Are Canadians being "hood winked" on music piracy?

[Frankie3s]

A report that came out this week mentions that online music purchases have increased 60% over last year,

"Nielsen SoundScan Canada reported that just over 40 million digital tracks were sold on digital music services like iTunes in 2008, up 60% from a year earlier."

While purchasing of physical CD's fell 14%,

"At the same time, total album sales fell 14% last year to 36 million units, compared with 41.8 million units in 2007."

http://www.hollywoodreporter.com/hr/...064e3d0a0c3f36

Isn't this to be expected with new media technologies such as the iPod and other music players? Then wouldn't it be logical for the old media (CDs, Records and Tapes) to continue to fall in popularity as other more convenient ways of acquiring music (iTunes, Rhapsody) become available?

If someone owns an iPod, why on earth would they want to go and buy a CD when they can for the same price, buy the album on line and download it directly into their music player? So why are CD sales still being mentioned? That's like still reporting on the sales of records and tapes and saying "see, people are not buying these anymore so they must be pirating them" when evidence is clearly showing that new media sales are strong with a growth of 60% in 2008.

[SAN66]

They release these figures to track the transition from physical media sales to virtual media sales.

The more important figure to them is the 14% drop in total sales (regardless of media). This can be partly attributed to people picking and choosing their tracks. With CDs if you really liked a song, you would buy it and be stuck with some less favourable tracks you may not like, with MP3's you can just buy that one track and ignore other tracks you don't like. Still, thats probably a small part of the 14%, piracy takes the bulk of that 14% drop.

[thechampion116]

They release these figures to track the transition from physical media sales to virtual media sales.

The more important figure to them is the 14% drop in total sales (regardless of media). This can be partly attributed to people picking and choosing their tracks. With CDs if you really liked a song, you would buy it and be stuck with some less favourable tracks you may not like, with MP3's you can just buy that one track and ignore other tracks you don't like. Still, thats probably a small part of the 14%, piracy takes the bulk of that 14% drop.

agreed.

I don't buy CD's for the sheer fact that I may only be interested in only 1/2 the songs on the album and could care less for the rest of it.

There will still be a niche for CD's though, even when digital media takes over the music industry completely. CD's provide a physical media for people to collect.

[Super strokey]

I wonder if this includes things like rockband sales?

[sfu_lifer]

I wonder if this includes things like rockband sales?

I doubt it but it would be good if they did include it since Rock Band tracks sell like mad.
People in the digital age is all about instant gratification. I know if I hear a nice song on the radio, I tag it on my Zune and download later.

[darksith31]

I doubt it but it would be good if they did include it since Rock Band tracks sell like mad.
People in the digital age is all about instant gratification. I know if I hear a nice song on the radio, I tag it on my Zune and download later.

YAY!! Another Zune user! Add me to your friends list (mine is salamahoy).

[rilhouse]

If someone owns an iPod, why on earth would they want to go and buy a CD when they can for the same price, buy the album on line and download it directly into their music player?

there are many reasons to buy CDs:

- artwork
- have a physical copy of the media
- not compressed and you can encode to what ever format you want
- DRM free (for the most part) although iTunes is moving to DRM free anyway

i personally don't buy CDs but i know many people you have PMPs that still do. there will always be a market for physical media.

[rabbit]

> If someone owns an iPod, why on earth would they want to go and buy a CD when they can for the same price, buy the album on line and download it directly into their music player?

Because lossy format sucks the dong, and nobody should be paying money for it ... well, maybe if it were 25c ... definitely not a dollar.


> So why are CD sales still being mentioned? That's like still reporting on the sales of records and tapes and saying "see, people are not buying these anymore so they must be pirating them" when evidence is clearly showing that new media sales are strong with a growth of 60% in 2008.

Because CD still outsells everything else. If you sell 100 tracks a year, it's not difficult to grow to 160 tracks the next year. You have to take the actual units into consideration.



> I wonder if this includes things like rockband sales?

What isn't being included are things like concert ticket sales, where prices have skyrocketed, and souvenirs sold at concerts (t-shirts, etc). I'm sure used CD/vinyl sales have never been included, either.


PS. You're fooling yourself if you don't think piracy isn't hurting music sales.

[Madchester]

[i]>

PS. You're fooling yourself if you don't think piracy isn't hurting music sales.

Actually....

http://www.economist.com/business/di...ory_id=9443082

I've posted this article multiple times before.... but some people still miss the message that musicians are moving away from a CD/album based system and towards concert-driven revenue. The album to concert revenue split has gradually changed places over this decade.

People's preferences are just changing so that they'd rather pay for live music, than the recorded medium. Even with all the recession worries, Pollstar reported that 2008 US concert grosses exceeded that of 2007. Meanwhile, domestic film grosses fell year-to-year.

As the Warner Records exec told his shareholders: "The music industry is growing.... the record industry is not growing."

[rabbit]

I meant 'music sales' as in sales of music/songs, and everyone should know this. How do you pirate going to a concert? Fake tickets? I don't think those work too well. Fake t-shirts? Okay, this is possible.


