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How Digital Piracy Harms Everyone

January 31, 2011

The Information Technology & Innovation Foundation recently sponsored a panel presentation and discussion on the amount of Internet bandwidth taken up by digital piracy.  Speakers included David Price from research firm Envisional, Klaus Mochalski from ipoque, Thomas Sehested from MarkMonitor, and Daniel Castro from ITIF.  All the materials presented confirmed that digital theft of music, movies, and copyrighted content takes up huge amounts of Internet bandwidth in both the U.S. and across the globe.

In summary, the main research conclusions showed that digital piracy took up 24 percent of global Internet bandwidth, while in the U.S. specifically the figure was 17.5 percent.  Note that these figures are actually conservative, as pornography was not categorized for purposes of these studies, even though vast amounts are pirated (Mr. Price estimated in the discussion that if infringing pornography were included the percentage would likely rise to 30 percent or more).  It was noted that these figures might actually be lower than they were a few years ago, but that is more likely the result of increased legal video streaming traffic via sites like YouTube than from a decline in digital theft.

The methodology of the research was solid, as the researchers laboriously analyzed thousands of files on numerous online services, including BitTorrent networks, other leading P2P networks, cyberlockers, video streaming sites, and Usenet.

The research showed that the overwhelming majority (90+ percent) of files traded on all of these systems were infringing (with the exception of video streaming which included YouTube and other legal sites).  Links to the data and presentations can be found here, here, here, and here.

So why does this matter to anyone not worried about Internet infrastructure?  Because the costs of a black market that constitutes almost a quarter of the Internet are enormous.  From lost cultural capital when incentives to create are reduced (see here), to billions of dollars in lost economic productivity and wages, and tens of thousands of jobs disappearing (see here).  In short, this affects all of us. Studies like this reaffirm the need for all stakeholders in the Internet ecosystem to take online theft seriously and work together to find and implement meaningful steps to address these issues.

Joshua P. Friedlander, Vice President, Research and Strategic Analysis, RIAA


C'mon Get Happy!

January 12, 2011

Hey, music fans: ever get chills just from listening to a song's crescendo? Are there certain songs that tug at your heartstrings and evoke a sense of euphoria? Well you might be interested to know that researchers at McGill University in Montreal looked at the pleasurable feelings music elicits from fans and confirmed what we all knew without really knowing: good music can be a drug. Specifically, they found that at certain points from various songs the brain releases a substance called dopamine which is responsible for a happy sensation that can cause goosebumps. From the article:

PET scans showed the participants' brains pumped out more dopamine in a region called the striatum when listening to favorite pieces of music than when hearing other pieces. Functional MRI scans showed where and when those releases happened.

Dopamine surged in one part of the striatum during the 15 seconds leading up to a thrilling moment, and a different part when that musical highlight finally arrived.

The songs in the study represented a wide range of music -- from classical, jazz, punk, tango and even bagpipes. As for other types of music, further research is needed to determine whether the sensation occurs when vocals are present. But as any fan who has a “happy” playlist or gets chills during the chorus of their favorite song, we can safely assume it’s the music that leaves us trippy. So tune in and c’mon get happy!

Cara Duckworth, Vice President, Communications, RIAA


A Historic Bruno Mars Landing

January 12, 2011

The RIAA is forecasting a certifiably superb 2011 for Hawaiian smooth singer-songwriter Bruno Mars.  We’re happy to report that Bruno’s October album debut Doo-Wops & Hooligans has gone Gold in just three months to earn the Elektra act his first G&P album award for shipping more than 500,000 records.  The album’s sweetly addictive “Just the Way You Are” additionally sailed to RIAA triple-Platinum honors this month, tallying more than three million paid downloads since its July release! Bruno also brought his explosive “Grenade” hit Gold in January, while B.o.B.’s “Nothin’ on You” and Travie McCoy’s “Billionaire” tracks featuring him are both double-Platinum for selling more than two million digital downloads.

Check out today’s USA Today piece “Bruno Mars' musical orbit is inescapable” and don’t miss Bruno at the 53rd annual Grammy Awards on February 13 where he is nominated in seven categories!  In case you missed it, read the RIAA’s recent roundup of 2010 G&P awards, including the artists who received the year’s highest certifications, as well as record-breakers and first time cert recipients, here.

