The Digital Meteor

What is Killing the Music Industry? Not the Pirates.

A great post by Jens Roland about how the music industry is off base and wasting its time by placing the blame of tanking music sales on the file sharers:

The fact is that the music industry’s revenues have been artificially inflated for decades because of limited consumer options. The last 15 years of innovation have lifted those limitations, effectively leaving the music industry with an obsolete, defective business model of monopolized production technology, forced album bundling, and almost nonexistent competition in the realm of home entertainment. What is happening now - the decline of music profits and the piracy witch hunt by the music industry - is merely the panicked struggle of a dying business model, a complacent industry’s refusal to accept its diminishing role in a digital world. The pirates are not the reason, and the decline is the not the disease. It is the cure.

How To Kill the Music Industry

Fighting Piracy: Content Is a Service, Not a Product-- Charge Less to Make More

A very interesting view of piracy from an Exec at Valve Software:

...digital content is best viewed as a service, not a product. As a service, you focus on providing continual value -- and people are paying for that future value (which is a scarce good prior to delivery), rather than an infinite good already created. There's value in paying for that future (scarce) service, and it trumps paying for an abundantly available good. 

From there, he noted that the reason "piracy" is doing so well is that the "pirates are ahead not just on price, but on service." In fact, he noted that since DRM decreases the service value for customers, it also tends to increase piracy, rather than decrease it. 

Then, he showed how that combination of service and smarter pricing allowed the company to run experiments and make a lot more money -- competing quite successfully against piracy. The most stunning example: last weekend, the company ran an experiment with the game Left 4 Dead. It heavily discounted the price, and sales shot up 3,000%. And this wasn't just a case of building off a small base. The sales over the weekend were more than when the game launched. 

In fact, it looks like a big part of the problem facing the industry is that they charge way too much for their products.

Valve Exec Explains...

NBC Universal: Piracy Under Control

 NBC Universal general counsel Rick Cotton says that the threat of Internet video piracy and illegal video sharing is now "under control," thanks to enforcement action and new technology for tracking copyrighted material.

"We've gone from a situation in video sharing where it was totally out of control to where, from a rights perspective, it's under control," said Cotton. He attributed the gains to the threat of enforcement action as well as the cooperation of video sites like YouTube Inc. , which have installed copyrighted content recognition software.

NBC Universal...

Omniphone in Talks for "Digital Jukebox" with ISP's

Internet users could soon be able to enjoy unlimited, legal music downloads at home for a small additional monthly fee, after a British-based music company announced it was in discussions with internet service providers and major record labels...

Omnifone, which already provides unlimited music downloads to mobile phone users, said its MusicStation Next Generation service would provide internet users with a legitimate alternative to illegal file sharing.

..."Tens of millions of European consumers are engaged in music piracy every day," said Rob Lewis, chief executive of Omnifone. "While government pressure is growing, we also need to deliver alternatives that recognise the needs and desires of the YouTube generation.

Mobile World Congress...

Internet is Killing Porn Profits- Hollywood Next?

The adult entertainment business was once grudgingly acknowledged as a pioneering industry that led the way for innovations later emulated by Hollywood – first to adopt video, and first to embrace the Internet, among other things. Now the adult industry is being hit hard by piracy, and what happens could be a harbinger for Hollywood.

Internet Piracy is Killing Porn...

Most Pirated YouTube: Univision

Protecting shows from piracy on YouTube is an obsession for some TV networks, but Univision Communications' efforts haven't been able to thwart a booming market for its illegally uploaded content. The Spanish-language TV network is the most-pirated U.S. broadcast network on YouTube, with mostly clips of blockbuster telenovelas drawing more than twice as many views as Univision's nearest network competitor, Fox.

Univision: YouTube's Most Pirated...

Movie Box Office Records Reached Despite Piracy

Despite the MPAA's continuing battle against film pirates and even a French group's warning thatpiracy could kill the industry, domestic box offices are doing better than ever. Both blockbusters and not-so-blockbusters propelled record-setting revenues to an estimated $9.78 billion in 2008, with ticket price increases and films from Warner Bros, Paramount, and Sony drawing captivated audiences

In 2008, about 1.36 billion tickets were sold in the US and Canada, which is actually down from the 1.4 billion tickets sold in 2007, according to The Hollywood Reporter. Thanks to a 4.7 percent increase in average US ticket prices to $7.20, and despite a prediction of a "really hard year" from the National Associate of Theater Owners, 2008's box office earnings narrowly edged out last year's by two percent. 2007 was also a record year for profits, though, growing 5.4 percent over 2006 by grossing $9.63 billion.

