Music Business Tunes for Next Copyright Fight

If you've been worried about the financial health of the music business, especially since last Friday, when Congress shelved indefinitely the SOPA and PIPA bills music-business moguls were counting on to halt the global pilfering of their products and profits, you can stop.

The music business is actually in pretty decent shape. Much better shape, in terms of digital sales, than any other part of the entertainment business, according to execs at the Record Industry Association of America (RIAA), the industry's professional association, Washington lobbyist and apologist.

During 2011, the number of consumers using paid subscription services rose 65 percent to 13.4 million, according to a tweet from Jonathan Lamy, SVP of communications for the RIAA, who was passing along the good news from a new report issued byIFPI (International Federation of the Phonographic Industry), the global version of the U.S.-based RIAA.

Paid digital music services are up and running in 58 countries, bringing in $5.2 billion in revenues, Lamy also pointed out via tweet.

Total revenue from digital music sales is up only 8 percent compared to 2010, but the number of countries in which digital music services sell it went up 242 percent between 2010 and 2011, from 24 countries in 2010 to 58 in 2011, according to Cara Duckworth, VP of communications for the RIAA, who was also quoting IFPI figures.

"W/more than half of all music sales coming from digital services, we know how Internet works. "Music=Innovation. Declare THAT. #CES #SOPA," Duckworth tweeted.

The news gets better, at least for the music business.

Key findings of IFPI study on music-industry digital revenues and health:

  • Demand for downloaded digital albums went up 24 percent;
  • The number of subscribers to paid digital music services rose 65 percent to 13.4 million;
  • A "Hadopi" anti-piracy law in France gets credit for cutting content piracy by 26 percent in 2011;
  • The number of people downloading music from P2P services dropped by 2 million in France in 2011 due to Hadopi;
  • One in four digital-music consumers "regularly access unlicensed services;"
  • The 8 percent increase in digital-music revenue is the first year-to-year growth in digital music since IFPI began tracking it in 2004;
  • Digital downloads now account for 32 percent of record company revenues globally, up from 29 percent in 2010;
  • In some countries digital music makes up more than half of record-company revenues, including the US (52%), South Korea (53%) and China (71%).
  • In 2011 consumers paid for 3.6 billion pieces of downloadable music, 17 percent more than in 2011.

Record companies are building a business in digital music "in spite of the environment in which they operate, not because of it," according to Frances Moore, chief executive of IFPI, in a statement (PDF) that accompanied the report.

Record companies are working with ISPs, search engines, governments, and law-enforcement agencies to reduce the number of illegal downloads and ensure that an ever-higher percentage of the music that is downloaded is bought legally, she wrote.

"Our digital revenues, at one-third of industry income (and now more than 50 per cent in the US), substantially surpass those of other creative industries, such as films, books and newspapers,"

Which just begs the question about SOPA and PIPA: If the music industry is doing so well, why is it so important that Internet-censoring, consumer-incriminating, Constitution-violating new laws like SOPA and PIPA be passed quickly and without much debate?

Is it because adding new laws that put all the burden of enforcement on companies or individuals other than the copyright holders, especially when the copyright holders are raking in money hand over fist, seems gratuitous? Excessive? Just plain rude?

Maybe.

Maybe it's just because RIAA wants its cake and to eat yours, too.

Within all the good news about how much more money RIAA members are making were a series of demands (ably summarized by Ars Technica) the IFPI and RIAA believe the industry needs to be able to put the appropriate amount of pressure and assumption-of guilt on their customers:

RIAA/IFPI Legislative Priorities

  1. Graduated response laws (punishment graduated according to grievousness of the offense. (Grievousness refers to the number of illegal music files, not how bad they are. They're not promoting laws that carry greater penalties for downloading Justin Bieber, for example. Unfortunately.)

  2. Site blocking: everyone should block sites RIAA and IFPI have decided are detrimental to their business and not ask questions about how they came to that conclusion.

  3. Search engines should be required not to search for things music execs don't want them to search for (repeat the part about 'no questions' from item No. 2).

  4. Credit-card and other payment processors should cut off those accused of hosting illegal downloads, or downloading music illegally, even when (usually) payment processing had no part in those transactions.

  5. Ad networks should cut off pirates – MegaUpload and its ilk shouldn't be able to profit from ads.

  6. Mobile operators should also try to punish illegal downloaders by monitoring their customers' traffic to identify and cut off files RIAA and IFPI believe customers shouldn't be able to access.

  7. Lawsuits. More lawsuits against big downloaders.

All those demands are shaped as public priorities that support public safety and prosperity, even though none of them have anything to do with either of those things.

If they're passed into law and other people are forced to enforce copyrights owned by music producers, the only thing producers have to do is occasionally post onto sites other companies pay to maintain new content other people (bands) write and produce, and rake in money other people (consumers) pay to download.

How much better is that than the days when record companies had to actually produce records, promote them, ship physical media around the world and get people to buy and play it? Think how much effort went into convincing people to throw out their record players, buy CD players and re-buy all those albums they'd been collecting?

Think the industry wants to go to that much trouble again? Absolutely not.

At first, from the perspective of public policy, ethics, Constitutional law and avoiding the coddling of greedy idiots, none of the RIAA's political positions makes any sense.

From this perspective – the desire to profit even more by doing even less – it all makes sense. Not for anyone other than a few dozen executives in the record industry, of course. Certainly not for the Internet companies, law enforcement agencies, customs agencies and other organizations that would be doing all the work for music publishers without any of the profit.

But if your point of view is so narrow and ethics so warped that it makes sense to not only overcharge, but abuse, insult and belittle your customers for the small amount of work you have to do for a large amount of money, sure. It all makes sense. 2012 will be a good year for 2012. The rest of us will be paying enough money in enough different ways to be sure of it, at least if the RIAA gets its way.

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