I have just read part of this paper called: "The Impact of Music Downloads and P2P File-Sharing on the Purchase of Music: A Study for Industry Canada".
The paper is contentious because it reports that illegal music sharing increases CD sales. That did not go down well with the local music industry.
I found this paragraph interesting:
We find evidence that purchases of other forms of entertainment such as cinema and
concert tickets, and video games tend to increase with music purchases. It has been
argued in the literature that the increase in the number of entertainment substitutes has
led to a decline in music purchasing, but our results do not support this hypothesis.
As expected, we find that reported interest in music is very strongly associated with
music purchases. Finally, our results suggest that household income is not important
in explaining music purchases.
Let me add some perspective on illegal music sharing here. When I was young, as soon as I could afford it, I bought a twin deck tape recorder. It's sole purpose was to copy the legitimate (or illegitemate) tapes of others to my own blank tapes. I had a good collection of tapes - it might have been 50% bought and 50% copied. This seemed to be true of most of my friends. When CD's arrived, the first thing we did was hook up CD players to the tape decks so that we could copy a CD that someone else bought. That quickly died out - mainly due to the "snob factor". A tape was seen as being of markedly inferior quality, and no one wanted to be seen with music on such an old fashioned and plebian format.
Piracy only started to take off again when it became economic to copy one CD to another. That is, once the cost of blank CD's plunged to a similar level to what blank tapes used to cost - or less, since the "stuff up" rate of recording CD's was higher, so you needed say 15 CD's to make 10 good copies. You only needed 10 tapes to make 10 good copies, since you could just re-record over a tape if you got it wrong.
If we wind back even further - back to when I was at high school in the early 1980's - most of my fellow boarders were members of a mail-order music club. This was back when The Eagles and Tubular Bells and Meatloaf were huge.
The deal with the mail-order club was that if you signed up someone else, you got a free LP or two. I don't remember the specifics, but I do remember that when I arrived as a fresh faced youngster at the age of 12, the first thing the older boys tried to do was to sign me up as a club member so that they could get a freebie. New members also got special sign-up deals. When you signed up, you could buy 3 records for the price of 2 - or whatever. You get the drift. The way to maximise the number of free or discounted records that you were entitled to was to sign up as many new members as possible. Hence the strong arm tactics that were occasionally used on the freshmen to sign up.
The other trick was to sign up a "new member" under a false name, and to reap the benefits that way. If you name was John Smith, you simply signed up as Joe Smyth and the bonus record would come your way. Because there were only 70 kids in our boarding house, and it was perfectly obvious when an LP had arrived in the mail (because of the shape of the package), the package was simply handed over to the person with the name closest to that on the label. Everyone knew what was going on. Some people signed up under dozens of aliases.
The beauty of pulling this scam back then was that no one had a credit card. Everything had to be done by money order, so the fraud was fairly untraceable. We simply walked down to the post office, handed over cash, got a money order and ordered our stuff fraudulently.
Well, others did. I never had to, since I didn't have a record player, and I was not that much into music. Those that were though built quite significant collections. The only limiting factor really was the amount of physical space that they had in the confines of a boarding house with few private spaces. LPs took up a fair amount of room.
Once tapes became the most popular format, copying took off. Twin tape decks in the ghetto blaster format were just becoming available, and they were a popular item. We were always catching the bus into town to buy another box of 10 blank tapes. The great questions of the day went along the lines of:
"Should I buy a 45 minute tape, and put just one record on it, or buy a 90 minute tape and put two records on it?"
"What do I do if a record is over 45 minutes in length? Should I keep some 60 minute tapes on hand?"
"What type of tape is better? (At the is point, I forget all the different types of magnetic tape coatings that were on offer - but there were many and the prices differed radically)."
The greatest advance was when double-speed recording twin tapedecks came out. For those born after 1990, they allowed you to record a 60 minute tape in 30 minutes. That was a huge leap forward in the realm of music copying.
I blame the Walkman for all this. It really drove up the demand for taped music, and no one cared whether it was legitimate or pirated. I find it hilarious that Sony, the inventor of the Walkman, is now one of the furious music companies trying to clamp down on piracy. That's like BP complaining about global warming.