What Piracy?...

Hollywood Clings To Analog $$

Hollywood is attempting to preserve an analog business model in a digital age. The result is a crazy quilt of availability in different media, in different geographies, and at different times...

The studios are caught in a web of relationships with theater operators, premium cable channels, on-demand services, and DVD and online distributors. In many cases their contracts with these parties dictate the time intervals between theatrical release and various other forms of distribution, as well as release dates in different countries. Unlike the desperate record companies, movie and TV studios are still making good money, which leaves them reluctant to mess with these tangled arrangements.

Hollywood's Digital Dawdling

RIAA Drops Lawsuits, To Have ISP's Reduce Service to Suspected Pirates Instead

The music industry's highly controversial strategy of suing customers for file sharing has mostly ended.
The Recording Industry Association of America said Friday that it no longer plans to wage a legal assault against people who it suspects of pirating digital music files...

According to a story in The Wall Street Journal (subscription required), which broke the news about the RIAA's new strategy, unidentified Internet service providers have agreed to "reduce the service," to chronic file-sharers.

The industry has learned that the answer to piracy isn't to intimidate people into obtaining music legally. The recording companies have made music available in ways that actually appeal to consumers.

If people don't want to pay for music, they can go to MySpace Music, YouTube or iMeem and listen to all the ad-supported streaming songs they want. And a huge number of digital music fans are willing to pay for songs at iTunes.

RIAA Drops Lawsuits...

MPAA Goes After Illegal Movie Download Sites, Which Continue to Skyrocket

The Motion Picture Association of America sued three allegedly illicit movie sites on Wednesday, bringing to 13 the number of MPAA lawsuits since 2007 challenging downloading sites...

The MPAA is often successful in its piecemeal legal approach to combat the underground trade of its intellectual property. U.S. judges have shuttered at least four sites since March -- although illegal downloading is skyrocketing.

an untold number of freebie sites also exist overseas, including the world's largest, The Pirate Bay. While The Bay, a torrent-tracking service, is facing copyright charges in a Swedish court, online piracy is running rampant, so much so the U.S. government just created a copyright czar.

MPAA Reining in Illicit Movie Sites; Downloading Continues Unabated

Pirates Crack Blu-Ray DRM

The pirates are apparently ripping high-def movies (cracking Blu-ray's AACS and BD+ encryption in the process) and re-encoding them using AVCHD, which offers a 720p picture. Because of the reduction in resolution, file sizes are smaller and can be burned to regular DVDs instead of the more costly Blu-ray discs, netting a tidy profit. Needless to say, the film industry isn't thrilled by the news. "We are concerned and are assigning priority to this issue," the MPA's Asia-Pacific managing director Mike Ellis told the Wall Street Journal.

Chinese Pirates Crack Blu-Ray DRM...

Warner Bros. to Offer New Movie Downloads for 60 Cents in China

In an attempt to make headway against rampant film piracy, Warner Bros. will distribute newly released films online in China.

The studio struck a deal with Union Voole Technology in China to offer new movies, as well as those that have never been seen in Chinese theaters, at rental prices ranging from 60 cents to $1. The inexpensive video-on-demand service seeks to entice China's estimated 253 million Internet users to pay for Hollywood fare rather than download illicit copies.

Warner Bros. to Offer Legal Movie Downloads in China

Viacom & MySpace Team to Profit from Piracy

A new technology that essentially allows content owners to profit from piracy will get a high-profile test this month from MySpace and MTV Networks.

Instead of triggering the usual take-down notices, copyright-infringing footage of select MTV NetworksMTV, BET, Comedy Central, Spike and Nickelodeon. programing uploaded by MySpace subscribers would be automatically redistributed with advertisements that would generate revenue for the companies. MTV Networks is the parent company of such channels as

MTV & MySpace Test Piracy Profit Plan

Media Conference: Piracy and DVR's Won't Kill TV

The main message to come out of the German TV festival and confab, which wrapped Monday, was that big industry bugaboos including Internet piracy and TiVo-like time-shifting technology won't mean the end of TV. 

