Is Piracy Really Killing The Music Industry?

For more than a decade the music industry has claimed that digital piracy is the main cause for the gradual decline in revenues.

logo
Ultimate Guitar
0

For more than a decade the music industry has claimed that digital piracy is the main cause for the gradual decline in revenues. However, looking at the sales data of the music industry itself shows that the disappointing income might be better explained by a third factor that is systematically ignored.

After music cassettes were introduced in the mid-70s the number of sales saw a gradual increase, until the late 80s when the CD took over in popularity. Cassettes were eventually phased out as CD sales continued to skyrocket. In music industry vocabulary one could argue that CDs killed cassettes.

Interestingly enough, this format shift was nothing new for the music industry. Now, three decades after cassettes started to dominate the music business, the CD is losing ground.

This time around there is a new enemy in town, digital piracy. For nearly a decade the U.S. music industry has seen a decline in sales of physical CDs and all this time it has put the blame on digital piracy. By doing so, the labels conveniently ignore the most drastic format shift music has ever seen the digital revolution.

With the growing popularity of the Internet, computers and most importantly MP3-players, music fans have started to trade in their CDs for MP3s and other digital files. Initially, the public had to convert CDs themselves, but in 2003 the iTunes store opened, selling over a million tracks in the first week.

With this shift from physical to digital, another important change hit the industry, one that may in part explain why the labels' revenues in the U.S. continued to decline. With the introduction of paid downloads, consumers no longer had to buy a full album if they were only interested in two or three songs. This new freedom for consumers has dramatically changed the music sales landscape.

According to statistics taken from the RIAA shipment database, between 2004 and 2008 the number of single tracks sold in the U.S. increased by 669 percent while the number of album sales dropped 42 percent. Consequently, the income of the big labels suffered since single track sales are less profitable than full albums. As can be seen in the chart here, the number of music "units" sold continues to grow rapidly nonetheless. So where does piracy fit into this picture?

The format shift from physical to digital music, and the change in buying habits that came along with it, may explain the decline in revenue more than piracy can.

Read the entire article here.

