Pirate Bay is to go legit. The notorious illegal file sharing site has been bought out by a Swedish company called Global Gaming Factory for about €6 million. Which probably means we’ll never hear of it again.
Music download sites such as Napster or Kazaa that made the illegal-to-legal move instantly lost their allure. People, it seemed, just weren’t willing to pay for something which they once got for free and, although Pirate Bay 2.0 is making lots of noises about “free content”, the terms and conditions will mean they’ll get your cash in the end.
While the buyout is dramatically hailed as a further nail in the coffin of illegal file sharing by the usual industry mouthpieces, it is anything but. There are any number of new Pirate Bay-style operations out there – all of which have learned from the mistakes of their predecessors and continue to refine their operations.
While it’s true that illegal downloading is on the decline, this is not the result of fining people or throwing them in prison. It’s all to do with the raft of new free (and legal) “streaming” sites now available. A UK survey recently found that among 14- to 18-year-olds (the age group that illegally downloads the most), only 26 per cent now do so compared with 42 per cent in 2008. And the figures suggest that they’re all moving to free streaming sites such as We7, Deezer and Spotify. You can get all the music you like on these sites (either free or as a “premium” subscriber); the one snag is you can’t download it.
The industry, however, still has a big problem with the “dinner- party pirates” – people in their 30s and 40s who download illegally simply because it’s more convenient than buying it. These people aren’t natural “pirates”, they simply find the legal sites unnecessarily inconvienent to navigate around.
These casuals can be easily pushed towards the legal streaming sites. But if streaming is the new downloading, then the big consideration here is which model will win out. At Spotify (whose founders Daniel Ek and Martin Lorentzon have made the clear market leader by signing deals with all the major labels), most of its millions of users opt for the free as opposed to the premium service (those who go “free” have to listen to ads every 20 minutes or so). Spotify won’t disclose how many premium users it has, but is hoping to increase that figure considerably with its iPhone application, which it is hoping to launch within the next few weeks – if Apple decides to go along.
The Spotify iPhone application will only be available to those premium subscribers who pay €9.99 a month. In theory, subscribers won’t ever have to buy individual downloads from iTunes because most everything will be on Spotify. They will also be able to listen to music even when no internet connection is available.
Spotify currently isn’t making enough money from ads to justify its “free” status, which is why it’s pushing users towards its subscription service. The site has added another two million songs to its catalogue and signed a deal with Stephen Fry that will allow users access to a number of Fry’s audiobooks for free, and estimates that the iPhone application will be sufficiently enticing to move a whole block of its free users to its premium service.
But will Apple bite? The company is considering the Spotify application and looking at how it will eat into its iTunes store. It is part of Apple’s terms and conditions that it can reject any application for “any reason they see fit”.
What comes down to is how much Apple values its iPhone sales over its iTunes revenues. The company has always said it makes little money out of iTunes, and the site exists only to drive iPod sales. If Apple allows the application, iPhone sales will increase because Spotify’s premium users not using the phone will be sorely tempted to switch over to it. It may well be in Apple’s interests to allow Spotify access – even if it means the slow death of iTunes.