"Television is a parasite that lives on the back of other platforms," said MIT professor and media historian William Uricchio in his keynote. "The panic I'm seeing now (with regards to the Internet) has happened to TV before ... with the advent of the remote control and the video recorder." 

While Uricchio acknowledged he thinks the traditional ad-supported TV model is on the way out, other Cologne Conference speakers provided some hope with examples of other profitable ways to produce drama content. 

Tech Fears Tackled at Cologne Conference

Google Fights Massive China Piracy with Free Music Service

Google Inc has launched a music search service in China that will give users access to free downloads of licensed songs, while capturing advertising revenue for music providers in a market rife with piracy.

Google Launches Free Music Service...

Does Piracy Hurt the Film Industry?

Illegal downloads of popular films are nearly as numerous as box office visits, a French antipiracy association claims. The Association Against Audiovisual Piracy (ALPA) analyzed P2P traffic in France between November 2007 and June 2008 and concluded that a number of popular films had been downloaded so many times that the phenomenon could endanger the entire film industry.

Piracy Could Put Film Industry Out of Business

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But do illegal downloads really hurt movie sales?   (Analagous to cable rating higher this summer than last despite piracy):

A bunch of folks have sent in this report from Variety about a study talking about what a big deal unauthorized movie downloading is in France. Specifically, it points out that movie downloads are "reaching box office levels." Except... that means they're basically counting every download as a lost sale, which we (as well as those putting the study together) all know isn't true. Even worse, the folks behind the study (who go by the already biased name: Association Against Audiovisual Piracy) seem to totally miss the most obvious point from their own report: that movie piracy doesn't seem to have a major impact on movie ticket buying. After all, their own report points out that the most popular movies at the box office in France are also the most downloaded. If it were really true that movie downloads were harming the box office, then wouldn't that mean that the most downloaded movies ended up with fewer tickets sold?

Techdirt: Totally Misunderstanding Movie Downloading in France

 

DVD Piracy Up

With black market sales of bootlegged DVD movies costing Hollywood studios about $6.1 billion in lost revenue annually, illegal copying of pre-recorded DVDs (primarily TV programming) increased 8% in the first six months of 2008, according to a new report.

DVD Piracy Continues to Increase

Despite Piracy, DVD and Blu-Ray Sales Climb

Consumers may be tightening their belts, but that reduction apparently hasn't affected DVD sales just yet. In fact, spending on DVDs and Blu-ray discs during the first half of 2008 showed a slight increase over the same period a year ago, according to data collected by Home Media Magazine. Spending on rentals rose even more, indicating that perhaps part of consumers' money-saving efforts involve cozying up to a movie at home for entertainment instead of heading out for a night on the town—or downloading from the Internet.

P2P Not Hurting DVD, Blu-Ray...

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Sales of DVDs have grown impressively this year, despite an economic slowdown and the threat of online piracy.

While Canadian retailers aren't disclosing precise numbers, some major chains have reported a double-digit rise in sales, fuelled partly by the new generation of high-definition DVDs and greater investment in home theatres.

Retail DVD Sales Soaring

 

Tivo Watches and Reports on You

Approximately everyone who has ever used one of TiVo Inc.'s digital video recorders has skipped over commercials. However, the devices also report, anonymously, every click of a remote back to the main offices, and track that aggregated information for clients of the company's Stop||Watch service...

Subscribers to TiVo's Stop||Watch service include: Omnicom Media Group, NBC Universal, CBS Corporation, The Interpublic Group, Starcom, Carat USA, MPMA, Crispin Porter + Bogusky, Media IQ, and Euro RSCG New York. Juenger would not say how much the companies pay for the service, nor how much TiVo earns from the service in general. "It is a strategic platform for TiVo's business," he told BetaNews. "We intend to make it an important part of growth going forward."

Tivo Cleverly Converts...

