File-sharing was on the tip of everybody’s tongue in the early to mid-2000s. While file-sharing might not be the hot-button topic it was in 2005, the concept is still around and it doesn’t seem like the file-sharing sites in existence are going to be going anywhere anytime soon.
But, how do file-sharing websites really affect the artists that make the music and the people behind the scenes? There may not be a clear-cut answer to that question.
Are Illegal Downloads Costing The Music Business Money?
When it comes to file-sharing for artists and people behind the scenes in the music industry, the biggest issue they face it the potential loss of revenue. While people that use file-sharing sites don’t pay for music that they’re downloading, there’s some evidence that people who use file sharing sites may actually buy more music than those who don’t.
In fact, individuals that use file-sharing sites may buy about 30-percent more music than people who don’t. Many people who use file-sharing sites claim that they use them to sample music in order to avoid paying for songs they don’t really want.
However, many large recording companies are suffering due to an overall decrease in recorded music sales. Many believe that this is simply a transition period for most major labels though, as they work to figure out new ways to recoup the costs of recording music and producing albums without selling as many.
Who Is Going to Fill All Those Seats?
In 2013, the revenue that comes from selling recorded music is a considerably smaller percentage of their overall income than it was 20 years ago. Today, artists are making most of their money from touring, merchandise and, in some cases, endorsements.
In some respects, file-sharing may be increasing the amount of ticket sales a particular artist can make. A person that downloads an album without paying for it very well might pay for the concert experience – something they’ll never be able to download for free.
Many people behind the scenes are struggling to catch up with this business model, however. In the past, record labels generally paid for recordings and recouped the money spent, plus a profit on the album sales – leaving the touring and merchandise revenue to the artist.
In 2013, the smartest record companies are getting involved in touring and merchandise as well. Some are even building percentages of tour revenue into their contract with an artist because of generally low record sales.
What About Streaming Music?
Another reason we haven’t been hearing as much about file-sharing this year is because of the rise of streaming music. Services like Pandora and Spotify are offering free music to consumers, relying on ad-revenue or a monthly membership fee.
Spotify even allows users to put music in their library to listen to it anytime they want. Free users face short ads every few songs, but subscribers can stream unlimited music 24 hours per day for about $10 a month.
Many musicians and people in the music business believe streaming is really the wave of the future. However, recent issues with royalty rates paid to artists and labels have raised concerns.
While many think streaming services, like Spotify, are beneficial for the industry because they will help boost some record sales, ticket sales and create ad-revenue for a struggling music business, it’s true that most musicians only get less than a tenth of cent royalty payments for each play on a site like Pandora or Spotify.
Most within the industry believe that royalty issue must be fixed sooner or later so that artists can earn an appropriate amount for their creations, and there are those who are making a move to do so. For example, Arena is a new streaming site based on a model that gives an unprecedented $.21 cents to each artist per play, as well as 100% of all purchase proceeds.
Almost everybody agrees that the music business is in a very strange state right now. Small labels are growing; big labels are shutting down. Free music is all over the place, and we continue to gain access to it more easily each day.
Only time will tell how the industry finds a way to monetize an important asset – the art of music. However, for now, attempting to take down the file-sharing sites, which don’t seem to be doing much to hurt the business, likely shouldn’t be the top priority.
Marcela De Vivo is a freelance writer, yoga enthusiast and mother whose writing covers the music, health and marketing industries. She enjoys listening to music through platforms like Pandora, but when she finds an artist she truly loves, she will do what she can to support them. Follow her on Facebook and Twitter today!