THE AFTERMATH OF P2P NETWORK DOWNLOADS IN THE MUSIC INDUSTRY AND RIAA {THE NEW DIRECTION OF THE INDUSTRY}

THE AFTERMATH OF P2P NETWORK DOWNLOADS IN THE MUSIC INDUSTRY AND

RIAA {THE NEW DIRECTION OF

THE INDUSTRY}

RIAA

• Recording Industry Association of America

• Create and distribute 90% of recorded music sold in the US.

• Formed in 1952

P2P= Peer-to-Peer Downloading• Resulted in-

– Lawsuits due to copyright infringement.– Wide debate as to legality of P2P and file

sharing.– Overall acceptance of music piracy.

Legal and Illegal Differences?

• Downloading itself is legal.– But not for free.– Exceptions

Cracking Down on File Sharing

• RIAA tends to target college students, as well as accounts with over 1,000 songs/files.

• RIAA sued 261 P2P users in 2003 for downloading copyrighted music.

• Sued over 18,000 individuals for sharing, with about 4,500 cases settling for $4,000 per case ($18 million).

• RIAA CEO: “ P2P downloading has been contained. Not eliminated, but contained.”

Contained?

• Con-tain [verb]: – Prevent (a severe problem) from

increasing in extent or intensity.– Control or restrain.

Contained… Continued

• Currently– At least 1.5 Billion songs are available for

free swapping at any time on P2P networks.

• In 2003– 36 million internet users download music.– Half (18 million) swap files outside

traditional P2P or paid services.

Contained… Continued Again

– 7 million users have downloaded files from other users iPods/MP3 players.

– 10 million users get their content via e-mail or instant messaging (IM).

– Overall, 48% use sources other than P2P networks or paid services for content.

• Other sources can include music and movie websites (illegal sites), blogs, online review sites, etc.

Light at the end of the Tunnel?

• RIAA has sent cease and desist letters to Grokster, Bearshare, and WinMX.

• Limewire is currently the most popular P2P service. BitTorrent as well.

If you Can’t Beat em’, Join em’

• Record companies, and the RIAA alike, are slowly, but surely converting the majority of their music sales, to a digital form.

• But is that necessarily a good thing?

Other Recent Problems

• 2006 results– Album sales dropped for a seventh

consecutive year at the end of 2006.– Dramatic increases in the sales of digital

music tracks helped keep the industry afloat.– 588.2 million album units were sold last year

(down 4.9%).– 581.9 million digital tracks; 65% increase

from 2005’s 352.7 million sold.

The Point?

• How much does a song on iTunes cost?

The Point?

• How much does an album on iTunes cost?

So What’s the Problem?

• It is cheaper, and more accepted by the general public to download the hit single or two. So, .99 cents X 2= $1.98

• iTunes album download, $9.99 to at least $19.99.

• There’s not as much of an incentive for the customer to purchase the full album, but to just download the singles.

The Future?

The Future

• iPhone– Possibly replace the iPod, and be the final

step in MP3 and cell phone convergence.

• Music as a utility?

• Web 2.0?

Final Slide I Promise

• Do I download? – Yes

• Do I think downloading is a problem? – Yes

• Do I think something should be done? – Yes

• Will I pay for music in full if I have to ever again? – Yes