The Internet and the Music Industry: Friends or Foes?

When Radiohead decided to release their latest album online, and let consumers decide how much they wanted to pay for it, some wondered if they were marketing geniuses, or about to lose a huge amount of money on a publicity stunt. After all, this kind of music distribution lies at the centre of a major controversy: is free music available over the Internet a benefit to the music industry, or a major source of lost revenue? On the one hand, it can be argued that when consumers can get a free download of some songs, then those consumers are more likely to buy the entire album, or buy other songs from the artist, as well as potentially going to the concerts and buying other merchandise. On the other hand, there are many within the music industry who feel that any time a person dowloads a song for free, without the consent of the people or company who own the rights to that song, it is theft. Without a comprehensive solution to the problem, illegal file-sharing will continue, and record companies and artists will not earn all of the money they are entitled to from the works they create and promote.

Taking a look at Radiohead's approach, one might simply say that such choices can be left up to the artists, as well as to the consumers. Unfortunately, there are a huge number of problems with such an approach. First and foremost, the artists are not necessarily the owners of any given song; nor are they the only one's who have a financial stake in songs, albums, and downloads. As Paul McGuiness, manager of U2 points out, the people who stand to lose or make money on music that is produced anywhere other than a particular artist's or band's own home operation, extends from the artist to producers, managers, tour promoters, and people who work for performance venues, store owners where music is sold, the owners of websites where music is sold, the vast number of people working for entertainment and recording companies, the Internet Service Providers (ISPs), radio and television stations that use the music for their content to attract listeners or viewers and advertisers, and the list goes on and on.
In addition, even if artists were willing to sell their music at a particular price, or give it away, they still do not have control over what will ultimately happen to it, since it is so easy for people with the right techonology to convert files to a format that can be shared over the internet. McGuiness also points out that even when Radiohead offered its new album for free, people still copied it illegally. That is, people could have gone to Radiohead's site directly and downloaded the entire album for free, completely with Radiohead's consent. Yet, many people still went through sites where music is available in copied formats, essentially illegally, to steal the same album they could have obtained for free anyway.

But really, how big of an impact is the Internet, and illegal downloading, having on music industry? The answer depends on who is asked. For example, some compare it to the same kinds of issue that came about when cassette tapes were first beign sold, and people could tape songs off the radio, or tape albums and share them with their friends. Similarly, anybody with a CD burner on his or her computer can copy any album over and over again, and give those copies away, or even sell them illegally. Still,because people can obtain copies over the Internet, rather than from their friends, it is possible for thousands upon thousands of illegal copies to be made from a few sources, rather than, for example, a few friends to copy each others' CDs.
At the same time, some sources claim that the losses from Internet file sharing are not the only reason that record company sales have been declining. For example, one analysis of the Canadian music industry points to a variety of reasons, ranging from stores like Wal-Mart keeping prices below certain level, to a competition between multiple forms of media, to fewer new releases being offered. So it may be, for instance, that consumers only have a certain amount of money to spend, and if they spend that money on a DVD or a video game, that is less money to spend on CDs. One interesting issue I did not see addressed was how the impact of legal Internet music sales services, like iTunes impact the overall record industry sales. For instance, if consumers can buy one popular song for 99 cents, rather than buying an entire album for roughly fifteen dollars, or even a CD single for four or five dollars, then isn't there a loss of revenue from these legal ways of getting the music?

The music industry has pursued many lawsuits and other legal attempts to try and stop illegal file sharing of copyrighted music. For instance, a recent unsuccesful lawsuit in Europe tried to force ISPs to disclose Internet users who were using illegal file sharing programs. Even when such lawsuits are succesful, they have not had the impact of shutting down illegal file sharing of music. People are left to debate whether the music industry really is losing money in the way it says it is, and for the reason it says it is, or if it is just an attempt to control distribution, or earn more money off the same old material. This question is not an easy one to answer. But I would tend to side with those who stand to lose money from people using their work without having provided them with compensation.