recording industry

Chart of the Day

??Business Insider

The overall conclusion is that the music industry is actually doing much worse than the Bain chart implies:

10 years ago the average American spent almost 3 times as much on recorded music products as they do today.

26 years ago they spent almost twice as much as they do today.

The reason for the dramatic loss of revenue?..not piracy…but intransigence and failure to change the business model.

Turns out that, somewhat unsurprisingly, the recording industry makes almost all their money from full-length albums

Equally unsurprising, no one is buying full albums any more

Pirates are the best customers

More evidence that pirates are record companies best customers:

Joe Karaganis, from SSRC, points us to the news that there’s been?yet another such study… and this one is from HADOPI, itself. Yes, the French agency put together to kick people off the internet for file sharing did a study on the nature of unauthorized file sharing, too. Not surprisingly (and consistent with every other study we’ve seen on this topic), it found that those who spend a lot of money on content… were much, much, much more likely to also get content through unauthorized means. HADOPI released the results in a somewhat convoluted way (perhaps trying to downplay this result), but Karaganis reformatted the results to make this clear:

Karaganis suggests, then, that HADOPI’s method of dealing with this — threatening people to stop their file sharing, won’t do very much to help the bottom lines of the entertainment industry:

If piracy is a sampling and discovery tool for high spenders, then suppressing piracy could depress legal sales. If?as I?ll argue at more length in a subsequent post?we?re in a mostly zero-sum market in which consumers are maxed out on discretionary media expenditures, then enforcement won?t significantly expand but at best just cannibalize one media sector for another. Music, games, and movies, let?s say, competing for the same discretionary dollars?and all of them competing with rising, increasingly non-discretionary internet access and data charges. If we?re in this type of market, then HADOPI is just in the business of eliminating its best customers. Good luck with that business model.

And suppressing the means of communication at the same time — collateral damage for no good purpose. Brilliant!

Why the Recording Industry is going broke

The clue here is that it isn’t because of piracy, but you can see why they need draconian laws to protect their nice little cartel, they simply just suck at business and they want governments to protect their sorry asses.

Pirates vs. CopyrightThe RIAA’s “business plan” is even worse than I’d guessed it was.

The RIAA paid Holmes Roberts & Owen $9,364,901 in 2008, Jenner & Block more than $7,000,000, and Cravath Swain & Moore $1.25 million, to pursue its “copyright infringement” claims, in order to recover a mere $391,000. [ps there were many other law firms feeding at the trough too; these were just the ones listed among the top 5 independent contractors.]


If the average settlement were $3,900, that would mean 100 settlements for the entire year.

As bad as it was, I guess it was better than the numbers for 2007, in which more than $21 million was spent on legal fees, and $3.5 million on “investigative operations” … presumably MediaSentry. And the amount recovered was $515,929.

And 2006 was similar: they spent more than $19,000,000 in legal fees and more than $3,600,000 in “investigative operations” expenses to recover $455,000.

So all in all, for a 3 year period, they spent around $64,000,000 in legal and investigative expenses to recover around $1,361,000.


No wonder they get paid the big bucks