So I find all the current dribble about on-line piracy to be just a load of crap. All that the internet and peer-to-peer has done is to make this whole process visible, because you can see how much piracy is occuring by looking at web sites and web traffic and that kind of thing. Record companies had no way of tracking it 20 years ago when piracy consisted of my mate Jack coming over with his tape collection and the two of us doing a swap on my twin tape deck. He brought some blanks, and took away recordings of what he liked from my stash, and I did the same with his.
There was of course always a problem with recordings degrading if you kept on making copies of copies of copies, so we mostly only recorded from an original tape. That's not a problem these days.
Then as now, some people never bought music. They just bought stacks of blanks and had huge collections. That type of person will never go away.
I will go back to this statement in the research though:
We find evidence that purchases of other forms of entertainment such as cinema and
concert tickets, and video games tend to increase with music purchases. It has been
argued in the literature that the increase in the number of entertainment substitutes has
led to a decline in music purchasing, but our results do not support this hypothesis.
This says nothing about who the consumers are.
Now, who do you think has time to enjoy all these forms of entertainment - cinema, concerts, videos, games and music? Youngsters, that's who. Oldies, like me, spend very little on these things - because we have kids. I have not been to the movies for a year, because it would involve paying $100 for a babysitter (I shit you not). Going to see a band is the same. We do spend a bit on DVD's - I spent $40 on two Wiggles DVD's yesterday. I don't spend anything on music because I never have any time to listen to it.
That's the crucial thing - time - not money. I think entertainment purchases are largely a factor of how much time someone has available, not how much money they have. Look at us - our household income is in the top 5%, yet we don't have pay TV. Who has time to watch it?
But just about every dole bludging, good for nothing layabout has pay TV. And an MP3 player of some sort with a large collection of video games for the Xbox and a stack of DVDs to watch.
I used to listen to a lot of music when I was doing country road trips for work, but often as not, the phone would ring and I'd spend half the trip talking to someone at work via the car kit and not listening to music.
I could listen to music when I cycle, but if you ask me, that's a death trap. You need to be able to hear the traffic - it is one of the prime defences of a cyclist who wants to stay out from under the wheels of a bus.
But back to that paragraph again. The largest consumers of entertainment are the young. They probably start to choose their entertainment at around 10 or 11 - we're just going through that phase now with Junior. He is starting to collect CDs and wants to discuss the merits of Fergie vs the Guns'n'Roses and will probably be hassling us for his own iPod next year.
His biggest problem though is that he has no money of his own. If he wants something, he has to convince us to buy it for him. Kids of his age with a computer of their own probably have a music collection that is 95% pirated because they have no other means to getting their hands on music - unless mum and dad are particularly soft headed.
Then kids hit about 15, get a part time job and have their own spending money. If they are anything like me as a kid, they will probably spend a lot of time loafing around in places like Virgin and Red Eye Records and HMV discussing the relative merits of east coast vs west coast and agonising over how best to spend the $20 that they have in their wallet. Long arguments (ala Jack Black in whatever that movie was) ensue as your friends try to convince you to buy this or that.
We used to try and split up our music purchases at that age so that everyone got a tape, and whatever we chose generally had to be liked by everyone else, because we then went home and made a copy each of everything we had bought. If there were four of you, you got 4 tapes for the price of one.
I guess 15 year olds these days spend their time mooching around in MySpace agonising over the same things. Except they can skip the spending $20 part and just download what they want.
Anyway, after "borrowing" lots of music as a teenager, I started buying CD's by the truckload once I could afford them. I have been burgled 5 times, and lost an entire collection with each robbery. Each collection was worth a few thousand dollars, so I have probably spent at least $10,000 on legitimate music, and that doesn't include going to see live bands etc etc.
What I'm getting at is that I think a lot of people go through a piracy phase when they are young, and then go legit.
Why?
Because people like to show off that they can afford expensive things. Why do men want to drive a Ferrari? So chicks will look at them and think, "Wow, he has lots of money". It's the same with music in the end. People will want others to think that they have the money to afford nice things, including music. Running around telling others that you all you do is steal music is not a great way to advertise yourself as a potential mate.
On top of that, I get a lift from buying things. I enjoy the shopping experience, the thrill of spoiling myself with something nice. Is there a vicarious gain from nicking something? Nope. People will pay for things if buying them makes them feel good.
I can't understand why the music industry isn't pushing this angle. They need to work the psychology.
Of course the stupid bastards never will. Because they are over run with lawyers.
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