File-sharing and Music Industry (I)

The first Part in a series about file-sharing, the content industry, and the impact of the “file-sharing” war on the society.

Today: Why file-sharing is not responsible for dropping music sales

Today I read this post: Three Strikes For File-Sharing Fails to Halt Music Sales Decline and I put some thoughts into the reasons behind this drop in music sales.  I think I have found multiple reasons for this:

First of all, I don’t think that raising the penalty for file-sharing won’t do anything. At the moment you can face prison, you will most likely held liable for a huge amount of money and you can loose your connection to the Net (France and USA) or your Right to use a computer (USA). So adding an automatic fee, won’t change anything.

For second, I think that people shared their belongings since dawn of man. It is one of the integral elements of building a cooperative society. And people as long people see their music and software as their own property (an other Theme i will cover an other time), they will continue to share this property with others. One way or an other.

The difference to earlier ages is that software and music is no longer bound to a physical medium an can be duplicated as one likes.

The third reason is that people would by music, despite the fact that they could easily get it illegally for free, if the people could afford it. And this is my main point:

The music industry created the marked for music, for “canned”” and “bottled” music (as in contrast to live music). With institutions like music TV, billboard charts, other charts, music advertisement, etc… the industry suggests that you need to have the latest music, that you need to by a new song on iTunes, Amazon or Google play. This is creating a marked for their own new products.

Don’t get me wrong: They need to have a market with a demand to sell their products. With music that seems always to be nearly identical; music that isn’t really innovative, you need to create an market. That’s is ok. Think of it as an toaster industry that always produces the same kind of toasters. They need to be innovative or create an artificial market for their toasters (eg. you need more toasters, even when you can’t use more than one at a time).

So the music industry created an market, an demand for their own products, and the people, the music consumers, jumped on the train and want to have the music. They have an kind of an collective feeling, that they need the non innovative music.

But they can’t afford the music: To satisfy their needs they need to pay for the music. But the people only have an limited amount of money to spend. In the last 10 years the average amount of the discretionary income, corrected by inflation, dropped steadily: The industrial production was outsourced, production mechanism were streamlined and rationalised, and more and more products can be produced for a lesser price.

While can be healthy for all participants in the market (consumers and producers), mostly it wasn’t. Producers didn’t lower prices despite the fact that the production was much more cheaper. Wages didn’t rise as much as the inflation and so, after a period of time, consumers have to cut down expenses.  (I will cover markets in an other post)

So music is one of the first things to cut down, when forced to decide. It isn’t necessary for your personal or economical survival. The other direct consequence from this development is that whey you need to satisfy an personal demand (see above) and cannot satisfy this demand by legal means (because you are poor and you don’t want to steel physical things) you will satisfy this demand by illegal means: filesharing.

As an conclusion: If the music industry want’s to stop the decline in sales, they shouldn’t look at the filesharer. They should look at themselves and their pricing policy. They wan’t their big business with  big (and i really mean really really big) profits back, but this won’t happen. like all other industries, the music industry also did lower the producing costs of music. They don’t need expensive equipment any more, they don’t need to press the music onto a CD or DVD. They have much lower costs: So give it to the consumer. lower the price. Don’t pay millions and billions to stars and starlets, cut your own profit.

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