Analysis The British Phonographic Industry (BPI), the UK equivalent of the Recording Industry Association of America (RIAA) recently claimed that new research proves that illegal file-sharing is hitting labels' wallets hard.
In a survey of 3667 members of the public aged between 12 and 74, 17.8 per cent said they had downloaded music. Of those, 92 per cent - 600 people - admitted to using illegal file-sharing sites.
On the basis of this figure, and an assumed 48.78 million members of the music buying public, the BPI reckons some eight million Brits are stealing songs via illegal file-shares.
And they're buying fewer records, the BPI says. Among music downloaders, album spending was last year was down 32 per cent on 2002, and spending singles was down 59 per cent.
By contrast, UK album shipments have remained broadly flat over the past three years at around 232 million units, while the volume of single purchases has dropped 30 per cent year-on-year.
In other words, downloading music discourages punters from buying records. We have never been entirely convinced by the counter-argument - that downloaders buy more music, because they get to sample more of it - but the BPI's numbers also warrant closer scrutiny.
'Shipments' and 'spending' are not the same thing. The BPI admits that album prices fell last year. "Latest figures show that almost half of all CD albums now retail for under £10," the BPI notes, down from around £13, in our experience. So if the number of CDs sold remains the same - at around 232 million a year - of course the public is spending less. By around 23 per cent, according to those pricing figures.
So if they had bought the same number of albums in 2003 as they had in 2002, downloaders' spending would typically have dipped by around 23 per cent in any case. The fact it has fallen beyond that is a matter for concern, but the revenue lost to downloading - if it is indeed due to downloading - isn't as much as the BPI would have us think.
Economic with the actualité?
CD sales have not fallen, despite the fact that downloaders are buying fewer albums. That means that everyone is actually buying more albums, to make up the difference, and keep sales broadly static between 2002 and 2003. And don't forget that album sales have grown over the years to 2002, despite the Napster and Kazaa 'crises'. "Between 1998 and 2002, worldwide sales of recorded music fell by 18 per cent. Over the same period the value of sales in the UK rose by six per cent," the BPI said separately.
Actually, we say 'broadly static', but by the BPI's own admission - a point not made in its recent 'file sharing destroys industry' statements - UK album sales rose 5.6 per cent last year. That runs contrary to last week's BPI claim that "despite falling retail prices, album sales have remained relatively stable over the last three years".
Indeed, total album shipments yielded a 2.1 per cent increase in revenue to £1.112bn. In other words, the "falling retail prices" have led to rising unit sales and revenue growth and not the reverse, as the tone of the BPI quotation above suggests.
And for those who think 5.6 per cent might not be too much compared with earlier CD growth rates, don't forget that the biggest boost to the format was fuelled by the replacement of old vinyl LPs and cassettes, and that has largely come to completion now.
The BPI's numbers were this week paralleled by an equivalent set of numbers put out by the Australian Record Industry Association (Aria). It too notes falling CD single sales, but failed to point out that Australia's CD sales reached record numbers last year. 2003 marked the first time more than 50 million albums were sold, and sales of all music formats reached beyond 65 million, also a record. Sales have been rising since Napster et al launched.
Australians bought 7.85 per cent more CD albums in 2003 than they did in 2002. By contrast, single sales fell 16.5 per cent. The BPI said single sales fell 30.7 per cent to 36.4 million units. Singles-sourced revenue was down 33.6 per cent to £64.4m on 2002's figures.
In short, what's happening in both territories is that one-song sales are becoming less attractive. The music industry claims this is largely due to illegal file-sharing, but the BPI itself offers an alternative reason, in a statement put out earlier this year: "Price-cutting means 62 per cent of single CD albums now sell for £9.99 or less."
When the old 45rpm single died, the music industry turned to CD as a replacement, but not in the old, cheap one song on either side format, but as the digital equivalent of the old 12in 'maxi' single. Padded out with live tracks, demos and the like, these were generally only of interest to artists' hardcore fans, not the general public.
Single sales have been declining ever since, in part for that reason, also because CD singles generally yield less value than albums. Buy more that two CD singles and you'd have been better off getting the same three headline songs from the album. That's even more the case now that album prices have fallen.
Declining single sales have been accelerated by downloading, not engendered by it.
When the industry responds to this trend by releasing fewer singles - as it has - then the process speeds up. Again, the prime cause is not necessarily downloading. Indeed, the album figures suggests it isn't the source of the problem.
Most research suggests that downloaders generally target individual songs rather than whole albums. The emerging legal download sites may change that - most people don't mind paying to hear songs. What they don't like paying for are songs they don't like, which has hit single sales hard, and may yet impact album sales.
The Register has long argued that file-sharing services are more akin to the radio than the record store, just with a greater degree to programme your own playlist. In the 1970s and 1980s, kids taped radio shows to save spending money on singles. Nowadays, they download them. Either way, the revenue generated by the music industry is nil. And it wouldn't be much higher if either of those sources had been shut down.
The BPI's own research figure show that the heaviest downloaders are within the 12-19 age bracket. While that group accounts for 16 per cent of the music buying public, it accounts for 29 per cent of the downloading population. The BPI rightly notes that this group is a "key music buying audience". It's also the most financially constrained, and thus more likely to grab stuff for free when they can. For a start, that means that legal download services are going to convert fewer of them to sales, but crucially, if all illegal download sites disappeared overnight, the music industry would not see an equivalent rise in sales. It will have have to share teenagers' limited disposable income with DVD and computer game suppliers.
Anecdotal evidence from adults who have confessed to this reporter that they download songs suggest that, again, singles are the objects of choice. Sometimes it is songs heard on TV and briefly enjoyed. More often it's older material that is available on an album for which the remaining songs are not wanted. "I'm not paying 13 quid for one song I happened to like 20 years ago," is a common response.
The legal song sources will help alleviate this problem, and might even start to revive the single's fortunes. Certainly, most folk over the age of 19 - i.e. those who are working or about to start work - don't have a problem buying music, and the album remains a desired purchase thanks undoubtedly to tangible assets like sleeve artwork and that fact that it's ready to use at almost any time. No one really wants to boot up a PC to listen to music after a long day at the office. Equally, row after row of hand-written or inkjet-printed CD-Rs look like crap on your living room shelves.
So instead of bemoaning its fate at hands of downloads, the music industry should be highlighting and encouraging the growing demand for albums. Yes, singles are declining, but for many reasons -and not just the ones the RIAA, Aria and the BPI want you to know about.
The BPI rightly notes the growing presence of new online music companies, but doesn't mention the many hoops such companies have to jump through to license content. Or the fact that none yet cater for Mac or Linux users, effectively criminalising two constituencies which want the same access rights to music as other OS users enjoy. Or how huge swathes of desirable back catalogue are not available now, and not likely to become easier to obtain in future. ®
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