industry is non-responsive when it comes to online services.

The Record Industry's Response

The recording industry’s response to Forrester's findings was another survey, conducted by Peter D. Hart Research Associates for the Recording Industry Association of America to explain a 7% decline in shipments in the United States in the first quarter of 2002.

Of the 860 consumers randomly polled by telephone in May (2002), the Hart Research Associates report claims 41% of the individuals whose downloading increased in the recent six months said they purchased less music, 19% claiming they purchased more. And of individuals who claimed to have downloaded the same amount of music as the previous six-month period 25% claimed they had purchased less music while 13% claimed they purchased more.

This information, published in an Associated Press article on August 31st (2002), fails to provide sufficient information to draw any conclusion. The article fails to mention how many individuals of the 860 polled downloaded music off the net, the poll having been conducted using individuals aged from 12-54 who simply accessed the Internet. It also fails to account for downloads of out of print material, free downloads by independent artists and individuals that download music they’ve already purchased in previous formats other than CD.

Professionals in the field have also questioned the validity of this survey, including Jonathan Potter, the executive director of the Digital Media Association; an association representing Internet based music distributors and promoters.

In an article published by Reuters on August 26th (2002), Potter stated “The way to defeat illegal music distribution services is to offer comprehensive, innovative, fairly priced legal services” and “Until the record companies offer their content ubiquitously in a consumer friendly way, studies like this are useless.”

It is now obvious that the major labels have no choice in the matter. They have lost their monopoly on music distribution and they will need to show some initiative to stop their sales from dwindling, to stop the propagation of their image as faceless subsidiaries that dispense a limited number of generic products like vending machines. They should stop whining and get all of their catalogs online !

UPDATE - An Industry Canada commissioned survey published in May 2007 shines new light on the subject : Click here to view the report

Links To Additional Information
Forrester Research
Downloads Save The Music Business - August 2002
Repackaging Downloadable Music - October 2001
Peter D. Hart Research Associates
The Canadian Recording Industry Association
The Recording Industry Association of America
The Digital Media Association
Blank Media Information

Related Articles
Labels say music swaps spur sales slump. - Reuters, August 26th, 2002.
Hit Charade - The music industry's self inflicted wounds - MSN, August 25th, 2002