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Rory Cellan-Jones

Is music winning the digital war?

  • Rory Cellan-Jones
  • 13 Oct 08, 09:20 GMT

Is there finally some good news to cheer up the music industry? The people behind a major piece of research - the Digital Music Survey 2008 - would certainly have us think so.

Man using a computerTheir press release is headlined: "Light in the tunnel for the music industry: revenue opportunities are increasing, illegal downloading is down." The truth is, it's still a mixed picture. There are signs that threats of action against illegal downloaders may be having an effect, but there's also evidence that the music-buying (or sharing) public is still pretty underwhelmed by the legal digital offerings.

The figures showing a fall in illegal downloading are pretty inconclusive - down from 43% of the 1500 sample last year to 39% in 2008. But look at the figure for teenagers, tomorrow's potential music buyers. A shade up at 58%, and this was also the group which said it was most likely to carry on swapping music for free. There was also a belief that legal download services just weren't good enough - two in three said that legal sites couldn't offer the range of music that they could get by file-sharing.

But there's vindication in this survey for the music industry's campaign to get Internet Service Providers to join their campaign against piracy. In July the big ISPs agreed to send warning letters to persistent illegal downloaders and it looks as though that may have had more success in putting the frighteners on the pirates than the threat of legal action by the music industry. 61% of illegal downloaders said they believed they were being monitored by their ISPs and 72% said they'd stop if they got one of those scary letters.

After years of snail's-pace innovation by the music industry, consumers suddenly have an embarrassment of choices when it comes to legal digital services. But this report shows they are often more conservative than we might expect. Radio was still by far the most important way of discovering new music, and, when it comes to acquiring music, there's still a degree of wariness about digital options.

The survey respondents were asked to rank different methods in order, including buying CDs, subscription services, free music supported by ads, downloading to a PC, buying a Nokia Comes with Music phone and downloading to a mobile. And, you've guessed it, buying CDs was number one by a mile.(A friend who dropped by while I was writing this has told me he has just spent over £80 on a Bob Dylan three-CD collection, after scouring London to find it. But that may say more about my friends than the state of the music business).

That doesn't mean that CD sales won't keep on falling, and what will worry the music industry is the lack of enthusiasm for one of its big new ideas to replace those lost sales, mobile music. The numbers downloading to their mobiles had actually fallen, and over half said they were just not interested in trying it out.

But let's not assume that this revolution has been stopped in its tracks - or that consumers aren't changing. One fascinating part of the report deals with social networking and its growing importance for music fans. So which was the top music network? YouTube. Yes, the site which started as a simple way to share your favourite video clips, was cited by 41% of the respondents as the most important network for music, sweeping past MySpace which was number one last year. Why? Because they've found that just about any music video ever made is on the site.

The next challenge for the music industry is to turn all that passion about music on YouTube and MySpace into cash. The survey floats an interesting idea, asking whether people would be willing to act as sellers of music on sites like YouTube and MySpace, promoting bands they like and then getting a commission for each sale. 43% of those asked warmed to the idea, so when your friends start boring on about some fantastic new album you need to buy, you may have to question their motives.

Comments

  • Comment number 1.

    There are people who will not pay , whatever , who's attitude is why should I pay when it's free on Limewire? I retort by suggesting they try shoplifting from HMV or wherever before berating them as thieving cheapskates.

    However the record industry has also tried to rip off fans by reissue / remaster programs resulting them expecting you to pay over and over for the same music!!

    Music is very cheap these days, a new CD will cost less than a tenner and older ones are usually availble for a fiver . I pay £12 for my monthly emusic subscription (90 tracks plus lots of free stuff) . Then you have the WE7 model , paid for by ads which is fine. There's no need to pay for music if you use WE7 and keep an eye out for bands such as Nine Inch Nails who make their product available for the cost of your email address.

    Heres some information on free and cheap downloads here

    http://www.songofthesalesman.co.uk/phpBB/viewforum.php?f=5


  • Comment number 2.

    The music industry is like Han Solo after being released from his protective carbonite cocoon - blind, bumbling and a liability to itself.

    The difference is I can't see their vision returning any time soon.

