In this article from Wired Magazine last month, Google’s YouTube claims that “giving away music for free generates as much money for copyright holders as charging for it.” The article goes on to say that most of this increase in revenue from free music comes from advertising. Traffic to free music has increased dramatically, especially with mobile phone usage, where it is made more difficult to skip advertisements. In addition, the advertisements can be more interactive.
Phil Farhi, a representative from YouTube, is quoted in the article, pointing out how free music can make money: “We’ve been very focused on advertising so far, but there are users who will pay for content with their money, and users who will pay for content with their time and attention. We’ve been focused on [the latter]. What we’re seeing is that by really optimizing everything, you can make just as much money for a label as the others…you really need to consider not just the price tag, but the scale of audience and views that you’re reaching with that.”
Another article from last year in the Economist discusses how the real money in music is concert ticket sales, which have been rising in the last few years. Therefore, if you put these two ideas together, it can be conceived that increased viewership from free music on sites like YouTube can lead to more fans for the artists, and perhaps increased ticket sales and therefore increased revenue.
Is this realistic? Do you think the concert sales will make up for lost revenue from the free songs?
Although I stand more towards the support on free content, I do not think concert sales will make up for lost revenue from the free songs. I have recently read an article on how music broadcasted in a store is often freely used. It said in the article that if broadcasted music in a store is fully paid, monetarily this market can increase more than ten times larger than it is now. So, back to free songs and concert sales, I wanted to make a point that free songs are not only used in personal MP3 players but also in commercial and public area as well. This is why the concert sales can never make up the lost revenue from the free songs. We need to realize that the audience of free music is not just individuals.
Tim O’Reilly wrote a great article (nearly a decade ago!) outlining the benefits for both listeners and artists of “free” music, and while there are definitely still problems with free music, he addresses two important points in favor of free music (whether by the artists’ choice or via peer to peer networking): obscurity and quality.
On the obscurity side of the equation, O’Reilly argues that, for every Lady Gaga or Justin Beiber song on a p2p network, there are dozens – if not hundreds – of what would have been undiscovered, forgotten songs by lesser known artists. Free music allows for the discovery of these artists, and may even lead to sales of CDs.
On the quality side of the equation, O’Reilly makes the apt observation that very few people use dial-up, or “free” internet, preferring instead to use paid services from internet providers. p2p networking lays the foundation for a shift towards subscription and paid services. While we’ve seen this shift in some network sharing circles (i.e. post-lawsuit Napster), it hasn’t happened yet on Pirate Bay or bittorrent – but there’s nothing to say that it WON’T ever happen.
Also, Regina: restaurants, stores, and other establishments that play music must meet a whole host of requirements outlined in Section 110 – are you saying they are breaking those requirements and providing free music, or that the requirements are too lenient and causing profit losses, or something else entirely?
Article HERE: Piracy is Progressive Taxation, and Other Thoughts on the Evolution of Online Distribution
I like where this article is headed, although I don’t fully agree. I think that the easiest way to stop piracy and increase profits is to incentivize, and not punish, the consumer. The risk for me to pirate music is minimal, but if I love the artist (for example, I have an embarrassing affinity for Katy Perry) I don’t have a problem buying the CD on iTunes for better quality, getting concert tickets, or even buying the ~Katy Perry for OPI~ nailpolish. I understand that smaller artists often can’t compete with these ideas, but they seem to do okay getting discovered on those sites and growing to having legions of fans (Justin Bieber anyone?) The problem is that the music industry might be entitled to royalties but when they act as if they should do little for the money, it just doesn’t work out for consumers.