> People's preferences are just changing so that they'd rather pay for live music, than the recorded medium.

I'm sure people would rather not pay for either, but since it's nearly infinitely easier to get music for free than it is to get into a concert for free ...



> Even with all the recession worries, Pollstar reported that 2008 US concert grosses exceeded that of 2007.
+
> As the Warner Records exec told his shareholders: "The music industry is growing.... the record industry is not growing."

But what are the actual number of people going to the concerts now compared to ten or twenty years ago? If it costs $100 to buy a ticket now, when $50 could have gotten you a ticket + album back then, sure, concert grosses are going to look pretty good these days. And I think the main reason why tickets are so expensive now is to make up for lost album sales due to pirating.

[Madchester]

How do you pirate going to a concert?

Bootleg concert trading. I need to re-activate my Dime a Dozen account. Whereas a record label may only release one live DVD or album for a tour, with popular taping bands like Radiohead you can get an entire catalogue of their tour performances online. This is especially useful for hearing/watching rarities and new material that haven't been relased by the recording label. It also lets you hear historical performances from bands who have disbanded; i.e., Pink Floyd playing DSOTM in full, while road-testing a full rendition of Animals on the same show.

Obviously this is an imperfect substitute to the live experience, but the wealth of online bootlegs (including the wealth of amateur Youtube concert videos) has made nary a dent in concert revenues. In term of utility-maximization and consumer surplus, consumers get (or feel they get) better value for their money with concerts than recorded music, even when there's a mark up premium in the former.

It's no different than the coffee price phenomenon (see Tim Harford, "Trust Me I'm an Economist" on the BBC... Dan Ariely of "Predictably Irrational", etc.) where the price of coffee has sky-rocketed in recent years, even though the actual cost of coffee hasn't. It's just that the producer (Starbucks and co. for coffee, Live Nation and co. for concerts) have recognized that consumers are willing to pay more for greater (perceived) value in their purchase. Obviously there's some price point where consumers will shy away from the product, but the producers have done a good job in evaluating consumer preferences, and thus their prices.

The recording industry, on the other hand, have done a tripe job in evaluating consumer preferences and value for their product, hence their declining fortunes in recent years. They've tried many gimmicks in increasing the value of a CD, whether it's interactive content, bonus DVD footage, etc. but they're just losing touch with the general public.

If you're interested in learning more about this shift to a concert-driven music industry, read up on the recent 360 artist deals, especially those given by Live Nation. The company's laughing it's way to the bank whereas the record labels still haven't got a clue.

[rabbit]

> In term of utility-maximization and consumer surplus, consumers get (or feel they get) better value for their money with concerts than recorded music, even when there's a mark up premium in the former.

They don't get better value with concerts when downloading/pirating music is free. Make concerts free, and then see which people prefer: music or concerts.

What do you think people prefer to download, studio albums or live bootlegs?

edit// You're comparing buying a CD to going to a concert, which I think it wrong.
My comparison is:
1) buy a CD = have less money for other things, or
2) pirate music = have money for other things, such as go to concerts.


Anyhow, this is getting off topic. The answer to the original question is: no. I'm sure lots of people are not paying for music that they would have if they could not get it for free. However, music labels do exaggerate the problem.

[Super strokey]

Ill pay more than a few pennies to see a concert of a band i want to see (over 100 bucks for iron maiden and it was sooooo worth it). But I sure wont pay for a ****** CD.

I thikn its a load of crap the way the music industry is complaining. They are making ******** amounts of money already and because they refuse to embrace the way things are changing.

Things we know that arnt included in their "we are so poor but still make millions numbers"

Rockband sales (which are high and not at all cheap)
Concert sales (which are way way up and tickets are not cheap)
Band related stuff like memorabilia (which again, is up for current and older bands)

[Madchester]

They don't get better value with concerts when downloading/pirating music is free. Make concerts free, and then see which people prefer: music or concerts.

Ill pay more than a few pennies to see a concert of a band i want to see (over 100 bucks for iron maiden and it was sooooo worth it). But I sure wont pay for a ****** CD.

i.e., the absolute and marginal utility for a concert is greater than that for a recorded album. Even if both were free, people would prefer the live experience over the recorded one. Likewise, if you had a $200 budget on "music" per year, then you'd still choose the concerts over the CD, since the consumer perceives more value/utility in the former than the latter.

It's really economics 101. The full Economist article expanded on the topic more thoroughly. It noted how artists used to have tours as a promotional vehicle for their album releases. Today, with consumers assigning so little value to recorded music, it's become the promotional tool supporting a concert tour.

[Eternia]

there are many reasons to buy CDs:

- artwork
- have a physical copy of the media
- not compressed and you can encode to what ever format you want
- DRM free (for the most part) although iTunes is moving to DRM free anyway

i personally don't buy CDs but i know many people you have PMPs that still do. there will always be a market for physical media.

Yup, I'd still buy CDs for the right price. Either it's usually cheaper than buying each track individually or I can't find it elsewhere. Physical copy is a plus. Need that Canadian dollar to go up though !