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Free Does File Sharing Mean the Death for the Music Industry? Essay Sample

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The industry of modern popular music developed in close connection with technology. Currently, it is the product of social media, protected by copyright. Moreover, the formats of recorded music have a long history starting from vinyl records, audio cassettes, CDs and coming to digital formats. As any sociocultural phenomenon, show business should express the spirit of the time. However, sometimes, cutting-edge technologies, justifying their title, change the market dramatically, forcing major players to count losses. Now, after the appearance and spread of the Internet, industry representatives are mainly fighting in defensive battles. However, the appearance of the Internet in general and musical file sharing in particular not only influenced the whole industry but also changed the attitude towards music. Currently, such phenomenon as file sharing is considered as digital piracy that kills the music industry. However, a thorough and consistent analysis of this claim has completely opposite results. File sharing does not prevent the development of music industry and has both positive and negative consequences on a global scale.

Historical Context

Modern music came to its golden age rapidly. In 2000, the music industry reached its highest point when American citizens bought 943 million albums on CD. However, the history of music and copyright began earlier in the 20thcentury. The International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations adopted in Rome in 1961 became the turning point for the whole industry, although the concept of intellectual property existed before the Rome convention. The first international document on the protection of intellectual property dates back to 1886, but it focuses only on literature. The 1950s were a time when popular music was born. Jazz rhythms were eventually replaced by rhythm-and-blues and rock and roll. However, the fact of mass production of records was even more important. Every musician could make money from music remotely without performing concerts. Moreover, music became a very profitable concept. Little by little, such attributes of the industry as music stores, record labels, concert agents, and clubs began to emerge. Not surprising is the fact that music business became controlled at the international level, and artists started to receive not only recognition but also millions of dollars.

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The structure of the music industry changed dramatically with the appearance of the Internet. However, it was not an immediate process. At the end of the 90s before the invention of Web 2.0 and peer-to-peer networks, the Internet helped to promote artists and develop the industry. The most popular musical format MP3 was developed in 1994 but became popular only at the end of the decade. However, this technology became disruptive after the invention of convenient ways of spreading MP3-files. In 1999, the American teenager Shawn Fanning designed the program titled Napster that used the peer-to-peer principle of decentralization, thus, allowing users to send music files for free. The popularity of the program was deafening as millions of users could share music. A young programmer Fanning even appeared on the cover of a respectable magazine Time. Moreover, Napster became the number one problem for the music industry. It existed for two years up to the moment when in July 2001, after numerous attacks of rights holders, a court decision shut Napster down. However, its initiative moved to Kazaa and Soulseek, and later to torrents. All these events have contributed to a popular idea that music should be free.

The Situation on the Market

Currently, the music transition towards the digital distribution occurs more difficult than the same one for the movies or literature. However, the situation is not as sad as the representatives of major record labels usually depict it. Recent transformations in the industry are more challenging and depend on the consumers’ preferences. It is partly because the American music industry spent many years in a battle under the slogan “destroy MP3,” and was not ready for the mass consumer rejection of the physical formats. At the same time, according to the report of Nielsen Company and Billboard, the number of sales over the last decade grew seriously. For example, one-time purchase of music exceeded 1.5 billion over three years. The situation in the industry around the world is similar. Between 2004-2009 total revenues of the music industry dropped by 30%, while sales of digital music content increased by 940% (IFPI). These statistics can be related to such growing online streaming services as Rhapsody and Spotify.

With the general increase in the number of sales, total revenue of major music companies in the US declined by about 2-fold - from 19 billion in 2000 to 8 billion in 2009. However, American companies and the global music industry have all reasons to expect the growth in digital sales. According to Business Insights analysts, global sales of music in a digital form will grow from 7.4 billion in 2010 to 20.1 billion in 2015. However, it should be noted that music industry includes not only large companies but also millions of musicians who receive profit with their music without signing the contracts with record companies. Moreover, the situation on the market becomes even more positive. According to the eMarketer report, in 2006 the global music market was worth 60.7 billion dollars. This year was the heyday of file-sharing networks that are the primary enemies of multinational content companies. Musicians received not only a significant portion of these revenues but also an opportunity for publishing their music digitally, thus, challenging the traditional content industry.

Positive Effect of File Sharing

Many researchers outline the fact that an objective and unbiased analysis shows that unauthorized distribution has a positive side. The Internet publication of works even without permission of copyright holders can promote the growth of authorized sales if they satisfy such requirements as quality, fair price, and convenience. While the damage of piracy is impossible to calculate since there are numerous factors, there are studies that outline the positive effect of unauthorized distribution. For example, the study titled Ups and Downs: Economic and Cultural Effects of File Sharing on Music, Film and Games focused on the illegal distribution of music and computer games. The researchers outline that the practice of unauthorized copying from illegal resources is extremely popular. However, users who regularly use file-sharing networks by downloading files and providing the ability to copy music tracks for other users are also active buyers of music. According to Huygen, Rutten, Huveneers, and Limonard, 63% of respondents who practice illegal downloading of music and games also buy authorized content after trying them. In addition, these users buy more related products and often go to the concerts or other performances of their favorite artists.