Trending stories

48 comments sorted by best / new / date

comments policy
    DesertEagle
    interesting theory i want this to be the case but piracy these days is huuuuge :S. I just wish that the record companies could get on board and start up their own digital album selling sites it would create good competition lowering prices. However nothing beats the physical product of an album..
    justahumn
    Can't use digital to de-seed and roll on...no artwork, lending, scratching, dropping, reading inserts, etc...took the flavor away although, it sounds better. I do like not having to purchase entire album/cd just for a couple of songs. Technology! Bands I use to see for $10 bucks is now $100 twenty, thirty years later. Don't tell me priacy is killing the music industry...today's music is killing the industry. Use to be sex, drugs, rock and roll. Now! gay, lame and the Black Eye Peas????
    spidenrikii
    Want more people to buy CD's? Stop signing and promoting shitty bands! Single sales are up because that's what all these shitty bands do..make a couple of singles and put them between a bunch of fillers on an incredibly lame album. Sing good bands, who make the effort to write a COMPLETE album. Of course I'm not going to buy an album if only 1 or 2 songs are decent. I want quality AND quantity... I want quality quantity. Also remember that CD sales dropped hugely as soon as concert DVD's and the like came out but you never hear record companies talking about the new revenue they make from DVD sales
    Dennis187
    well yeah....i just bought blaggards cd on amazon...but because it was cheap
    Admiral Petty
    Pool_Shark wrote: I feel like itunes should only allow the sale of full albums, rather than single tracks. And I don't see why people would rather download an album than go out and by a physical copy. There'n nothing better than holding a CD of your favorite band and looking through it. Anyway, the only way to make money these days is touring and the lives shows. That makes up for the loss of CD sales.
    Lame, some albums only have a few good songs. Some artists refuse to sell their albums online cause they don't like people just buying one or two songs. That's their right, but the others obviously aren't so bothered by it. Think about the public in general anyhow, most people aren't really album people, they just like to hear a song or two and move on, we can't force people to have a greater appreciation for music. Most true fans of bands will find that their favorite songs by that artist aren't usually the singles anyhow. But most people are just casual fans who don't care to search deeper, why do you think we've had greatest hits albums around for so long?
    MrSir4 wrote: Piracy is still putting a hole in the music industry BIG time. If we had as many people paying for tracks alone as we do people who pirate their music, we would not be having this issue. That isn't to say that I do not agree with your theory. Because it does make a lot of sense. Times are different, and these days piracy is not something that every company can avoid, so maybe it is time to consider selling whole albums instead of individual songs. Maybe Itunes should put a song or some content on the albums (with the artists' consent, of course) that you have to buy the whole album in order to have access to. Just my opinion/suggestion
    You do realize that Itunes already does that right. Also, the inclusion of digital artwork on more albums is nice, although not as nice as having the real thing. The new Itunes LP files are cool as well, digital album artwork that is interactive in ways that cd artwork isn't.
    dorkfish94
    Im going back to buying cd's for the fact that, hey, i spend my money and get something i know will be there the next day. So many things go astray with computers now. And, i mean, come on, Rob Zombie has a new album out, Black Label Society producing an album soon, why not buy cds?? Thats just my input. Oh, and lowering the prices would help. ALOT.
    Vendim
    I just bought 2 Foo Fighters albums because they were like 7-8 euros. That's a good deal and I think the music labels would make more profit if they lower the prices!
    evilotto77
    Wow - digital music sales means that people buy fewer CDs. Big news here UG, big news...
    waysay
    I don't really give a shit. There is great music everywhere.(open mic nights!) and you don't nead to spend top dollars to listen to music. If the prices were lower I would buy cd's. I bought "SLASH" the other day for under $15. Thats makes more sense to me.
    nicksword87
    I think there has to be some additional extras put into cds. For example, Steven Wilson (Porcupine Tree) remasters his albums to surround sound 5.1. you can't download that. also, I just bought the limited edition dvd for over $100. but it is a full hard back book. it is a piece of art that I will keep forever so I don't mind spending the money. if artists put this much effort into the album as a whole and not just work on the music then it would be a different story.
    thrashmonkey
    I'm going to quote the late, great Peter Steele (of Type O Negative and Carnivore) to give you a taste of some of the artists' opinions on this. "I'm glad that this MP3 thing is happening, because it'll put the record companies out of business. Even if it hurts us, I will gladly cut off my nose to spite my face because I hate the record companies so much." -Peter Steele (RIP)
    b_flo
    It's killing the bands that are just starting, and just signed that recording contract. It's also killing the major record companies and local indie record stores. For well-established bands, they make their money on merch. when they're on tour...also a fraction of ticket sales. The silver lining: it forces bands to go on tour more.
    deadlyMETAL
    There need to be more studies on digital piracy and on music sales, so we can better make the statements that musicians make their profits largely from shirt/merch sales and from shows. For that reason, I support this article.
    b_flo
    nicksword87 wrote: I think there has to be some additional extras put into cds. For example, Steven Wilson (Porcupine Tree) remasters his albums to surround sound 5.1. you can't download that. also, I just bought the limited edition dvd for over $100. but it is a full hard back book. it is a piece of art that I will keep forever so I don't mind spending the money. if artists put this much effort into the album as a whole and not just work on the music then it would be a different story.
