Are downloads really killing the music industry?

Valerie | 15 Jun 2009, 15:44

Research commissioned by the Strategic Advisory Board for Intellectual Property published in the Guardian recently revealed that 7 million people “use” illegal downloads in the UK, “costing the economy billions of pounds and thousands of jobs”.

It followed the news that a coalition of creative industries organisations, including Pact, the broadcasting and entertainment union Bectu, the BPI and the UK’s biggest trade union, Amicus/Unite had, in a letter to the Daily Telegraph, outlined its calls for increased pressure on the government to act against illegal downloading in the forthcoming final Digital Britain report, stressing that failure to act would lead to widespread job losses in the creative industries. A consumer poll also found that the majority of British adults would back stronger government intervention against online piracy if it helped protect media industry jobs.

However, an article in the Guardian asks whether it is disingenuous to count each of the millions of music files downloaded each day as a “lost” sale. Instead, Guardian writer Charles Arthur argues that perhaps filesharing isn’t music’s biggest foe.

Comparing sales figures for consumer spending on entertainment, which includes music, DVDs sales and rentals and video games, he proposes that what appears to be hurting the music industry most is growing competition from the games industry. The figures show that whilst total spending has grown – music spending is being squeezed, with spending rising dramatically in the games industry, from £1.18bn in 1999 to £4.03bn in 2008. 

Summing this up, he said:

“... the reality is that nowadays, one can choose between a game costing £40 that will last weeks, or a £10 CD with two great tracks and eight dud ones. I think a lot of people are choosing the game - and downloading the two tracks. That’s real discretion in spending.”

Clearly there is much the music industry can learn from the games industry – Arthur suggests for example that consoles / new business models that lock consumers into buying its products is perhaps the way forward.  With subscription-based services from the likes of Spotify growing in popularity, innovation has an important role to play in helping the music industry to fight for a larger share of the consumer’s wallet and ensure customers keep coming back. It is this alongside the file sharing challenge that the industry needs to address if it is to survive and prosper.