Who and what are we taking music from?

Before the dawn of the Internet, a lonely and friendless time I imagine, sharing meant the physical material exchange of a specified good. Now that good has become immaterial, and the exchange no longer has to take place face-to-face, or even through mail.

The good at hand is music. A file, which can be compressed into MP3 format, and sent out for anyone and everyone to hear. We may call this relationship ‘sharing’ but in reality the majority of people sharing music online have no concern for whom they are sharing it with. Nor do the people illegally downloading it consider where they are getting it from, short of it being the source for some next generation super virus. File sharing seems to be a victimless crime. Clicking a mouse can’t make me responsible for someone’s financial ruin, can it?














No, actually, because just one click doesn’t seem to matter much. But once the group mentality begins to unfold, we could find thousands, potentially millions, of people illegally downloading a single song or CD. Some believe if there’s a victim, it’s some superstar diva, or over the top rock star that will be losing money, and they already have more money than they know what do with. This may be true, but it is not the whole truth. There are three things we must recognize about the way music is traditionally sold. First, is how the sales of a single CD or album breakdown.

A Rolling Stone Article from October of 2004 gave us a breakdown (although not a recent one) of the cost that goes into the average priced CD.

$0.17 Musicians' unions
$0.80 Packaging/manufacturing
$0.82 Publishing royalties
$0.80 Retail profit
$0.90 Distribution
$1.60 Artists' royalties
$1.70 Label profit
$2.40 Marketing/promotion
$2.91 Label overhead
$3.89 Retail overhead

This is the breakdown of the average CD priced at $15.99, a price you would often see at retail outlets such as Best Buy, Target, or Wal-Mart, which, together, form half of all major label distributions. This also means that the artist themselves only receive around 10% of the final sale of a CD. So if you plan on illegally downloading a CD online, instead of paying the outlandishly high price of $15.99, think about the union, the packager, the publisher, the retailer, the distributor, the overhead, and the record label itself. Also keep in mind the effective ad campaigns, and marketing that went into making the consumer aware that the artist has created new stuff, and where you can buy it. Promotion makes 15% of the CD’s profits, 5% more than the artist themselves, which tells us that there must be something 50% more valuable about a promoters job than the artists work itself.

The other issue of concern is the way the artist makes his or her money. In the record business an artist signs a record contract with a music label, hopefully a major one. This label will give the artist an advance. They are making an investment in the artist and their music. The advance will seem very generous, 1 million dollars. This will be split among the band members and manager(s) and taxed until $1 million turns into $100,000, for a four record deal. The record contract will come with the condition of high sales. By contract, the artist is required to sell X number of CD’s. If the artist doesn’t make those sales, he or she will be in debt to the label.

Most artists are currently in debt to their label.

They remain obligated to perform live concerts, which bring in great profits for the label and allow the artist to make extra cash through merchandising. In fact, for an artist to reach the sales expectations it would take to push them out of debt, their album would need to hit gold within the first year. That is over half a million records sold. This puts a great deal of pressure on the artist to sell well, which often times remains out of their control from the mistakes made by those in marketing and promotion.

The final issue is the actual effect illegal downloading can have on major record labels, artists, and the music industry itself. RIAA.com references a study that shows the decline and effects of music piracy.

“One credible analysis by the Institute for Policy Innovation concludes that global music piracy causes $12.5 billion of economic losses every year, 71,060 U.S. jobs lost, a loss of $2.7 billion in workers' earnings, and a loss of $422 million in tax revenues, $291 million in personal income tax and $131 million in lost corporate income and production taxes. For copies of the report, please visit www.ipi.org.”

If these statistics are accurate, 71,060 jobs should be more than enough to cause concern. However, these statistics may be supported by some anti-piracy organization or even worse, completely unrelated to piracy in the first place. What we should recognize is that the music industry is a very large part of the American economy. And much of this illegal downloading takes place outside of our country, where our anti-piracy laws are of little use. So the next time you hear a song on the radio from a new artist you enjoy, figure out where you’re going to get $15.99, drive to the nearest music retailer, find out they don’t have it, drive to the next retailer, realize they don’t have it either, go home and pay a buck a song to download it on iTunes, (which has no packaging, promotion, distribution, or material value) only to figure out the other 11 song on the album totally blow, consider the icky feeling you would have felt on the inside if you would have stolen that CD online by illegally downloading it.

-Kyle