Last year the UK government rushed the Digital Economy Act through the end of the Labour Parliament, which outlined new ways to protect media industry's from piracy and allowed draconian measures to be taken against internet users who have downloaded films, games and music illegally.
The paper, Creative destruction and Copyright Protection – Regulatory Responses to File-Sharing, claims that the Digital Economy Act gets the balance between copyright enforcement and innovation wrong.
P2P file sharing should be seen as a innovation, rather than being seen as the main reason why the music industry is struggling so much.
The LSE paper also states that providing music fans with more ways to legally download at a reasonable price like Spotify is a much better way to combat the problem than a heavy-handed legislative and regulatory regime.
With the average teenager unable to easily buy music online because they don’t have credit cards and getting pre-paid cards just isn’t a workable solution.
LSE also poured water over the claim by the music industry that they lost £40billion a year through piracy: “According to the international industry lobby group,” says the LSE report, “the music industry and its artists lost out on more than $40 billion in revenue in 2008 because of piracy including file-sharing.
The paper states that the valuation of losses by right holders is way too high and essentially wishful thinking as you can't assume that an illegally downloaded track would have been bought in the first place.
They assume that most unauthorised copies would be replaced by the sale of a legitimate product if file-sharing was effectively controlled - the LSE paper said from the research the average download wouldn't have bought the music anyway, and only downloaded it because they could, and it was so easy to do so.
The LSE publication suggests that the decline in physical sales of recorded music can’t be attributed to file sharing alone.
Changing habbits in music consumption, the rise of legal digital downloads and the fact that people have far less money to spend should all be taken into consideration.
The Digital Economies Act should have allowed persistent downloaders to have their Internet connection severed, but a year on this hasn't really materialised so far, and it doesn’t look like it ever will.
ISPs have said they wouldn't want to be ones to police this new set of laws and human rights organisations and your average joe on the street has stated this would be unfair and unworkable.
While it’s true that illegal file sharing does take place on a huge scale in many countries, with Spain being one of the worst offenders with over 90% of all music being pirated these laws don’t look to have made a blind bit of difference.
The RIAA in America threatened to sue more than 30,000 individuals between 2003 and 2008, yet the level of file-sharing continues – so is this law just a lame duck and do we need to go back to the drawing board ?
The music industry does look like it’s finally beginning to understand new lucrative distribution models with the likes of Spotify signing deals with The Big Four music labels, which can allow music to listened to for a flat-rate – essentially all you can listen to for £10 a month. And this has had some real success in Europe as Spotify announced they’ll be in America soon and already has 1 million paying subscribers including yours truly.
But the report says the music industry must become even more flexible to survive: “There is ample evidence that music fans are ready to pay a contribution, providing it is a reasonable amount and the process is not too complicated or restrictive,” the paper concludes.
They added: “Consideration should be given to a levy on blank media use and consumer recording equipment. A levy could be included in the cost of an Internet connection - an ISP tax if you will, which would be then distributed to right holders, but this wasn’t considered last year.
Yes the music industry is in decline and they aren’t making as much money as the days when physical copies were king. The channels of distribution have changed and if they don’t change with it they will lose. Can’t beat them? Then join then and lets come up with a system that’s fair for all.
One thought on “London School Of Economics Says £40 Billion Losses From File Sharing Are Wrong”
LSE is certainly not the first to say the loss figures are wrong. That very argument about assuming each download equates to lost sale has been floating around for the last decade. The US government concluded, a year ago, that the figures were pretty much bogus and should not be relied on. LSE is a bit late to this game.