I believe that free music only serves as advertising if the artist intends it to be. There may be some artists that make up the loss of money from concert sales, but not many. However, free music is definitely a great way for an artist to put himself/herself out there if he/she intends to. Take a look at rap artists that release mixtapes online for free. They do so to promote their official albums that will be released for sale. For example, the rapper known as Wiz Khalifa hasn’t even released his first official album yet, but through numerous mixtapes, he promoted himself and quotes in one of his songs “just made a million” which, if true, is most likely from concerts and shows etc. However, I bet the problem will start when people start downloading music from his upcoming album for free…
If you think about it, even though music has been around since forever, the recorded music industry, has just existed for a very small amount of time. Traditionally musicians made money only from live performances, and donations. Essentially, what I’m trying to say is that, the business model that we are arguing about here (CD sales/Digital downloads) may have just been a passing fad. And by trying to keep it alive, by defending the idea of paying for sound recordings, we’re just fighting against the natural economics of the situation.
Moreover, the shelf-life of music these days is considerably lower than before. How long does a song really last today? A few weeks at the most. You do have the occasional billboard charter that sticks around for a few months, but most songs fade away pretty quick. Twenty years ago, this wasn’t the case. It wasn’t possible to “own” as much music as we can today. This again brings us back to the idea of the present day record industry being an obsolete business model that attempts to reinvent economics to justify its old ways.
The days of paying for music are long passed us. As pointed out in “Code Warriors” disabling DRM on a compact disk is as simple of holding down the shift key on a laptop. As technology improves and therefore becomes cheaper and more accessible, so does the number of people who know how to utilize it.
The music industry themselves unknowingly set up the opportunity for illegal downloading before anyone knew it was even a possibility. When albums came on cassette tapes, anyone could make a copy of it. But each copy you made was of lower quality than the one before it. Record label executives saw an opportunity to make more money with compact disks. They began phasing out cassete tapes and forcing record stores to sell CDs instead.CDs allow anyone to make a perfect copy of the music on it every time.
Unfortunately, the record labels did not think about this possibility or see it coming. They have not made the necessary changes or prepared for the age of digital downloading. Instead of fighting to punish those who illegally download, they should focus on making a profit within the digital age in new ways.
I believe that free music does in fact have its benefits, it is the bait that attracts potential consumers. In addition to adverting themselves for a concert audience and personal gain, musicians have the ability to bunch people together to create an audience. If these artists continue to give their content away for free, then the audience will get larger, but the base of this audience will stay the same. That base is likability. If these artists can create these audiences with general commonalities, this can benefit advertisers, giving them a general idea of what else these potential consumers might like and advertising to them according to what they already know about them. This would make the demographical process easier. If the artists can successfully deliver these audiences to advertisers, these ad agencies will compensate the artists. Free music would become a lure to a platform for agencies allowing them to target a demographic.This sounds like radio, and in many respects it is but on a larger scale and on different platforms such as YouTube, Hulu, Vevo, etc. Besides this is an alternate way to make money as an artist, while satisfying your audience and it is a way better alternative for artists, better than holding tight to content only to have it pirated.
I also think free music has its benefits. Fans like free music, and like when their idols present free music. I think it strengthens fan bases. And, I mean, in the modern record industry many artists are already focusing on making a majority of their profits from concert sales and merchandizing due to the loss in revenue that free media downloading and file sharing is causing. Artists know that their music is accessibly free, so they make up for it by increasing prices for ticket sales and merchandise. I also think that within a matter of years, all music will be free due to the rapid incline of free music sharing.
I am actually doing a research paper on this. I’ve been saying for years that the money is in the touring. There’s no way that RIAA is going to be able to stop file sharing, and there is no way they can prosecute every person that does. The panopticon will never be respected. I agree, the industry didn’t see this explosion coming. They didn’t prepare for the trends. And to be honest, people are tired of buying a $20 CD only to find three songs that are halfway decent on it.. especially during these tough economic times. According to reports though, concert sales are still bringing in major profits. Billboard released their Top 25 Concerts not too long ago… U2 came out on top. I would like to find a breakdown of who actually benefits/profits from concert sales.
I do appreciate the links to other articles that have similarly discussed this issue.