Liz Kennedy, Deputy Director, Communications, RIAA


CES ROCKS

January 06, 2011

Along with 120,000 other gadget fans, we’ll be at the Consumer Electronics Show (CES) this week to check out the newest technologies hitting the market and support the latest and greatest music delivery services showcased at the nation’s largest electronics show.  The range and breadth of innovation is staggering.   Amidst the sea of announcements of new services and platforms, there are a few things that stand out and particularly excite us, one being the development and further expansion of digital music services in automobiles, such as Ford’s SYNC system by Microsoft and Toyota’s Entune platform by Nuance.  Both are integrated into the car’s navigation system and follow voice commands so that users can easily access Internet and Satellite radio, get directions, make dinner reservations  and more without ever taking their hands off the wheel.  Or test drive the streaming service MOG and its Fusion program, which enables the integration of the music company’s programming into the car’s in-vehicle controls.  This is innovative thinking at its best and gives a whole new meaning to the term “smart car.”  

Another reason why these are platforms worthy of the music industry’s support?  Digital radio services like Slacker, Sirius, MOG, Pandora and others compensate artists and labels for the music that is the foundation of their business.  That’s not the case with traditional AM/FM broadcasters.  We have a dedicated interest in the success of those digital music services that support our creative community by paying royalties, unlike radio broadcasters who don't pay us a dime. Radios in today’s modern vehicles are increasingly transitioning from antiquated, one-way analog systems that don’t compensate artists to satellite and Internet streaming centers built on consumer choice and connectivity that do compensate artists.  That’s something we can get behind and will do our part to help promote.

So lock yourself in your car and rock out whenever these music-friendly custom models hit the market later this year.  And for a taste of things to come, check out this video from USA Today which features Pandora founder Tim Westergren demonstrating the service’s sleek in-dashboard function in a BMW Mini-Cooper.

Cary Sherman, President, Recording Industry Association of America


It's The End Of The Year As We See it

January 06, 2011

With 2010 in the books, we thought it would be a good time to do a quick roundup of Nielsen SoundScan data and other music sales trends we’ve seen so far (keep in mind, the most complete barometer of the industry’s financial state, our annual shipments data including all physical, digital, and mobile formats, is still to come). 

According to SoundScan, digital albums grew by 13% versus 2009, and although digital track sales only rose by one percent, revenues from those sales likely increased by significantly more as variable pricing took hold in the marketplace.  With the Christmas week setting a sales record of 2.8 million digital albums, in addition to 44 million individual tracks, 2010 saw overall digital sales growth of 5.8% (calculated using SoundScan’s “TEA” method).  Additionally, by that same methodology, if both individual track downloads and album downloads are combined, legal digital song downloads in the U.S. exceeded 2 billion in a year for the first time.  Please note: that represents nearly 6 percent growth in the volume of digital sales.   That fact is not always appreciated based on some reporting that only counts single track downloads. 

The growth in digital albums did not completely offset the decline in physical albums.  SoundScan reported 240 million CD sales in 2010, representing a nearly 20% decline versus 2009.  Overall album sales, including both physical and digital units, were 374 million in 2009 vs. 326 million in 2010, down 13%. 

As we and other industry observers have noted, comparing sales numbers only reveals part of the story.  Perhaps more telling about the direction in which the music market is headed, 2010 saw enormous growth in online streaming music and access models.  Although the growth of services like Vevo and Pandora have been well documented, the growth of revenues from streaming services is becoming more significant.  Preliminary estimates for 2010 put SoundExchange’s royalty payments at about $250 million, which would be more than 60% growth versus 2009.  

Further, music continues to be the most commonly purchased digital content according to a recent survey from the Pew Internet & American Life Project, which showed that a third of internet users have purchased digital music online.

The point here is not to put an overly rosy gloss on a challenging year.  That’s not realistic.  But understanding context and the full picture is important as we all try to digest the data we see in a rapidly changing marketplace. 

Joshua P. Friedlander, Vice President, Research and Strategic Analysis, RIAA