December 1, 2006
Invalid assumptions
This post isn't a link to an article, but just a rant.
I think it's high time we dispensed with the fantasy that every download of copyrighted content represents a lost sale. Seriously now: though sales of traditional media have arguably fallen over the past few years, the volume of copyrighted materials downloaded over that time is probably closer to the total sales figures for record companies than to the decrease in their sales.
The largest record label conglomerate in the world, Universal Music Group, did five billion euros in sales last year (it's a wholly-owned subsidiary of the French company Vivendi, and thus states its earnings in euro), with a total profit of around half a billion euros. That's a lot of music. But there must be millions upon millions of songs and movies swapped over the internet every day. I would be very surprised if the legitimate music sales business were larger than the volume traded online.
As the music companies' revenue is more or less intact - yes it's gone down, but not that much - it's absurd to say that every download is a missed sale. Just because a song is downloaded doesn't mean the user had more money than he did before, and doesn't mean that he's choosing not to spend money he had earmarked for music purchases. The choice isn't between acquiring content by paying for it or by not paying for it, it's between acquiring content by not paying for it and not acquiring it at all. Record companies seem to only understand the former choice. Consumers deal with the latter one, because they're already spending as much as they can afford on music.
Yes, the advent of digital file sharing has dramatically affected and continues to affect the business of selling content. No questions there. But people will always spend money on things they're willing to spend money on. What we're seeing with downloading is largely people acquiring content they would have otherwise done without. Until the labels realize this, they'll come up with increasingly breathless and irrational solutions like this one.
