Piracy is down but still very much in play

Mu­sic in­dus­try must deal with a gen­er­a­tion that grew up in the age of Nap­ster.

Los Angeles Times - - MONDAY BUSINESS - Ryan Faugh­n­der ryan. faugh­n­der @ latimes. com

Ap­ple’s big­gest ri­val when it launches its $ 10- amonth stream­ing mu­sic ser­vice Tues­day might not be Spo­tify or Tidal, but piracy.

About a f ifth of In­ter­net users around the world con­tinue to regularly ac­cess sites of­fer­ing copy­right in­fring­ing mu­sic, ac­cord­ing to the In­ter­na­tional Fed­er­a­tion of the Phono­graphic In­dus­try.

In the U. S. alone, 20 mil­lion peo­ple still get mu­sic through peer- to- peer file­shar­ing net­works, ac­cord­ing to re­search f irm Mu­sic-Watch. And newer meth­ods have emerged, such as mo­bile apps and soft­ware that rip au­dio from YouTube.

Com­par­a­tively, just 7.7 mil­lion Amer­i­cans paid for a mu­sic sub­scrip­tion ser­vice last year. “It’s a tremen­dous prob­lem,” said an­a­lyst Russ Crup­nick of Mu­sicWatch. “The good news is some of the very tra­di­tional ways of steal­ing are down pretty dra­mat­i­cally.”

The rise of con­ve­nient, li­censed stream­ing has helped cut U. S. f ile- shar­ing rates in half in the last decade. Anti- piracy ef­forts of the Record­ing In­dus­try Assn. of Amer­ica — rep­re­sent­ing Uni­ver­sal Mu­sic Group, Sony Mu­sic En­ter­tain­ment, Warner Mu­sic Group and oth­ers — have also con­trib­uted to the dropoff.

But the mu­sic in­dus­try is still try­ing to re­cover from piracy’s hey­day. Last year, to­tal mu­sic in­dus­try rev­enue was about $ 15 bil­lion world­wide, well be­low the 1999 peak of $ 38 bil­lion.

Free down­loads have main­tained their al­lure for peo­ple who want to build mu­sic col­lec­tions and refuse to go to iTunes, Ama­zon or Wal- Mart.

Part of the prob­lem is get­ting peo­ple who grew up in the age of Nap­ster, LimeWire and Kazaa to pay any­thing for mu­sic, in­dus­try ex­perts say. Many young peo­ple don’t see any­thing wrong with down­load­ing from unau­tho­rized sites or rip­ping from YouTube.

“We now have a gen­er­a­tion of peo­ple for whom the value propo­si­tion of mu­sic has changed,” said Larry Rosin, co- founder and pres­i­dent of Edi­son Re­search. “A lot of peo­ple saw this as re­venge for be­ing ripped off by the in­dus­try for years.”

The RIAA brought thou­sands of law­suits against in­di­vid­ual al­leged thieves early on. Although the le­gal ac­tions brought wide­spread at­ten­tion to copy­right theft, many viewed them as heavy­handed. Even el­derly sus- pected cul­prits and teenagers were sued.

“At the time, what put a thorn in my ass was see­ing fans get sued,” said Möt­ley Crüe bassist Nikki Sixx. “Now I can just pay a sub­scrip­tion and get all this mu­sic… I think it is a health­ier an­swer. You ask a lot of kids to­day how much pi­rat­ing are you do­ing, and I think it’s down.”

The failed 2011 anti- piracy con­gres­sional bills known as SOPA and PIPA were an added black eye for the RIAA and fel­low Hol­ly­wood sup­port­ers.

In­dus­try groups have since em­pha­sized softer mea­sures to com­bat illegal down­loads. The record com­pa­nies have worked to get In­ter­net ser­vice providers to help pre­vent copy­right theft and pushed search en­gines to de­mote sites in users’ re­sults. The RIAA has also tried to pres­sure brands to not al­low their ad­ver­tise­ments to ap­pear on of­fend- ing Web des­ti­na­tions.

“In­fring­ing site op­er­a­tors don’t care about mu­sic, they care about eye­balls,” said RIAA Deputy Gen­eral Coun­sel Vic­to­ria Sheck­ler.

Tak­ing down file- shar­ing sites, many of which op­er­ate off­shore, is akin to whack- amole. The founders of the web­site the Pi­rate Bay were con­victed of aid­ing copy­right theft in 2009, but it re­mains one of the most pop­u­lar sites for free mu­sic and movies. Swedish po­lice raided and shut down Pi­rate Bay late last year, only to watch it rise again with a new Phoenix logo.

Oth­ers have been added to the wall of de­funct ser­vices. LimeWire was dis­con­tin­ued in 2010 and agreed to pay the record in­dus­try $ 105 mil­lion to set­tle a 2011 copy­right case. And Kim Dot­com’s Megau­pload was shut down in 2012. Most re­cently, the mu­sic in­dus­try forced the demise of Groove­shark, the stream­ing ser­vice that once counted tens of mil­lions of visi­tors and got its mu­sic from user up­loads.

Fac­ing $ 736 mil­lion in po­ten­tial dam­ages, Groove­shark’s par­ent com­pany Es­cape Media agreed to close the site in April as part of a set­tle­ment with the record com­pa­nies. “We failed to se­cure li­censes from rights hold­ers for the vast amount of mu­sic on the ser­vice,” the com­pany said in an apol­ogy let­ter on the site.

For­mer ex­ec­u­tive John Ashen­den said in a blog post he was “over­whelm­ingly im­pressed” that Groove­shark was able to “fight the line” for so long. “How many young peo­ple do you know that still down­load mu­sic ( legally or il­le­gally) in­stead of us­ing a paid or ad- pro­moted stream­ing mu­sic ser­vice? I would wa­ger that it is quite few— likely a mi­nor­ity,” he wrote.

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