New research study: Piracy effects on media economics

A renowned research company called “House of Research” has recently published a new study regarding the piracy effects on media economics. The study has been supported by the “Medienboard Berlin-Brandenburg”. The full research in German language can be accessed here: http://www.medienboard.de/WebObjects/Medienboard.woa/wa/CMSshow/2841628

 

The part on the music industry analyses the recording industry and its development since digitalisation has affected the revenues (since 1999).

In my article about the music industries’ development after the 1990s, I investigated the reasons for the decreasing music sales. More reasons were mentioned than the online piracy, but not only this research but also other researchers determined online piracy having a large impact on this development.

The research of this article criticises other studies, which pose that heavy users of music filesharing also buy more music, for example due to a “sampling effect” that consumers want to test music before they buy it. Illegal downloading is mainly done by young consumers, who traditionally are also more into purchasing music than older generations. So, this correlation of illegal downloading and music purchases is not solid. The research also compares the spending on music in 1999 and 2008. In the age groups of 20-29 years and 30-39 years, the spending decreased by more than 50 %. This argument also objects the positive correlation between illegal downloads and music purchases.

Another aspect, mentioned in this research, is the alleged reduction of illegal downloads in the last years. This is objected by this research due to increasing illegal album downloads, which results in a higher amount of illegal downloads.

One comparison here is the result of how the music sales revenues would have been developed according the GDP in Germany: According to that, the music sales revenues would account for 3.116 Million €. The reality displays 1.669 Million €, which is approximately half of the GDP-connected amount. A 1-to-1 equation between music sales and the GDP might not be realistic, because in tough economic times, the spending on entertainment and luxurious goods is less important to consumers than in boom times. Even when the GDP in Germany didn’t face a large recession according to the statistic in the study, the dot.com bubble crash and financian crash in the 2000s had its impact on the consumption behaviour.

In my music history article, I also mention the changed format preferences, which are also displayed and discussed in this study, albeit objected as “the” reason for the declining music revenues, because the decline started before the unbundling in the download shops took place.

One more interesting aspect is the statistics about the employees in the recording industry, which diminished by 38 % in 11 years (1999: 13.000; 2010: 8.099). This probably doesn’t include the number of artists who needed to start other “day-time” jobs, because they can’t make a living from music only anymore.

This research study is without any doubt very interesting and evolves interesting facts. However, its focus concentrates on file sharing nearly being the only reason for the music sales crisis. I have investigated a couple of reasons for this crisis, which is backed up by many other researchers. The reality of reasons for the decline of music sales over the last 13 years might be a combination of following reasons:

  1. Music Piracy, illegal downloads
  2. Digitalisation in general
  3. Changed consumer behaviour
  4. Changed format preferences
  5. Ended CD replacement cycle
  6. Additional entertainment consumption options
  7. Changed music retail structure
  8. Changed economic situation

For details on these aspects, I recommend (again) my music history part III article. Here is again the link to the research mentioned above (in German language though): http://www.medienboard.de/WebObjects/Medienboard.woa/wa/CMSshow/2841628 .

 

 

 

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