    With about a decade to anticipate and plan for the post-CD era, they have done nothing except treated their customers with contempt.

    Look at what some small labels like Linn Records are doing - you can buy all Linn's catalogue online in varying non-DRM formats and qualities, from 320kbps MP3 through to uncompressed 24bit 48kHz studio masters, all for appropriate fees. If small outfits like Linn can manage this, why can't the recording behemoths with their (for the moment) valuable back catalogue income and associated marketing spend?

  • Comment number 3.

    Could you comment on the complete lack of major-label DRM-free MP3 music stores in the UK? The US has an abundance of them, Amazon Music Store, Wal-Mart etc whereas if we in the UK want to buy music from major artists we have to choose between CDs or having it locked down by DRM and at low-bitrates.

    It's things like this that make me feel no sympathy for the labels.

  • Comment number 4.

    Why have none of the BBC's journalists referenced the EU Telecoms Package amendment 138, passed on September 24th?

    Given that it makes '3-strikes' style disconnections illegal under EU law without a court process, it would seem somewhat relevant to the discussion.

  • Comment number 5.

    #2: said "Look at what some small labels like Linn Records are doing"

    The difference is that Linn is a company that has, for decades, prided itself, rightly, on its superb customer services They are interested in providing satisfied customers, not in trying to extort every last cent from them. It is a model that most companies should be trying to emulate.

  • Comment number 6.

    I cannot wait until the 'Labels' are gone. Exactly what do they do right now? Promote? No need, the internet can do that. Produce? You can buy a Mac and Logic Express for less than £1000.

    They do nothing except leech from musicians, and are desperately trying to hike up prices because they know their days are numbered.

    Good riddance I say.

  • Comment number 7.

    @compactdistance. 7 Digital are the people to go to, they now have DRM MP3s from all the major labels and a lot of the minor ones. Lots of different price points including regular free download promotions. Definitely the best we've got at the moment.

  • Comment number 8.

    Emusic have always been DRM free . Link on


    http://www.songofthesalesman.co.uk/phpBB/viewforum.php?f=5

    as mentioned 7 Digital have DRM free and iTunes have DRM Free options buit still in itunes format.


  • Comment number 9.

    The problem with Illegal downloading is that it gets rid of DRM problems that plague CD's. Anyone remember the coldplay album that had that stupid copy protection on it disabling the ripping of the CD to media player/itunes? I had to download the album to get it on my computer to get around the DRM. If the music industry wanted to remove the file sharing problems, they should look into other ways of copy protection. I praise microsoft here for their wireless transfer option for the zune where you could pass it on 5 times but after 5 days (or is it 3), the person who has recieved it, has to buy it for it to become DRM free. This I fear is one of the main reasons the zune will never be released over here. What's the point when a feature as good as this wont be allowed to be used? You can still listen to it for 5/3 days but as soon as that is up, you have to buy it. Why not do this for ipods or mobiles? It would remove one reason for the downloading.

    The other problem is that p2p sharing allows users to download hgh quality DRM free music. This is something that the music industry will not push over here due to the lack of control. Allow this, cut out a vast majority of file sharers.

  • Comment number 10.

    I cannot wait until the 'Labels' are gone. Exactly what do they do right now? Promote? No need, the internet can do that. Produce? You can buy a Mac and Logic Express for less than ?1000.

    ------------------

    Without the Labels 90% of the artist out there would find it impossible to get started.

    Self promotion is a finite thing. If a hundred bands do it then it can work. If a hundred thousand try it them very few get through. At least the labels can get music through to the radio stations (including net ones) and MTV.

    As far as production goes, not everyone can do it themselves, most bands havent got a clue how to do that and restricting music to those who can would lose you an awful lot of very good bands.

    Frankly the labels will be necessary for as long as there is music, however the current labels are not. Eventually those that provide the best service will win out over the draconians, it's just going to take time for the public at large to make that happen. Once the price of new release CDs comes down to the same sort of £5 price as older releases then we will be talking fair prices. The same needs to happen online, download tracks should be DRM free but contain a unique combination key of track, store and buyer so that it can be identified and linked to the buyer for reference. They should also be available ina range of qualities from the standard MP3 (160-192) to full wav for the same price adn a purchase should allow for free download of that track in each format and as many times as necessary.