    Thanks for your support...I personally know some of the band members, and handle their gear from time to time. I'll pass it on.
    guns for hire
    firestond wrote: Why would I go buy a cd like green day, when in a few months i could have heard the best 4 songs off the cd.
    Especially now, when three of those four singles seem to be released before the album even hits the shelf.
    GiantRaven
    Pool_Shark wrote: I feel like itunes should only allow the sale of full albums, rather than single tracks. And I don't see why people would rather download an album than go out and by a physical copy. There'n nothing better than holding a CD of your favorite band and looking through it. Anyway, the only way to make money these days is touring and the lives shows. That makes up for the loss of CD sales.
    Personally? Space Issues. Alongside not being able to find CDs of bands I like in shops.
    Mr Pringle
    I think that what they're saying as a loss in money is much minor to the damage music piracy is doing to the industry.
    pfinnegan
    I understand that the average person wants piracy to be shown as not contributing to the downfall of the music industry, but let's be honest with ourselves, it's probably one of the biggest killers for the industry. However, you make a damn good point. I am an "album oriented" person. I don't like to download singles, rather I enjoy whole albums. In fact, I don't really enjoy listening to artists who can only produce a single or two and not a whole albums worth of material. But, I admit, I'm in the minority here, and I can accept that. I have absolutely no data to support this, but here's what I see as killing the music industry: 1. Piracy, plain and simple. 2. "Legal" download sites from foreign countries that offer legal downloads for 10 cents a song. Who wouldn't do that? 3. Agreeing with your logic above, but with a slightly different view: the exposure of shitty artists. Artists who can only produce a single or two encourages people to only download those songs, and not the entire album. 4. To accompany point #3, the idiocy of "pop" fans. Most of the pop fans out there (probably not many visiting this site) only listen to top 40 songs, so that's all that they're downloading. Back in the day, as you pointed out, they had to buy the whole album. Now, the ADD society can just download the one or two songs they like and then move on to whatever else they want. That's my two cents. Great article though.
    thedeaduk
    thrashmonkey wrote: I'm going to quote the late, great Peter Steele (of Type O Negative and Carnivore) to give you a taste of some of the artists' opinions on this. "I'm glad that this MP3 thing is happening, because it'll put the record companies out of business. Even if it hurts us, I will gladly cut off my nose to spite my face because I hate the record companies so much." -Peter Steele (RIP)
    Hear hear!!
    Seein-Red
    Recording companies (i.e. "The music industry") have been screwing and bastardizing artists since the 70's. The marketing companies have been steering the type of music that exits the building onto the CD, Tapes, Records, MP3's.... Plus THEN, most radio stations can ONLY play the music that they are ALLOWED to as deemed by the "Music Industry". Talk about "CONTROL"! This song or that song wouldn't even get RECORDED because some marketing exec said, "No No.. It might not make enough money.) Greedy bastards! As musician's we have the tools to make our OWN recordings at home or go to a privately owned studio and have a master made. From which a musician can distribute how ever they see fit. Back when "Labels" (and have I got a LABEL for them!) actually CARED about the artists and their music, they were a good venue for up and coming musician's. But now, it's all marketing, lunch boxes, t-shirts, coffee mugs, flame throwers (Spaceballs, the movie). It's all about the "almighty dollar". DOes anyone here remember walking down a street and hearing a decent garage band and just stopping to listen for a while? Does anyone DO that anymore? And no... I don't pirate music. And I buy CD's (DO they HAVE to put all the damn stickers on the case?!?!?!) However... If I happen to find a song that was written by a now-dead artist or group, I personally wouldn't have a problem with obtaining it via "other means". Why should a "Label" continue to get money by sitting on their butts? Maybe instead of WHINING about how much they THINK they are losing, maybe they should start cultivating and SUPPORTING new artists... Like the USED to... Ok... I'll get off my rant. Take care all!
    XxBassMan666xX
    Single sales are good, I get to spend less money by not buying the 80% of the album that sucks
    firestond
    Basically the labels have destroyed the music industry that they say they cared about. When I was younger, you used to have to wait 6 months for the second single off of a CD, now every 3 weeks they are released if they are a big band. Why would I go buy a cd like green day, when in a few months i could have heard the best 4 songs off the cd. The second reason music is in a decline is like what someone above stated, that albums just are not good from start to finish anymore. I once read that if a band has a single that the label figures they can make a little more than the recording/manufacturing cost, they will sign the band for that small profit. We have all seen these bands before..smashmouth, sugar ray, alien ant farm...where are these bands now. I'm never gonna buy an album again unless i have downloaded it and made sure its 80% good. I'm also expecting I won't have to buy more than 10 albums in the next 5 years.
    siraxlrose
    Pool_Shark wrote: I feel like itunes should only allow the sale of full albums, rather than single tracks. And I don't see why people would rather download an album than go out and by a physical copy. There'n nothing better than holding a CD of your favorite band and looking through it. Anyway, the only way to make money these days is touring and the lives shows. That makes up for the loss of CD sales.
    Sometimes certain cds that are out of print or imported cd's could cost more than downloading it from itunes.
    Pool_Shark
