Many Americans are guilty of illegally downloading music, to the tune of 20 billion songs a year. Innovation on music piracy estimated the economic damages at over $6 billion in losses to the music industry, $422 million in uncollected taxes, and 70,000 music jobs uncreated or lost.
The recording industry thought by supporting streaming sites that offer free listening, it would persuade file sharers to make the switch to "free legal listening", yet it can also induce a person to switch from purchases to free legal listening.
BRIGHT IDEA?? Look at the current state of the music industry and ask yourself that question!
The major record distributors which were six at the time, WEA, MCA, EMI, UMG, SONY, and BMG began the "BLEEDING" of the industry over a decade ago. They are directly responsible for the current state of the industry by raising the retail price of a compact disc to levels that were not affordable by a large majority of consumers by agreeing to place the exact median prices on their products for "new release" and "catalog". This birthed the current state of the industry as we know it today. The internet had been around for decades before this move by the major distributors, yet not a single one of them jumped the gun to establish a viable internet presence before tons of fledgling "file sharing" sites began to spring up all over the world wide web. Napster, Bearshare, and numerous others were the catalysts and models for numerous file sharing companies that share in the consumer driven sharing of intellectual property today, often illegally uploaded and downloaded.
From Glenn on Coolfer.com - "Consider a song sold at iTunes. The label collects about 70 cents (ignoring publishing and distribution). A typical on-demand streaming payout would be, realistically, around half a cent per stream. That means the song must be streamed 140 times to generate the revenue of a single track purchase. A sale results in an immediate 70 cents while streaming spreads out that revenue over time (the time value of money dictates that money now is better than money later). The sale of an entire album results in revenue equivalent to 1,400 streams. The buyer would have to spend about 5,600 minutes -- over 93 hours -- listening to music on a playlist site to generate the same revenue generated from the purchase of a digital album"
Streams are substitutional at best and should not be totally depended upon for broadening your product's market base because of the strong possibility of you not being able to track when, where, how and who may be downloading and sharing your music for "FREE". It is a viable marketing and promotional asset to have in your tool belt, and especially for the independent artist, yet numerous artists who currently have their music on several file sharing or "music distribution" services (at least that is what they are passing themselves off as), have yet to financially benefit from the "NEW AGE" of the music industry!
Is the digital age of the music industry going to slow down any time soon, the answer to that is a resounding "NO"?
What is the solution?
The French music industry seems to have come up with an innovative and at least temporary approach to this world wide problem in their own backyard by offering music subsidies in the form of prepaid music cards. Consumers ages 12 to 25 will be able to purchase 50 euro cards for only 25 euro, with the government chipping in for half. France expects to sell a million cards annually for two years, estimating that the initiative will cost $34.65 million. The companies that accept these cards are expected to offer music at a reduced price, helping to keep the cost of the program low.
A temporary fix? A disaster waiting to happen? Or a boon for new companies to launch new music portals and capitalize off of consumers who have already prepaid for music before actually downloading it? Only time will tell, but the American music industry needs to take heed and at least try something, if not, what the French are doing.
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