Slides used for 6th form open day

1. 1

2. “American businesses lose $250 billion
every year, and we have lost more than
750,000 jobs because of intellectual
property theft.”
-Introduce Intellectual Property Rights Enforcement
Legislation, 24/7/2008
2

3. “According to the Institute for Policy Innovation,
more than $58 billion is lost to the U.S. economy
annually due to content theft, including more
than 373,000 lost American jobs, $16 billion in
lost employees earnings, plus $3 billion in badly
needed federal, state and local governments’ tax
revenue.”
- 16/12/2011
3

4. “Of the total $6.1 billion in annual losses LEK
estimated to MPAA studios, the amount
attributable to online piracy by users in the
United States was $446 million”
- Cato Liberty, 3/1/2012
4

5. 5

6. Context
6

7. 2 7

8. 8

9.  Vivendi-Universal
 $12.5 billion loss in the first 3 financial
quarters of 2002
(Economist, 16 Jan 2003)
 EMI
 £54.4 million loss in the first 2 quarter of
2001 (£138.4 million profit over same
period in 2002)
(Economist, 18 Jan 2003)
9

10. E.M.I. R.I.P?
 2002
EMI sack Mariah
Cost = $28 million
 2004
EMI sack 1,500 staff
 2007
Axe boss, Alain Levy
Profits -10% on ‘06
£50 million loss
10

11. E.M.I. R.I.P?
 2007
 Terra Firma pay £4.2
billion for EMI
 Citigroup provides
loan of £2.6 billion
11

12. EMI’s death throws
2010
 £1.56 billion net loss
2009  Forced to write down the
 £412 million net loss value of its catalogue
 Global economic crisis  £1.04 billion impairment
 Problems restructuring charge
debt  Debt of £2.6 billion
12

13. EMI today?
Recorded music M usic publishing
 Back catalogue  Improving top-line
operating profits
 from £56m to £163m
 Overall profits: ~£300
million
 Source: Pratley, 2010
13

14. EMI reborn?
2011-12
 Business broken up
 EMI + Universal = 36%
of recorded music sales
globally
14

15. Percentage of total global music
revenues
15

16. Causes
 The Internet
 Peer-2-Peer (P2P) transfer
 Digitisation of music as files
 Broadband growth/penetration (up 23% since
2006: IFPI, 2008: 5)
 2002: 1 billion illegal files (Sanghera)
 2007: ratio of illegal-legal tracks: 20-1 (IFPI,
2008)
16

17. Industry voices
 RIAA (Recording Industry
Association of America)
 http://www.riaa.com/
 IFPI (International Federation of the
Phonographic Industry)
 http://www.ifpi.org/
 BPI (British Phonographic Industry)
 http://www.bpi.co.uk/
 UK Music
 http://www.ukmusic.org/
17

18. 18

19. About IMPALA
IMPALA was established in April 2000 to represent
independent music companies. 99% of Europe’s music
companies are small or medium sized enterprises (SMEs).
Known as the “independents”, they are world leaders in
terms of innovation and discovering new music and artists -
they produce more than 80% of all new releases.
The independents also produce 80% of the sector’s jobs.
19

20. Singles market
 1970s until 1999:
 annual UK singles sales = 70 million
 Since 1999, this has more than halved.
 (BPI, 2005: p8)
 2008: growth of 33%
 115 million + sales
 (BPI, 2009)
20

21. Album market
 Down 3.2% in 2008
 Digital albums = 10 million sales
 65% increase on 2007 (= 7.7% of market)
 Optimism?
 UK Grammy success (Radiohead, Coldplay)
 New digital services?
21

22. UK music market 1997-2011 (millions)
22
BPI

23. UK music market 1997-2011 (millions)
23
BPI

24. Yet…
24
BPI

25. Digital music to save the industry?
25

26. Digital music to save the industry?
26
Source: BPI

27. Digital music to save the industry?
27
Source: BPI

28. 28

29. 29

30. 30

31. 31

32. 32

33. 33

34. 34

35. 35

36. 36

37. UK music industry growing!
 Revenues up by 4.7%
37

38. UK music industry growing again!
 Revenues up by 5%
38

39. UK music industry levelling out?
 Revenues down by 4.8%
 Global decline of 11%
39

40. The new marketplace?
UK album sales (2008)
40

41. The Long Tail (Anderson 2004)
41

42. The Long Tail (Anderson 2004)
 Power law distribution curve (aka Pareto
curve)
20% 80%
head tail 42

43. The Long Tail (Anderson 2004)
 Selling more of the ‘tail’ may be the
future for the music industry business
model
 Value no longer in the hits but in the
volume of content
20% 80%
head tail 43