    I feel like itunes should only allow the sale of full albums, rather than single tracks. And I don't see why people would rather download an album than go out and by a physical copy. There'n nothing better than holding a CD of your favorite band and looking through it. Anyway, the only way to make money these days is touring and the lives shows. That makes up for the loss of CD sales.
    mr.blue7
    The only reason people only like, like 2 or 3 songs on an album is cus artist half ass it nowadays. so its not worth buying an album for 14.99 when the songs get boring. i mean really compare Metallica'a Kill em All to St. Anger or Death Magnetic. Can you really listen to the latter albums and say that you like more than 3 songs? If the industries want this to stop they should stop putting out shitty music. As for artist they should try to be more consistant in their work.
    Jesus_Dean
    There is another factor they don't mention. Back in the day, I used to play my favorite tapes (or records) so much they eventually wore out or no longer sounded clear. I then went out and bought another one, and after some time, depending on how good the tape was, another one, and so on and on....If my tape was left lying on the seat or dashboard of my car, I had to go buy a new one. If my tape player "ate" my tape....well, you get the picture. LOL. With CD's, we just make a copy as good as the original and the original gets put on the shelf for safekeeping, thereby making it unnecessary to buy multiple copies of one tape/record.
    Skarson
    it is the record companies' responsibility to change the business model, not the consumers'. if their sales are failing, regardless of the cause, they must figure out a way to work around the prevalence of piracy.
    the_hoodster
    Jesus_Dean wrote: There is another factor they don't mention. Back in the day, I used to play my favorite tapes (or records) so much they eventually wore out or no longer sounded clear. I then went out and bought another one, and after some time, depending on how good the tape was, another one, and so on and on....If my tape was left lying on the seat or dashboard of my car, I had to go buy a new one. If my tape player "ate" my tape....well, you get the picture. LOL. With CD's, we just make a copy as good as the original and the original gets put on the shelf for safekeeping, thereby making it unnecessary to buy multiple copies of one tape/record .
    Are you saying that's a good thing or a bad thing? I think it's good because the consumer doesn't have to keep spending money on the same item but I suppose the bad thing is that more money could be earnt for the artists if everyone were to keep rebuying.
    MrSir4
    Piracy is still putting a hole in the music industry BIG time. If we had as many people paying for tracks alone as we do people who pirate their music, we would not be having this issue. That isn't to say that I do not agree with your theory. Because it does make a lot of sense. Times are different, and these days piracy is not something that every company can avoid, so maybe it is time to consider selling whole albums instead of individual songs. Maybe Itunes should put a song or some content on the albums (with the artists' consent, of course) that you have to buy the whole album in order to have access to. Just my opinion/suggestion
    Cerelil
    A study in sweden showed that artists revenue has increased, and labels decreased due to piracy, artists make more money from touring and merchandise, due to the huge cut labels take from the artists profits. The labels have got what they deserved for fleecing artists. If they took a smaller cut, they would have made a smaller loss in comparison.
    Burgery
    Well, there are benefits to this. The music industry is ****ed in every way anyway. Id like to see the record companies all going bankrupt, and a new way of handling music coming about. No more Britney Spears or Justin Timberlake that are just famous to make a little money for the record companies. Fuck, i hate the world.
    Niiko
    It's all nice knowing the record companies are complaining about being screwed over but what about the musicians? They make practically nothing from album sales and they're the ones that create it. But alas, capitalism and the refusal to want to pay for things got the better of the industry
    Jesus_Dean
    @ the Hoodster: Of course I prefer a secure format for my music. I used to get hella pissed when my tapes were ruined forcing me to go to the mall and possibly have to order the damn thing if it wasn't on stock. My point is simply the record companies moan and complain about the money they could "possibly" be making. I would be interested to know how much it costs them to produce, print, transport, stock and sell an average CD im comparison to a cassette or a vinyl LP. I haven't researched it but I'm almost positive that CDs are cheaper to put out there than the older formats.
    CaMacKid
    There needs to be a change in how music is sold. Lets face it, digital format is dominant. When cassettes/early CDs were around not many people knew how to rip them to computer or burn CDs (that tech wasn't even around) so it was easy to regulate. Now everyone and their mother can get a mp3 of any song they want. They [labels] seem to think songs are like cars and when stolen can be (not all the time) gotten back or the thief can be charged. But when millions of people are stealing cars that means something basic is flawed. After a while the judges are gonna be like (Another music case again? Didn't we have like 1000 last week?!) I don't have an answer but I'm just saying something basic is flawed and needs fixing.
    jrcsgtpeppers
    piracy is the main issue. You can go and illegally download like 20 albums in an hour. You can get any album for free. People do that because its very convenient. If Cd's were cheaper, like 7 bucks instead of 15 cd sales would jump. I love having the cd.
    TheAmazingJHS
    Ain't that the truth. I usually buying $5.00-$7.00 because I am not rich. Gibson sells guitars ridiculously priced. The industry lives on the love of money and it is disgusting and it is wrong.
    SIEGE312
    What's interesting is going to be the shift in music itself over the next decade. Artists will no longer stride to make a great or classic album, but rather, put all focus into making a well-selling or catchy song. The rock world may very well sink to the depths that pop or rap has. In 10-20 years there will be very little experimentation in music. We will see before us, a decline in the honesty of most artists and the subsequent destruction of what we know as the record industry. They should be thankful for those who download full albums from torrent site, etc because it is these individuals who still care about the full body of work that is an album. Not saying this is all true, just something kind of interesting to ponder...