Google Begins Using Your Seach Data to Tailor Ads

Google assigns every computer that visits its sites a unique identifying number — known as a cookie — and records searches and other activities in an unimaginably large file along with those cookies. The company has maintained that it hasn’t used any of that information to draw inferences about users to target ads.

Until now.

Google acknowledges that it is now testing ways to use some of the data it has been gathering to better aim search ads at Web surfers, although it won’t say how.

Google Tests Using Your Search Data...

Gene Simmons Gives Digital Music Fans the Kiss-off

An interesting commentary on Kiss' Gene Simmons' grumping about digital music:

What's with all these old fools trying to make a name for themselves in the music business again by speaking out against piracy? First it was Metallica, who hated on bloggers, but came off its high horse only after we took the band to task. And now, it's Gene Simmons of the once-important KISS, who is blaming fans and peer-to-peer networks for the destruction of the poor music industry...

Gene Simmons Shows His Age...

Kid Rock to Kids: Steal My Music

The digital music revolution has been compromised, according to Kid Rock, because digital music stores and record labels still manage to hoard the lion's share of music revenue.

He advises fans to download his music for free from P2P services, although he himself doesn't have to. "I don't steal things," he told the BBC. "I'm rich." As for everyone else, he says, "Download it illegally, I don't care. I want you to hear my music so I can play live."

Kid Rock Boycotts iTunes...

While Warner Music had claimed that it was getting away from attacking fans who wanted to download, it appears that it still has a long way to go. Atlantic Records, a subsidiary of Warner Music Group, asked one of its stars, Kid Rock, to publicly denounce file sharing. Instead, Kid Rock publicly denounced Warner Music, while telling fans to download away. Atlantic came to him saying he needed to say something publicly because "people are stealing from us and stealing from you." Rock's response? "Wait a second, you've been stealing from the artists for years. Now you want me to stand up for you?" So, instead, he started spreading the opposite message: "I was telling kids - download it illegally, I don't care. I want you to hear my music so I can play live."

Warner Tells Kid Rock to Condemn File Sharing...

As Legal Downloading Slows, Digital Piracy Grows

The music industry had been hoping that an upsurge in legal download sales from sites like Apple's iTunes music store would start to compensate for the effects of online and offline piracy and falling CD sales. But figures due to be unveiled today by research group The Leading Question will show the number of music fans regularly buying downloads falling from 16% in 2006 to 14% in 2007.

Piracy Growing as Fewer Fans Buy Downloads

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Research specialists The Leading Question and digital strategy agency Music Ally have released some details from the new research, warning that the music industry must quickly change its business model to survive.

"Many UK music fans are telling us they are dissatisfied with the current legal, paid for digital music experience. They might buy a few tracks from iTunes when they get a new iPod for Christmas but few go on to become regular paying downloaders," said Tim Walker, managing director of The Leading Question.

Fewer are Paying for Music Downloads, Study Shows

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How the RIAA Looks for Pirates

ChiliRec Software Allows Easy Recording and Organizing of Web Radio

If they don't have a version of this to capture streamed video content, I'm sure it will exist soon:

ChiliRec allows anyone to record songs from any of hundreds of online radio stations, organize them for later use and download them to a computer or portable audio device.

Record and Download Online Radio Songs with ChiliRec

SurfTheChannel.com- Piracy That's Impossible for Hollywood to Stop?

A new threat in Web piracy, SurfTheChannel.com links to 56.com, Tudou.com and dozens of sites in China and other countries. Streaming technology makes films and TV shows instantly available on Web browsers, cloaks the viewer's identity and makes it almost impossible for Hollywood to stop.

Sony Corp.'s ``88 Minutes,'' made for $30 million, is among 95,000 film and television titles at SurfTheChannel, where visitors watching free videos have soared to 650,000 a month since October. The Stockholm-based company offers films still in theaters, such as News Corp.'s ``Jumper,'' and movies not out yet, including Time Warner Inc.'s ``Good Chemistry.''

...The threat posed by streaming raises the possibility studios may face the same fate as the music industry, where sales are shrinking and ``tens of billions'' of illegal files were swapped in 2007, the phonographic association said.

``This is exactly what every Hollywood studio should fear,'' Rich Greenfield, an analyst at Pali Capital in New York, said in an interview. ``SurfTheChannel is the beginning of what happened to the music industry.''