    The labels that provide this will be the ones who will be around in 20 years time, the rest will have rotted away.

  • Comment number 11.

    Im looking forward to Free music supported by ADs. can anyone tell me if its already available?

    Its been a few years since i bought a CD. i must admit i download from Limewire and bit torrent. The problem with buying it legaly is the huge amounds of DRM.

    Its like websites that host TV shows illegally, theres nothing Tv companies can do to stop it, so they host it themselfs with Ads to support it. look at channel 4 on demand. i would normally catch up on C4 tv shows by streamming it off one of the many hosing illegal sites. now i quite happily watch it from the channel4 website at the cost of watching a few ads. why cant music companies do this?

  • Comment number 12.

    I think that music is winning the digital war!

  • Comment number 13.

    I very rarely download music illegally, generally music from artists I already legitaimately own a number of albums of and whose back catalogs are so extensive and often deleted that it is the only realistic way to get hold of it.

    That said, taking a cursory look over some of the 'legitimate' music download stores recommended few of the seem to provide what I'm looking for.

    There are the stores such as itunes that have reasonably comprehensive music libraries but force you to use their formats and use low bit rates, and I have no desire to own an ipod.

    Then there are the sites that offer DRM free and better bit rates such as emusic, 7digital but don't stock a lot of the music I'm looking for.

    Until music companies wise upto the fact that that doing store specific deals rather than providing their catalog to all online retailers they are missing out on a lot of potential revenue. If they do open up the catalog to all, the onus will be on the relevant download stores to provide a service that best suits customers rather than the other way round.

    Then you'll find music stores bending over backwards to provide a bespoke music service for customers, rather than the lazy backward thinking we get from them at the moment

  • Comment number 14.

    One of the daftest problems is that you can buy a CD and rip it to your mobile/PSP/PS3/PC but that is still technically illegal.

    Which means when releases talk of illegal music one needs to know whether that activity is included in the figures.

    Millions must be ripping albums, otherwise why would the sales of MP3 players be so high.

    If downloads were half the price of buying the CD I'd fore go the physical album sitting on my shelf. As it is downloads are only marginally cheaper, and if the album has slipped from the top 50 it is often cheaper in physical shops than online.

  • Comment number 15.

    I've found that eMusic is very good for discovering new artists that I wouldn't hear about, while 7 Digital is the better site for the popular stuff. They have some good offers on new release. Who can complain about paying a fiver for a brand new album.

  • Comment number 16.

    I don't buy music online (other than directly from a band's website) because they are overpriced and usually low-quality mp3.

    If companies want to charge CD-prices, they should provide the music in CD quality, or make them proportionately cheaper.

    I listen primamrily to internet radio stations as there are NO mainstream UK radio stations that play my preferred music - and I am more than happy to buy the CDs of bands that I find I like. I'm probably much more willing to support smaller bands than pay inflated prices to big record companies who do nothing for me other than try to make by music-listening life difficult, and making me pay through the nose for the privelege!

  • Comment number 17.

    The problem in my opinion is that we all know how little of the actual cost of a CD goes to the artist. Okay so we have to pay for manufacturing costs etc for a CD but digital media doesn't come with that attached.

    Therefore why should we still pay over the odds for music downloads resulting in something thats as close to pure profit as it could be. Why would consumers want to buy music just to line execs pockets. In my view artists should release their albums direct and set the prices themselves.

    Not only that but downloading helps in the try before you buy attitude. Too often these days an artist gets away with releasing two or three quality singles encouraging people to buy and album where the rest is manufactured diatribe. If artists are to sell their own music and run everything themselves it would encourage them to release genuine quality tracks.

  • Comment number 18.

    Interesting post, Rory.

    If our war is about making sure that creative people are properly paid for the digital use of their rights, it’s too early to say the creators are winning but we are making progress.

    It will be interesting to see what effect advisory letters, and improving legal services will have in this “war”. Both are core components in the deal we signed with the ISPs earlier this year.