44. History
44

45. History
 1970s: home taping and organised crime
45

46. History
 Early IRCs 1990-94
 Evolved into the P2P
networks
Napster
Gnutella
Morpheus
Kazaa
Grokster
 Leyshon et al (2005:
180-1) a ‘musical gift
economy’ 46

47. Business model
 To ‘find, fund, record, promote and
market music. Record companies fund
that process by retaining the rights in the
artist’s sound recordings’
 (BPI, 2005: 27)
 stop piracy, increase profitability?
47

48. What changed?
 ‘a set of broader cultural forces … have
changed the role of music within society, and
relegated its immediacy and importance
among many of its consumers’
 (Leyshon et al, 2005: 181) 48

49. Scale of music industry
 ‘no more than 10 percent of records actually
recoup the money the record industry invests
in its production’ with some companies
stating that the real figure is closer to 3 %
 (Leyshon, 2005: 187)
 How does this fit against sales/profits? 49

50. Attitude shifts
1. Recent developments within the music
industry
 Context (clubs; festivals; merchandise)
1. Synergetic marketing of music
 Cross platform tie-ins (X-Factor, Pop Idol)
1. The inability to sustain consumer attention
 Competition for income (games, DVDs, mobiles,
Internet subscriptions)
50

51. The blame game?
 Industry business model has been in trouble at
least since the 1980s.
 Temporary delay via CD back catalogues
 (Breen, 1995)
 It is easier to blame an external process
(piracy) than to admit the industry itself
made a series of errors
51

52. Responses
 ‘Instead of exploring P2P exchange as a
business opportunity, they defined it as a
piratical threat. In doing so, they inadvertently
implied that they had the right to determine
how people apply after-sales use of intellectual
property by re-asserting commercial copyright
in a set of relations that were effectively
deregulated.’
 (Rojek, 2005: 359)
52

53. Metallica vs Napster (April 2000)
 Name and shame users
 Maximum fine of $150,000 per mp3 downloaded
 2007: OiNK.cd and TVLinks closed down
 2011: Mega Upload taken offline
53

54. One down, another appears
 May 2003 Kazaa: 230.3 million downloads
 New user uptake of 13 million a month
(Teather, 2003)
54

55. BitTorrent protocol
 1 in 3 broadband users are pirates?
 Torrentfreak, 3 Feb 2009
 uTorrent user base: 28 million monthly
users
 Torrentfreak, 25 Dec 2008
55

56. Busted?
 RIAA PR own-goal: prosecution of 12 year old Brianna
LaHara (BBC, 10/9/2003)
 Illinois Senator Dick Durbin:
 ‘Are you headed to junior high schools to round up the
usual suspects?’
56

57. Sue your customers?
File-Sharers Buy 30% More Music Than Non-P2P Peers
57
Source: American Assembly, via Torrentfreak, Oct 2012

58. Digital Rights Management (DRM)
58

59. Apple’s CEO
 “DRM’s haven’t worked … to halt music piracy … In
2006, under 2 billion DRM-protected songs were sold
worldwide by online stores, while over 20 billion songs
were sold completely DRM-free and unprotected on the
CDs by the music companies … So if [they] are selling
over 90 percent of the music DRM-free, what benefits do
they get from selling the remaining small percentage of
their music encumbered with a DRM system?”
 Steve Jobs, 2007
59

60. 60

61. 61

62. 62

63. Conclusion
 The traditional music industry business model
is under threat and forcing the industry to
react:
 prosecute major uploaders
 prosecute downloaders randomly
 develop anti-piracy measures, such as DRM
 pressurise ISPs (3 strikes?)
 new innovations?
63

