How are illegal downloads damaging the record labels and overall music industry?

As illegal downloading has cannibalized consumer spending on music, questions have circulated as to how drastically this will impact the major record labels and overall music industry. We turned to our panel of Zintro experts and asked them to share their knowledge. Here’s what they had to say:

John Latimer, founder of Undercurrents and Latitunes Music Publishing, feels that the record industry has drastically changed in the last decade, particularly because of the Internet. Although artists now have greater opportunities for exposure to the masses for free, this ‘freedom’ is not worth anything monetarily. Thus, illegal downloads hurt those whose sole focus from music is profit, but “artists who are not in it for the money can focus their energy on creating content instead of building anxiety by running after those whose try to steal their recordings.” Latimer advises that musicians focus on the content and “be so good that they get noticed and then ask for donations,” allowing truly great artists to benefit emotionally as well as financially.

Kathy Douglas, an expert with over 25 years of experience in direct sales with a focus on the music industry, explains the severity of illegal download sites and file sharing on the music industry. Because record labels and industry related companies in the past relied wholly on the sales of music to consumers, these sales have dropped significantly over the past ten years as a direct result of music piracy. Douglas understands that “job losses, downsizing, quality control, artist development, and everything that has made music a successful industry in the past, has been affected by the continuing loss of revenues” that result from music piracy.
Douglas believes that more government legislation is needed to inhibit these types of illegal activity.

Vincent Scuderi, an accomplished music professional with more than 25 years in the music publishing industry and 12 years in music clearance and licensing, agrees with Douglas that illegal downloading has drastic effects on the music industry worldwide. Not only has music piracy substantially deflated the demand for full albums of material, “it has also altered an entire generation’s perception and expectations relating to an industry that hitherto survived just like any other born in the Industrial Age, by sales of units of Product.” Unfortunately, while Scuderi knows that developing a new business model in imperative, “as of yet nothing seems to be able to replace the loss that illegal downloads have created.”

Wayne Sinclair, creator of the Media, Sports and Entertainment Group, says that “a slew of new artists will tell you that with the wider distribution of their music through illegal downloads, they have been able to convert the increased exposure into consistent, sustainable live touring careers.” Further, Sinclair understands that this issue has a socio-cultural component. Referencing developing countries like Jamaica, where piracy was a problem even before the download era, Sinclair knows that these artists’ main source of income was always live music. Therefore, this “technological twist on an old nemesis is hardly more than a blip on the radar” for such countries. The extent to which the U.S. industry has been damaged has as much to do with the slow pace at which the institutional framework has adapted to the opportunities presented by the new technology as the technology itself. Like Scuderi, Sinclair knows that it is now up to the industry to create innovative new business models to convert disadvantages to advantages, and to “not demonize what most people under the age of 20 know as the only way to acquire music.”

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