    You say people are pretty underwhelmed by the legal offerings. In digital terms we’re building up from ground zero: these services arrive as a competitor to unlimited free from p2p, which has set expectations unrealistically high.

    So I guess it’s not surprising that a lot of people are going to be underwhelmed by a commercial service, because unlimited free music simply isn’t a realistic proposition.

    We’re not saying the new services are perfect, they can and will improve, but the majority of people we speak to say the main reason they use p2p is not because they don’t like the legal services, but because p2p enables them to get something they want (and value) for nothing.

    Reducing the ease at which people can take music for nothing will be important to solve our business problem: declining revenues means less funds available to invest in new artists. New services and consumer awareness will play a part in this, but now we have the support of the ISPs, and the backing of government in tackling illegal p2p, our outlook is positive.

    A few comments on previous postings:

    @ compactdistance: mp3 deals have been done (including 7digtial) as blinddrew said. This market will get a lot more interesting in coming months. More music will now be available DRM-free, we’ve long maintained that you should be able to play a download you’ve bought on any platform. The companies have ditched copy protection on a la carte downloads to achieve compatibility: but consumer awareness of this is still pretty low and we’re working on this with the retailers.

    @ stuart_john: There are lots of free ad-supported services on the market already (yahoo, youtube, myspace) but these tend to be streaming only. Ad-supported free downloads underpins the We7 model, though. This service is yet to launch, but the beta is live and worth a look.

    @ giz: I don’t think labels are missing a trick here. Many record deals were signed in a pre-internet era so it may be that the label doesn’t have the digital rights to the catalogue. Or, the songs you are looking for are either pretty niche, or long since deleted from active catalogue. Digital solves this issue for us, but more than 30,000 albums are released a year (so based on 10 tracks an album, over 50 years, that would be around 15m tracks in the UK alone). Getting all these available through retail takes time but the choice is pretty wide – iTunes alone have some 7m I think. Labels and retailers have to prioritise when making stuff available, but they’re adding tracks quickly.

    @ AP Ferguson: you’re right that ripping a CD is technically illegal, as the purchaser doesn’t buy the right to copy it. This is because a copyright owner has the exclusive right to reproduce (copy) their own work. That's what the labels "buy" or licence from the artist.

    That said, record labels are happy for people to copy music for private use (provided it is private e.g. copy a CD on to a PC, phone or mp3 player – not give copies to friends or upload on a p2p network). All of which is academic: BPI has never enforced this law against a consumer, and the government are looking to amend it in any case.

    @ stublake: record company costs have not fallen substantially as a result of online delivery. They are incurring substantial new costs, including digitisation of catalogues, creation of metadata, servicing a variety of online music services with different requirements and more. And while the CD still represents a major part of sales revenue, record companies still have all the fixed costs associated with physical manufacture and distribution: but manufacturing and distribution only represent a small part of the costs of a record company. The largest costs to record companies are the costs of identifying, supporting and promoting artists. At an average cost of 80p per track we think downloads are extremely good value for money.

    Matt Phillips, BPI

  • Comment number 19.

    Matt, these days we can get good cds for "free" with our newspapers. The "record" or recorded track has been devalued since we discovered the actual negligible costs of delivery in its various forms. What the musical public do value is a live performance. Why else are the top tickets resold for mega money?

    "the costs of promoting artists" would be huge if you paid the true price of an advert on radio. The broadcasting royalty fees should be reversed, so that you pay to promote your artists. If radio record royalties stopped today, there is no way your industry would ban playing them. Since we consumers and BBC licence payers have paid indirectly to listen to every track played on the radio, often thousands of times, preventing us listening via a free digital download is piracy on your part.

    You now have a goverment backed memo of understanding to support, with taxed fees, the recording labels, and stop "piracy". If you loved music, and not just money, these fees would be spent on grass roots music support at the school level, enabling more to fully appreciate and create music. Musicians would earn by working as mentors/teachers in music lessons, not sitting idly back while royalties from last year's work gave them a crust and kept the shareholders in gravy.

    There is no doubt that the BBC licence fee should no longer be used to pay for musical royalties. The promotors should pay the BBC, but we will settle for quits.

 

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