Has Piracy Ever Killed An Industry?

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Throughout the decades we've all heard that battle cry that piracy is killing the music business. But is it really? Since mix-tapes music fans have continually copied music illegally and the industry is still alive today. The film and TV industry cried wolf with the onset of the video age, and there industry is thriving like never before. Instead of blaming the messenger, i.e. that consumers want to own their music no matter what device or service they need to play it on – once they have paid for it. The recorded music industry should be taking an inward look at its own practices where it can easily be claimed that numerous record labels rip-off artists in a morally bankrupt manner. Furthermore, the ex-Director of Research at industry body the IPFI, Keith Joppling has clearly stated that he knows of no study ever undertaken whilst under his watch that unequivocally points to illegal file-sharing as being the main cause for declining recorded music sales. Let's also be very clear that it is independent labels that get caught in the crossfire, despite the fact their deals are a lot more "fair and equitable" than major label record deals.

Whilst yes, physical sales have been declining on the recorded music side, publishing income has been increasing year on year and so has live touring income for artists. The truth of the matter is that this is no different for artist's from any other decade. Despite records making money for labels, artists are told they have not recouped, even when the label has recouped numerous times over on the sales of that same artists music. So whilst an artist may NOT be recouped, a label may have made $2 million gross on the album release.

There is no industry in the world that would even dream of getting away with the following scenario that the music business has gotten away with for decades.

A label advances an artist say $200000 to record an album. Whilst the label wholesales the finished record, to music retailers at say $10 per record, the artist is only paid around a 10% royalty (after producer and packaging deductions – yes it usually starts off at 16 – 18%, but then artist have pay producer points out of their cut, and then their are lots of other deductions labels charge against the artists royalty) so $1.00 per sale. But the artist only starts to see their payment once they have paid back their $200000 advance via their $1.00 per record unit sale. The label refers to this as recoupment.

So in essence a record label only has to sell 20,000 records to recoup its initial advance of $200,000, whilst the artist needs to sell 200,000 records before as an artist they begin to see a cent. By this stage the record label has already made 2 million dollars gross from the 200,000 record sales (whilst the artist has not made a cent). If the above is not a form of piracy – then TMV asks what is? It gets worse. Even after an artist has recouped the advance for the label, the record label still owns the artist's music.

A simple analogy depicts it better. You borrow money from a bank to purchase a home, you pay back the loan you own the house. In the music business as an artist you are given a high interest loan (advance), whereby even if you pay it back via what in any other industry would be regarded as illegal terms – the record label still owns your house (i.e. your music).

Now lets be clear here, TMV does not support piracy or the illegal copying of copyrighted content in any manner whatsoever. However, the recorded music business does need to look inwards first and clear up what are quite clearly unethical business practices! If labels want to be taken seriously when screaming blue murder about file sharing sites by government and music punters alike, then it's about time the recorded music industry also began providing BALANCED recording agreements – along with timely and accurate accounting procedures.

Piracy has been around for numerous decades, and the music business is as vibrant as ever. The only people feeling the pain are recorded music labels. Artists have rarely seen a pay-cheque from any recorded music sales anyway, so artist's pain has not increased in any quantifiable way.

On a final note start paying "fair and just royalties" to artists and open up licensing so if a consumer pays once they have every right to use the track on which ever hardware and/or software device they so choose and you have a win-win situation for all concerned. How much piracy have the labels stopped by preventing Spotify from launching in the US? TMV hope the labels are listening….

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