At the same time, a complete disregard of rights holders and their lobbyists for the positive effect of unauthorized distribution is the most vivid evidence that the digital transition is still not over. Moreover, in situations when content industry leaders confront with the fact of file sharing, they still consider them from the standards of the industrial age. The use of outdated business models makes the industry, right holders and authors to wage the war that is completely absurd from the market point of view. Previously the diligent publishers used copyright to struggle with unfair publishers, but now they struggle with ordinary users or, in other words, with direct consumers. Rights holders and their lobbyists see the increase of public pressure on Internet users and service providers as the only way to win this war. The primary strategy supposes law enforcements and technical regulations.

However, the mass character of unauthorized distribution makes the limitations unable to meet the criteria of efficiency, accuracy, and reliability. Absolute cessation of illegal activity is impossible not only physically but also technically since it requires full identification of an offender. Knowledge of offender’s IP-address and, in many cases, even existence of illegal content on his/her computer are not yet conclusive evidence of guilt. Thus, the strengthening of enforcement can be either propaganda and selective justice or the primary way to compensate the damage done by piracy to the copyright owners. Nevertheless, the level of unauthorized distribution continues to grow even despite an extremely active position of rights holders and substantial penalties for offenders. The threats of bankruptcy and long-term imprisonment seem to be not too effective. At the same time, according to the results of Recording Industry Association of America report, the financial side of the mass persecution of offenders is also ineffective. Between 2006-2008 RIAA spent 60 million dollars on the prosecution of offenders and received 1.5 million in compensation. Obviously, this anti-piracy campaign is nothing more than a costly but ineffective attempt to draw public attention.

Arguments for the Negative Impact of File Sharing

While the positive aspect of file sharing is obvious, there are numerous opponents of this concept. For example, Alejandro Zentner in his work titled Measuring the Effect of Music Downloads on Music Purchases found that free exchange of music reduces the possibility of its purchase by 30%. He also notes that this music can be spread among people who are not involved in illegal downloading and result in their purchasing decisions. While Zentner’s publication insists that online music piracy seriously affects the sales, it is also important to examine the issue more thoroughly. In fact, there are other dangerous consequences. William Wallace reflects such assumption in his work titled Authorizing Piracy on the Cyber Seas where he outlines the three most notable consequences of music piracy. Firstly, piracy leads to underinvestment in new talents. Wallace uses the Spanish record industry as a primary example (148). The increase in the number of people who use illegal content nullified the efforts of the local music industry in supporting new talents. The unprofitable character of such investments explains this situation. When the global situation with music sales began to deteriorate, Spain was not an exception. Between 2004-2009, the sales of local artists decreased by 65%. It led to the situation where the industry did not have sufficient funds to invest in local talents. It had a negative impact on the amount of local music and, as a result, on the development of culture in general.

Secondly, the fear of losses forces investors to shun some markets. For example, China's intellectual property situation is absolutely inadequate. The local law that is aimed at combating only with those pirates who profit from illegal activities is one of the primary causes of such situation. Such state of affairs is clearly outdated because the largest file-sharing services are functioning free of charge for their users. A ridiculously small amount of Chinese consumers want to pay for music. Such situation forces the record companies to think about the appropriateness of investments. Thus, the country can lose the ability to attract international partners who can invest in the development of local culture and help find new talents. Finally, piracy reduces jobs. Zentner outlines that the decline in sales has the most significant influence on American companies since they own about 41% of the market. The US economy annually loses an average of 12.5 billion dollars because of global and local piracy. As a result, more than 70 thousand job places were destroyed, and the third part of them referred to the record industry and related areas. Due to piracy, American workers do not receive around 2.7 billion annually. Moreover, every year America losses 422 million dollars of taxes. These numbers cannot be ignored.

Conclusion

As any social phenomenon piracy or, in other words, file sharing has both positive and negative consequences. At the same time, one cannot ignore its impact on the modern culture in general and the music industry in particular. While there is no single point of view, the opponents of piracy paint a scary picture of the music industry and outline multi-million financial losses. However, the arguments of file-sharing supporters look more convincing. Firstly, every discussion about music piracy includes the majority of copyright holders but not consumers or musicians. Secondly, the number of publication outline positive effects of file-sharing. Thirdly, the outdated business models and concepts prevent an adequate dialog between rights holders and consumers. Finally, the war with piracy is completely unprofitable and senseless. While numerous debates have no significant results, it becomes obvious that a current approach to musical file sharing is insufficient. The primary solution lies in the search for a compromise between copyright and free sharing. Moreover, there is a strong need for the creation of business models that will correspond with all current concepts and ideas.

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