64.  The industry has been partially responsible for
its problems:
 it didn’t adapt to change quickly enough
 multinational business interests are split into
smaller divisions which are partially responsible for
the encouragement of consumer banditry
 hardware/software advances destabilise the
traditional role of the industry
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65. Selected sources
 BBC, 10/9/2003, ‘Music firms target 12 year old’ at http://news.bbc.co.uk/1/hi/entertainment/music/3096340.stm
 BBC, 21/02/2006, ‘Broadband growth speeds forward’ available at http://news.bbc.co.uk/1/hi/technology/4736526.stm
 BPI, 2005, Illegal Filesharing Fact Sheet
 BPI, 2009, ‘UK reports resilient music sales in 2008’ press release http://www.ifpi.org/content/library/full-year-2008.pdf
 M. Breen, 1995, ‘The End of the World as We Know it: Popular Music’s Cultural Mobility’ in Cultural Studies¸ 9 (3): 486-504.
 ‘Lights! Camera! No profits!’, Economist, 00130613, 1/18/2003, Vol. 366, Issue 8307
 ‘How to manage a dream factory’, Economist, 00130613, 1/18/2003, Vol. 366, Issue 8307
 Malcolm Gladwell, 2000, The Tipping Point: How Little Things Can Make a Big Difference, Abacus
 IFPI, 2007, ‘Digital Music Report’ available from http://www.ifpi.org/content/section_resources/index.html
 IFPI, 2008, ‘Digital Music Report’ available from http://www.ifpi.org/content/library/DMR2008-summary.pdf
 Steve Jobs, 6/2/2007, ‘Thoughts on music’ available at http://www.apple.com/hotnews/thoughtsonmusic/
 Andrew Leyshon, 2003, ‘Scary Monsters? Software formats, peer-to-peer networks, and the spectre of the gift’ in Environment and
Planning D: Soceity and Space, 21 (5): 533-58.
 H. Parker et al, 1998, Illegal Leisure: the normalization of adolescent recreational drug use, London: Routledge.
 H. Parker et al, 2002, ‘The normalisation of “sensible” recreational drug use: further evidence from the North-West England
Longitudinal Study’ in Sociology, 36 (4): 941-64.
 Chris Rojek, 2005, ‘P2P Leisure exchange - net banditry and the policing of intellectual property’, in Leisure Studies, 24: 4, 357-367.
 Sathnam Sanghera, 2002, ‘Rock ‘n’ Roll Suicide: How Napster, TV-created Pop and a Dearth of Talent are Killing the Record
Industry’, Financial Times, 15 November, p19.
 David Teather 23/7/2003, ‘Music firms on pirates’ tails’ in The Guardian, available at
http://business.guardian.co.uk/story/0,,1004030,00.html
 Sarah Thornton, 1995, Club Cultures, Cambridge: Polity.
 Griffin Mead Woodworth, 2004, ‘Hackers, Users and Suits: Napster and Representations of Identity’ in Popular Music and Society,
27: 2, 161-184.
 Richard Wray, 13/01/2007, ‘EMI sacks music boss as profits drop’ in The Guardian, available at 65
http://business.guardian.co.uk/story/0,,1989490,00.html

66. Image sources
 P1,2, 5, Automania, 2005, “Christmas Music”, http://www.flickr.com/photos/automania/74037479/
 P6, hc gilje, 2007, “EMI Electola”, http://www.flickr.com/photos/hcgilje/501769056/
 P7, 8, aus_chick, 2006, “EMI”, http://www.flickr.com/photos/hcgilje/501769056/
 P10, 25, 34, myuibe, 2008, “copyright and digital culture”, http://www.flickr.com/photos/myuibe/2132305949/
 P11, 12, 16, 17, _ambrown, 2006, “Music Millenium, Portland Oregon”,
http://www.flickr.com/photos/dietpoison/195288442/
 P18, p_kirn, 2007, “Handmade Music 8/23/07 with Etsy Labs, CDM, and Make”,
http://www.flickr.com/photos/p_kirn/1218971167/
 P31-3, karola riegler photography, 2009, “Vinyl kills the mp3 industry”,
http://www.flickr.com/photos/karola/3639759076/
 P35, 37, Ferrari + caballos + fuerza = cerebro Humano, 2009, “Musica comprimida – Compressed Music”,
http://www.flickr.com/photos/gallery-art/3497849677/
 P38, GabryPk, 2008, “Music Is My Drug pt. 2”, http://www.flickr.com/photos/gabrypk/3107000631/
 P47, Selma90, 2009, “Apple” http://www.flickr.com/photos/selma90/3675162262/
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