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Why music piracy ain't so bad (for the industry)

Salon.com has an interview with economist Stan Liebowitz, concerning his recent paper (published by the Cato Institute) on the likely costs of piracy on the music industry. Liebowitz says that, while the theory predicts that piracy should cost the industry substantial amounts of revenue, the data doesn't seem to back that up — so far, at least.

I wonder if it ever will. For that to happen, not only would swapping music files have to replace purchasing CDs, consumers would have to decide not to spend the money they thereby save on buying other CDs (or whatever format eventually replaces the CD). But will people actually do that?

I don't think so. People generally spend the money in their pockets, and people like owning CDs, with cases and inserts (and, yes, infernal, irremovable packaging). People like going to record stores. And people like collecting more and more music.

This last is the key, I think. If consumers were different — if, instead of collecting music, they bought exactly (and only) those titles they thought they would listen to enough for them to be worth paying for — then the economists would have a good argument. But even when they already own the music they know they want, consumers don't stop buying music: If they save money by procuring some music online, they'll still spend that money on other titles to add to their collections.

For file trading to significantly hurt overall CD sales, I think, people would have to abandon the CD format (or whatever format replaces it) entirely. So long as CD players are in every home and almost every car, however, people will spend their money on discs to play in them.

(This is probably at least mostly wrong, of course, but perhaps not entirely....)

June 14, 2002 10:03 AM

Comments (and TrackBacks)


Agreed. I think it's a base human attribute to have the desire to acquire and accumulate material (whether this attrib is good or bad is another topic). Some people even collect beyond their need, specifically people in NAmerica, to levels most others would consider a sign of mental illness, or worse, mistaken life-values.

Collecting is a base, animal desire, and best treated as such by humans.

The music industry, RIAA, etc. know this and understand this. They live off of this inherent weakness, they feed themselves through it.

But, the matter for them is that swapping is a previously non-existant alternative source of acquisition, never mind a low-grade source.

Their goal should be to increase the "grade" of the material they offer, to raise the bar so to speak. Only then will they manage to reclaim the numbers they previously had, before this other, low-quality resource became available.

Anyway, that all said, the copyright dillema we now face (and will soon face in even harder-to-reconcile terms) should force a revisit of the whole concept of private property.

.rob

Posted by rob adams on June 14, 2002 11:36 AM

I love going to a record store more than just about anything else in the world. Digital files can never replace owning cds for me. I love to see the different cds that I owned lined up in the rack, sorted in my own very elaborate way. There just isn't that kind of joy in looking at "My Files" on Kazaa. It's just not the same. That for me is the primary reason I am not so deeply entrenched in the digital music bandwagon.

Posted by Michelle on June 17, 2002 11:22 AM

the industries that make the cds are rippen us off!! they charge us for what is on the cd and not what the cd is worth. and it only cost a couple of dollers to make the cd and all the other stuff. so they are charging us up to 18 dollers to buy a cd. and they keep alot of the money and the artists barely get any of the profite any way. And like the roch people neeed any more money they make like a milion bucks a year while all of us make like 35 to 50 thousand dollers tops.so they need to rip off the broke people to get the rich people more rich!!!!!!!

Posted by john on October 24, 2003 10:48 AM

my bad about the eirler one i spelled rich wrong i spelled it roch.........sorry

Posted by john on October 24, 2003 10:50 AM

i am back but that hooked on fonix dosnt work at all my spelling and reading still are taerrible!

Posted by john on October 24, 2003 10:51 AM

Someone has to buy the CD to put the songs online for download or for someone to buy the CD before anyones burns it, so the companies are still making money from the selling of CD's, plus one of the main company's against Burning CDs is Sony, yet they sell CD and DVD burners!!! What is up with that??

Posted by batoshi on December 3, 2003 12:30 PM

I don't believe downloading music off the internet is bad. I mean, the price for CDs is extremely high and some people can't afford CDs. The effect of downloading music online is 6% for music industries, which in my opinion, isn't much. Is it my fault that I love music and that CD prices are to high? No. I'm just a music-loving "pirate" and so are a lot of people world wide.

Posted by Erin on February 23, 2004 4:32 PM

you could only pick up selected songs from an original cd, but if you download it you can select the song you want.downloading a song doesn't really mean that you want piracy.but who wants to buy an original cd if you only want selected songs from there.

Posted by Anonymous on February 24, 2004 12:36 AM

you could only pick up selected songs from an original cd, but if you download it you can select the song you want.downloading a song doesn't really mean that you want piracy.but who wants to buy an original cd if you only want selected songs from there.

Posted by kamil on February 24, 2004 12:38 AM

With all due respect to the artists and musicians out there...I could care less.
If Nelly or some other artist is talented enough to make one really good song...then he should be talented enough to make 11 others on the same CD to make it worth buying in the first place.
There are people who don't have enough to eat, a place to live, or music to listen to in the first place....and here the artists are complaining about not getting another diamond necklace that they'll sell on ebay after they've worn it only once. Their source of income comes from concerts, t.v. shows, merchandise, etc.
If the artist, like U2 does, contributes their money to a really good cause...and im not saying they endorse a product, but if they truly, honestly, out of the public eye do something to better this human race---yeah, ill spend every penny on their CD. Bono's contribution to fighting AIDS (and apartheid lol) in Africa makes me WANT to spend a ridiculous amount of money for a CD. But to help a complaining artist buy his bling bling out of my own pocket is a setback for this society---so i'd rather download 100 songs and give my 18 bucks to a homeless man. Deal?

Posted by seema adina on February 28, 2004 11:25 PM


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