    lutfish
    Piracy's killing the bands that are in it for the money. Other than that music is probably bigger than ever, since almost everyone has access to it nowadays.
    jrcsgtpeppers
    mr.blue7 wrote: The only reason people only like, like 2 or 3 songs on an album is cus artist half ass it nowadays. so its not worth buying an album for 14.99 when the songs get boring. i mean really compare Metallica'a Kill em All to St. Anger or Death Magnetic. Can you really listen to the latter albums and say that you like more than 3 songs? If the industries want this to stop they should stop putting out shitty music. As for artist they should try to be more consistant in their work.
    The way you supported your point made it invalid. Some artists nowadays only release popular singles. Rather than the full album. And the albums only have a few songs. And when you put out one really good single, which most country, pop, hip hop, and rap do, people will just itunes that one hit for 99cents or $1.29. Why pay 15 bucks for one song? I dont want to compare metallica to lady gaga. But I will compare led zeppelin. Their albums were packed full of good songs. It made you want to full album. You also got a poster and a few stickers when you got a zeppelin record. And pink floyd for another example. Concept albums made you buy the entire album. You had to buy the entire album. Just using them as examples. I think another problem is availability of certain albums. I have to drive 50 miles to go to my nearest record store to get albums from buckethead or john frusciante. And when I get there, they only cary maybe 3 different albums from each. If there were more record stores more people could get cds. ANDDDD labels get their money from touring. Why pay to go see a pop singer lip synching? Just my... uhm... 2 bucks lol
    goon316
    Agreed peppers, $20 cds are killing the industry. Make them all $10 or less and you will see sales skyrockett.
    Mr_Dobolina
    Pool_Shark wrote: I feel like itunes should only allow the sale of full albums, rather than single tracks. And I don't see why people would rather download an album than go out and by a physical copy. There'n nothing better than holding a CD of your favorite band and looking through it. Anyway, the only way to make money these days is touring and the lives shows. That makes up for the loss of CD sales.
    I fully agree with you, but any singles off an album should be an exception. It sucks, but it's just how it goes; they release singles on cd. And touring has always been the way to make money in the music industry, as it should.
    true_bacon22
    But people have always been able to buy singles, maybe iTunes has made them a little more accessible, but I think it's pretty obvious seeing as a majority of people download full albums for free as opposed to IRl, that piracy is indeed the factor behind the decline in Music sales.
    Shredder666
    I also agree. Perhaps piracy isn't the hugest thing killing CD sales, however it would be ignorant to dismiss it altogether. As long as people would rather download an album illegally rather than buy it, common sense says that piracy helps to deplete record sales. Another argument is that the quality of music is killing record sales. I agree that quality has declined, but that's my opinion. The real problem is that people are interested now more than ever in singles. This, coupled with the digital age, reduces the want for albums. People are on the go with their iPods, and most people don't want to take the time and sit down with an album (unfortunately). This article is also from a biased source, torrentfreak.com
    cobainAnselmo
    jrcsgtpeppers wrote: mr.blue7 wrote: The only reason people only like, like 2 or 3 songs on an album is cus artist half ass it nowadays. so its not worth buying an album for 14.99 when the songs get boring. i mean really compare Metallica'a Kill em All to St. Anger or Death Magnetic. Can you really listen to the latter albums and say that you like more than 3 songs? If the industries want this to stop they should stop putting out shitty music. As for artist they should try to be more consistant in their work. The way you supported your point made it invalid. Some artists nowadays only release popular singles. Rather than the full album. And the albums only have a few songs. And when you put out one really good single, which most country, pop, hip hop, and rap do, people will just itunes that one hit for 99cents or $1.29. Why pay 15 bucks for one song? I dont want to compare metallica to lady gaga. But I will compare led zeppelin. Their albums were packed full of good songs. It made you want to full album. You also got a poster and a few stickers when you got a zeppelin record. And pink floyd for another example. Concept albums made you buy the entire album. You had to buy the entire album. Just using them as examples. I think another problem is availability of certain albums. I have to drive 50 miles to go to my nearest record store to get albums from buckethead or john frusciante. And when I get there, they only cary maybe 3 different albums from each. If there were more record stores more people could get cds. ANDDDD labels get their money from touring. Why pay to go see a pop singer lip synching? Just my... uhm... 2 bucks lol
    i second to this...
    ridonkulous420
    record companies are not needed anymore, its getting more and more ridiculous to see what they think is music and how retarded they treat you, stop buying music unless its directly off the artist/tour on a lovley artistic album cover and the show was a coherent human work of art! With the advent of cheap recording equipment and filesharing the power to create culture is back in the hands of the people who live in it! Make music, remix share with the rest of us for a real human culture that is diversity. We don't need huge recording studios anymore, we don't need huge ad campaings polluting our minds anymore, we don't have to be slaves to abstract consumerism anymore purchasing our personality and culture to attain what we ALREADY are! Sorry for that rant but f**k you moneybags