A New Threat in Web Piracy...

NBC to iTunes: Spy on All the Media on Your Hard Drive

NBC Universal now wants iTunes to include anti-piracy tools which would apply not just to music from the iTunes Store but all media in your library, including music you have ripped yourself...

...One word: BitTorrent. NBC, along with the "music industry guys", is competing with free. Free music, free movies and free TV shows. ITunes is about the only legal way to get this stuff easily. Instead of worrying that "the price doesn't reflect the full value of the product", you should be thankful that there are still people willing to pay for your DRM encrusted crap.

NBC Wants iTunes to Spy on All the Media You Own

The Way of the Future: Music Piracy Grows in US: 58% and Climbing

In 2007, there was an increase in the volume of music acquired for nothing and a sharp decline in the amount paid for, according to NPD's annual survey of Internet users. Although more people paid for digital downloads -- that market grew from 7% to 10% -- it wasn't enough to cover the fall in CD sales -- down from 41% to 32%.

Music industry lawsuits also failed to stop peer-to-peer file sharing, which grew from 14% to 19% by volume. This equalled the amount of music that NPD classes as "Burned from others" or "Ripped from others" (19% each).

In the US, 58% of Music Isn't Paid For
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...the biggest source of music for people is their friends — either burning CDs or ripping files for listening on computers or iPods. And despite the record industry’s crackdown, there is no reduction in the number of people of peer-to-peer file sharing service.

“The number of people who do peer to peer in 2007 versus 2006 has been stable,” he said. “The number of files taken per users has increased significantly.” This is because of the shift of many users from Limewire to BitTorrent, which makes it easier to download whole albums.

Amazon Gains Share of Shrinking Paid Music Market

Pro Piracy at ZML.com: The Future of Video Distribution

Instead of using the web to get films to people, studios ... use the web mostly as a medium to show dross, and just a handful of decent films. Yet, if the studios hope that by ignoring the web, Tinseltown can put off change, they are surely wrong (see article). Hollywood needs to confront the web—by embracing it.

There Will Be Blood
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TO SEE what the future of film distribution might look like, go to a website called ZML.com. It offers 1,700 films for download to personal computers, iPods or other hand-held devices, or to burn to DVD. It is inviting and easy to use, with detailed descriptions of each movie, editors' picks, customer reviews and screen stills. And the prices are reasonable: “Atonement”, for instance, costs $2.99.

There is one small catch: ZML.com is a pirate site. Hollywood's movie studios, which are used to dealing with scruffier crews like Pirate Bay, a Swedish outfit, are aghast at how professional the newcomer is. “It looks like a fabulous legal website,” says one studio executive.

Coming Soon

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Special thanks to Steve Diamond's Valleywood for the article about the above articles!

Despite Lawsuits: Piracy Grows

Unfortunately, people are discovering The Pirate Bay and a whole host of other sites. Even as the MPA, MPAA, IFPI, and other groups have scored legal victories over torrent sites, BitTorrent use is growing. In fact, average BitTorrent traffic for the two-month period from mid-January to mid-March was up almost 25 percent compared with the month before Christmas, according to online media measurement firm BigChampagne.

BitTorrent Use Soars...

Music Tracking Co Snocap Purchased by Social Networking Site Imeem

Fast-growing Imeem Inc. said Monday that it had bought Snocap, a struggling online music service co-founded by Napster creator Shawn Fanning.

By buying Snocap, Imeem, which owns a social-networking site that lets users listen to free music and watch videos, signaled its intention to offer new ways to search, discover and sample digital media. Analysts said it also might mean the firm will start selling music and other content...

Founded in 2004 but not launched until 2006, Imeem is the third-largest U.S. social networking site, with 24 million monthly visitors. Imeem shares revenue with music companies and other partners it generates through displaying advertising and sponsorships.

Imeem links to Apple Inc.'s iTunes store and Amazon.com Inc.'s MP3 store, which pay fees to the social network. But by owning Snocap, whose technology it began to use last year, Imeem could be setting the stage for selling music and other digital media...

Web Network Acquires Child of Napster
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Q&A Regarding Imeem's Acquisition of Snocap