Since the launch of the first free downloads site (Napster) in 1999, CD sales worldwide have fallen by over 6% and revenues for the big five record company’s fallen by over 9%.
The Record Companies are blaming this dramatic downfall in sales on the easy availability of free music on the Internet and the ease at which it can be downloaded. Up until recently the record companies would have nothing to do with the Internet. Until recently they didn’t realise just quite what they were missing out on, the worlds biggest market.
How many legal downloads of music from the major record labels were there? Hardly any. Because, until now, for the most part major labels have kept their music off the net. The major record companies' response to piracy wasn't to establish alternative legitimate sites where fans could pay for their music. Instead, they unleashed their lawyers.
They attacked the release the of the first portable Mp3 player, the Diamond Rio, claiming it was a device that blatantly encouraged piracy. But they were ‘wrong’ said a judge, it could also play perfectly legitimate mp3’s, freely released as a marketing tool by up and coming bands. The record companies lost and now there are hundreds of mp3 players available.
Their next step was to attack the websites themselves. The first attack was on the popular mp3.com. Industry lawyers crushed the site in the courts and forced it to stop offering downloads. But the arch enemy was Napster (2) but even if they succeed in this battle, other free Mp3 sites are sure to appear.
Recently the big five companies began to fight back against the illegal download sites. Finally, major labels have realised the only long-term hope of dealing with music piracy on the internet is to offer fans a legitimate, equally convenient alternative: official downloads from company sites which are paid for just as fans now pay for their music in the shops.
Having started so late, the record companies are at a major disadvantage. Music fans using the Internet have got used to Internet downloads being free, and it is going to take a lot of persuading to make them start paying for it.
This task is not going to be made easier by the strange methods the record companies will use to sell their music. Firstly it will not be in Mp3 format. It will be in a variety of encrypted formats which paying customer’s will then only play on their computer.
The other major problem with these is that most will not be able to be played on portable mp3 players. For example Sony music downloads will only play on a Sony mp3 player. And Sony products will not play music from other official sources.
The advantages to this system will be that the record companies will be able to make available better quality mp3’s and with faster download speeds. As the Internet develops it is likely that the record companies will have to involve themselves a lot more.
Music will always be available through the Internet, and the record companies are beginning to head in the right direction to do that properly. The debate will rage on, but however you look at it, the way we buy and listen to music is evolving. Now it’s all down to whether the record companies can keep up.