Music industry shows movie makers the way with illegal downloads
While US film group seeks to block websites streaming its work, digital music is the norm
Netflix increasingly produces its own content, creating further competition with the film and television studios rather than offering a direct outlet for their content in the way Spotify does for the record labels. Photograph: Jonathan Nackstrand/AFP/Getty Images
Rapper Big Sean and singer Jhene Aiko at the Spotify Best New Artist Nominees celebration in LA, California: it took streaming applications such as Spotify to move people from illegal to legal consumption. Photograph: John Sciulli/Getty Images for Spotify
The recording music industry offers a cautionary tale to the US Motion Picture Association, which this week went to the High Court in Dublin to force major internet providers to block websites illegally showing their work.
The music industry still takes people to court. However, they do so in far fewer numbers. Following years of trying to stop illegal downloads , the industry finally realised that it is better to work with those who want to download.
The Motion Picture Association is seeking to block Irish internet users from viewing three streaming websites: Movie4k.to, primewire.ag and onwatchseries.to.
It previously won blocking orders in the United Kingdom, Norway, Austria and Denmark but the cases taken against Napster and Pirate Bay have shown that blocking orders only work temporarily. The people behind them create new domains and proxies. Internet-savvy users happily follow, particularly if they are well versed in hiding their internet protocol (IP) addresses and using virtual private networks.
It has long been clear that people do not take the threat of prosecution seriously. So what can we and the Motion Picture Association learn from the recording music industry? Essentially, consumers want value.
They will download content based on price, quality, quantity and convenience, as has been shown by successive British Intellectual Property Office (IPO) surveys.
Fall in music piracy
Consequently, it took streaming applications such as Spotify, offering a large back catalogue, an easy-to-use “app” and an affordable cost with its “freemium” pricing strategy, to move people from illegal to legal consumption.
This is not to say that the major recording labels are to be praised for vision. Famously, they had the opportunity to commercialise Napster’s Peer-to-Peer format into a legitimate business in the early 2000s but did not.
This now looks like a costly decision. However, they have perhaps made up for it by striking favourable licensing deals with streaming subscription services, bringing significant revenues to an industry that was on its knees.
Today, over 100 million people pay for digital music streaming services. Goldman Sachs now predicts that the recording industry’s revenues will jump from $15 billion to $26 billion (€14.1bn to €24.4bn).
This rise in revenue is matched by a decline in music piracy. A European Commission study conducted in the early days of legalised streaming, between 2013 and 2015, suggested that every 47 streams led to one less pirated song.
Furthermore Music Business Worldwide (MBW) and the International Federation of the Phonographic Industry (IFPI) have shown a remarkable decrease in piracy in early-adapter countries such as Sweden and Norway.
In fact, the Norwegian branch of the IFPI reported that music piracy there dropped from 80 per cent in 2009 to 4 per cent in 2014.
So is this model replicable for the Hollywood film industry, given that the streaming model already works for television?
Netflix and Amazon Prime are both successful. So far, the piracy of the works they show has fallen significantly. However, the reality remains that nearly a quarter of all films and television watched in the UK is pirated.
Furthermore, Netflix increasingly produces its own content, creating further competition with the film and television studios rather than offering a direct outlet for their content in the way that Spotify does for the record labels.
Meanwhile, fragmentation in the film and TV industry and bitter rivalries means that individual subscription services can only offer a limited selection of programmes. Such limited services do not appeal to today’s consumer.
Consequently, it explains why piracy remains an issue in this industry when consumers can access illegal streaming websites that offer much larger back catalogues, conveniently in one place and just a click away.
Music streaming is competitive, too, but the big players can still supply large back catalogues and a superior offering – the quality of the product overwhelms the risk of behaving illegally.
Today, there are signs of consolidation between the major players. However, the decline in piracy still depends on the ability of the recording industry and legal streaming services to react to technological innovations yet unborn.
Although piracy has declined, the rise of subscription services has done little to improve the royalties musicians receive, since that largely depends on the deals they made with the record labels.
Appeals to the morality of consumers are useless, despite our pretensions to honesty. Tidal, the music streaming platform unsuccessfully tried, saying that it was “the artists’ label” and would better reward them. The public did not care.
Dr Gary Sinclair is a lecturer in marketing at Dublin City University