Musicians and the Upside of Downloading

The recording industry has indeed suffered from declining sales over the past ten years and it may be tempting to point the blame at file sharing, yet a mistake that is commonly made is to claim that the recording industry crisis is a music industry crisis.

For example, evidence from a Dutch study by Annelies Huygen in 2009 shows the “positive effect” of illegal file-sharing: people who download music illegally (aka. pirates) are more willing to pay for concerts and related music products. Huygen illustrates that the other sectors of the music industries (the artists and live music) are benefiting from illegal music.

A Pew Internet report from 2004 interviewed 2,755 musicians to get their opinion on the impact of P2P file sharing on the music industries. In the report, more than two-thirds of musicians revealed that file sharing was only a minor threat to them, or no threat at all. Within the past five years there have also been a number of bands (e.g., The National and Clap Your Hands Say Yeah) whose success has been attributed to P2P file sharing.

The rock band Wilco is one of the first bands to famously benefit from P2P file sharing. In 2001 the band was dropped from the Warner subsidiary Reprise because they were unwilling to negotiate creative changes on the album. At first, Reprise refused to hand over the (already recorded) album to the band unless Wilco signed a $50,000 deal to transfer the rights, but shortly after Reprise agreed to give it to Wilco for free as a peace offering. Ten years prior, being dropped from a label might have been the end of a band’s career, considering the challenges of distributing the album (among other factors). Instead of finding another distributor, Wilco gave the album away for free on their website. Within weeks Yankee Hotel Foxtrot had been downloaded by thousands of fans and was met with critical acclaim in the blogosphere. Then, in an ironic turn of events, Warner bought back the album they had given to Wilco a year earlier! Warner released the physical copy in 2002 and the album went on to sell over 590,000 units, peaking at number thirteen on the Billboard charts.

I have personally experienced some of the benefits of sharing music on P2P networks while promoting my band Dance at the Postoffice’s latest album. In July 2009 I uploaded the album to the BitTorrent sites Mininova and Waffles.fm with the hope of reaching a few new fans. The Dance at the Postoffice project had begun only six months prior to this, and admittedly we had less than one hundred fans. When the download statistics came in over the next few days I was shocked to learn that the album had 20 downloads on Waffles.fm and 450 downloads on Mininova.

In that first day, Dance at the Postoffice had made it onto the front page of Mininova as a “featured torrent”. I assumed that this might have explained the large amount of downloads, but still was not totally convinced. That week I contacted Erik Dubbelboer at Mininova to find out if there was a mistake in my interpretation of these statistics, to which he replied,

Some of these are other websites who download our torrents to use on their own website. And some of these are indeed random people sampling music. Since we have a lot of visitors the chance that a random person tries out your music isn’t that small. The huge number of downloads on [sic] the first 24 hours are because your torrent was placed on top of our front page at that time.

Similarly a moderator at Waffles.fm that goes by the name “wozgo” replied,

Yes, those are all real users sampling the music. We do not download any files for backup.

One month after uploading my album to these two BitTorrent sites, Dance at the Postoffice continues to receive an average of twelve downloads per day.

The use of “illegal music” in YouTube videos has been greeted with mixed reactions from the record labels. In 2008 Warner Music pulled hundreds of thousands of videos from the site that they believed weren’t fairly compensating their artists. Removing connectivity is usually problematic (as was shown in the last section in regard to content filtering at the level of the ISP). Ultimately it does little to benefit the artists, and in some cases can harm musicians. For example, one negative side effect of the Warner Music takedown is that some Warner Music artists that have embedded YouTube videos on their own sites now display black boxes that read, “This video is no longer available due to a copyright claim by WMG” (figure 2, figure 3). This connection failure not only cuts the flow of information between Warner Music artists and their fans, but it disrupts the level of continuity between the two, thus diminishing the Romantic author role by revealing industry-driven control.

Figure 2 – Death Cab For Cutie’s website displaying the Warner Music takedown notice for their own music

Figure 3 – Eisley’s website displaying the Warner Music takedown notice for their own music

While Warner Music has chosen to take down videos from YouTube, most other labels display indifference to the threat of YouTube. This is fortunate for Jive Records’ artist Chris Brown, who benefited in 2009 when his song “Forever” was used as background music in the YouTube hit “JK Wedding Entrance”. Within five days after the video was posted it became the most popular clip on the Internet, according to Nielsen’s BlogPulse, quickly passing 10 million views. Despite Brown’s song “Forever” having been released a year prior, it returned to the iTunes Top 10 list shortly after the release of “JK Wedding Entrance”.

Acknowledging illegal music as part of the music industries
Until file sharing is decriminalized, “illegal music” should be included as a component part of the music industries. To acknowledge illegal music within the analysis of the music industries does not excuse or condemn the act. Rather, it focuses on how illegal music is displacing profit and power within the music industries and creating effects that can be seen as positive.

The Australian government’s framework of the music sectors is rare in that it includes “illegal downloads” as a sub-sector of the music industries. The official document from the Music Council of Australia does not provide a detailed justification for the decision, but simply mentions that illegal downloads are important to include because “the record companies…are under increasing threat from piracy”.

Additional reasoning for why acknowledging illegal downloading should be included as a part of the music industries’ strategy is that websites are profiting immensely from illegal content:

• The Pirate Bay claims to be “the world’s largest BitTorrent tracker” with over 3 million users. Despite prosecution against four members in April 2009, the site still operates legally under Swedish law and generates about $780,000 annually from advertisements.
• According to the Dutch recording association BREIN, 92% of torrents on the BitTorrent site Mininova point to illegal content. Nonetheless, Mininova operates as a legitimate, tax-paying business in Utrecht, The Netherlands, and earned 1,037,560€ ($1,460,676) in 2007.
• Tens of thousands of YouTube videos violate copyright law, nonetheless the company remains extremely profitable and is worth billions of dollars.

Record labels experiencing a decline in growth need not look further than the illegal content sites and P2P services that are cutting into their profits. Nonetheless, while album sales have slowed over the past decade record labels are still generating enough cash to remain profitable. For example, in 2008 Warner Music brought in $878 million in revenue and the company’s net income surged 20%. This is more evidence of the “hybrid economy” that Lawrence Lessig argues for in his book Remix:

Work successfully licensed in a commercial economy can also be freely available in a sharing economy. If this weren’t true, then there would be no commercial record industry at all: despite the war on file sharing, practically every bit of commercially available music is also available illegally on p2p networks […] Yet despite this massive sharing, according to the recording industry’s own statistics, sales of music have declined by 21 percent. If parallel economies were not possible, that 21 percent would be 100 percent.

Illegal content continues to augment and influence various sectors of the music industries. Therefore, it should be included as a component part even though the recording companies themselves have failed to take advantage of this dynamic market.

Final thoughts
After a decade of unsuccessful battles against piracy, the decriminalization of file sharing is a must. Of the millions of dollars collected by the RIAA against illegal file sharers, none of this money has trickled down to the artists. The war on piracy does not get musicians paid. The more important (though less often discussed) question in the recording industry should be: how are musicians going to be compensated for their work?