IFPI, UK Police, Credit Card Companies Push People To Pirate Music, Rather Than Pay For It

from the did-they-really-do-that? dept

Fri, Mar 4th 2011 7:48am — Mike Masnick

Bizarre move out of the IFPI. It's gleefully announced a new deal, in conjunction with the London Police and Visa and MasterCard to cut off credit card services to online music stores who the IFPI accuses of selling infringing MP3s. This is really targeting sites like MP3Fiesta, which is sort of a modern version of Allofmp3.com. Of course, what they seem to be missing is that both of these sites were examples of people, who would otherwise likely be downloading totally unauthorized versions, being willing to pay for MP3s at a much more reasonable price. What I never understood was why the music industry never realized that these sites actually showed a business model that worked. Tons of people were happy to pay for the music when the prices seemed much more reasonable. What these services really showed was how much the industry has artificially inflated the price of music.

But, of course, in cutting off credit cards to those sites, two simple things are likely to happen in response: first, those sites will simply find alternative payment means. That may still limit some, but it hardly stops these sites from existing. But, more importantly, if people can't get music at these prices, it seems a lot more likely that they'll shift to totally free options, rather than go back to paying $0.99 per song (or more!). So, effectively, all this move really does is drive more people to stop paying for music. Is that what the record labels pay the IFPI to do these days?

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Filed Under: credit cards, liability, piracy, uk
Companies: ifpi, mastercard, visa

37 Comments

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The eejit (profile), 4 Mar 2011 @ 7:01am

He, I'd much rather they didn't use money I pay in for this. I'll be speaking to my local Met Comissioner very soon.
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Anonymous Coward, 4 Mar 2011 @ 8:12am

The funny part?

The IFPI stats show that 15 markets seen growth in 2010 and most of them are piracy heavens but they only looked at Sweden and South Korea saying they grew because of though laws LoL
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Spaceman Spiff (profile), 4 Mar 2011 @ 8:29am

Choose your poison, or pleasure
Personally, I no longer purchase major-label music. I buy CDs directly from artists. At least I know where most of the $$ goes to, and it helps them establish a real relationship to me. And, I know they have no issue with me ripping their CDs to mp3 or other mobile format in order to play their music on the road, or otherwise. Finally, most of these artists don't mind if I give a couple of these mp3s to friends in order to turn them on to the music the artists are creating. In the long run, this is a benefit to them (free advertising).
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Black Campbell, 4 Mar 2011 @ 8:48am

I've been of similar opinion, as well, Mike. Several of my favorite bands don't get US release for their albums. The music and entertainment industries (publishing included) are stuck old thinking and it's been costing them. Rather that rethink and restructure their business models, they relie -- as most big businesses do -- on government to curtail competition and new forms of delivery.
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Jose_X, 4 Mar 2011 @ 8:50am

Piracy is evil
because piracy successfully allows artists to abandon the dinosaurs
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Brian Schroth (profile), 4 Mar 2011 @ 9:00am

Isn't it true that these sites are not paying anything to the actual copyright holders? From the copyright holder's perspective, these sites are actually worse than customers using a "free" alternative. In both cases, their revenue is 0, but if a free alternative is used, at least the customer won't be using up their entertainment budget sending their money to AllOfmp3.com.
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Hiro Nogano (profile), 4 Mar 2011 @ 9:10am

Re:
Yes that is true, but it does suggest that many more people would be willing to pay for music if the price was adjusted to a lower point.
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MrWilson, 4 Mar 2011 @ 9:12am

Re:
That sounds like a good incentive for the labels to lower their prices. If your customers demand lower prices and you fail to deliver (and you collude with your supposed competitors to fix the prices), don't be surprised if the market punishes you for it.
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The eejit (profile), 4 Mar 2011 @ 9:23am

Re:
IS suggests that the management need to be taken out back and shot, from a pure profitability perspective.
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Anonymous Coward, 4 Mar 2011 @ 9:23am

Re:
You got it right Brian. Not only are copyright holders getting pirated, but the thieves are also making off with the income. It's a double shot.

Only Mike Masnick could stand up for companies that pirate and steal money on top. Congrats for a new low Mike!
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Jay (profile), 4 Mar 2011 @ 9:24am

Re: Re:
Hmmm... Wonder which major label you work for...?
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PaulT (profile), 4 Mar 2011 @ 9:27am

Re:
The difference here is that these sites prove the "people just want something for nothing" argument used against P2P sites completely wrong. People are quite willing to pay, it's just that these sites offer services that customers want.

An intelligent industry would heed these trends and adjust accordingly. Remember, it's not just cheap prices that these sites offer over and above iTunes et al., they also offer full catalogues (e.g. AC/DC and Pink Floyd, who are not available through legal digital channels) and a choice of quality (IIRC, since I never use them, but I think most offer FLAC and other formats), and so on.

While these sites should be shut down if they're breaking trade laws or are illegal in their home country (both of which are questionable), the industry would get more sympathy if they accepted the fact that these sites are often offering a better service to their customers than they are.
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Atkray (profile), 4 Mar 2011 @ 9:37am

Re: Re:
"Only Mike Masnick could stand up for companies that pirate and steal money on top. Congrats for a new low Mike!"

He didn't he tried to point out to you what you could learn from this but you missed it.

Reading: it's a life skill.
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Anonymous Coward, 4 Mar 2011 @ 9:50am

Re: Re:
How does that make it okay for these sites to resell said music without paying for it?

While I do not think that 'pirating' music for personal use is 'stealing' (or even giving it away to others for that matter). I do think 'pirating' music and then selling that music for a profit is wrong. It does highlight that some people are willing to pay at a much lower price but that is no different than itunes showing that some people are willing to pay a high price. However, none of that makes it right for these operations to resell a product that they do not pay for - that really does sound a lot more like 'stealing'.
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mike allen (profile), 4 Mar 2011 @ 9:54am

Re: Re: Re:
As I understand it all of mp3 offered a generous 50/50 split. The labels and copyright people turned them down tough on them.
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Brian Schroth (profile), 4 Mar 2011 @ 9:59am

Re: Re:
Apparently only you have the poor reading comprehension necessary to mistake this article for "standing up for companies that pirate".
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Brian Schroth (profile), 4 Mar 2011 @ 10:00am

Re: Re: Re:
I haven't seen a single person here say that it is OK, so you appear to be tilting at windmills here.
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Brian Schroth (profile), 4 Mar 2011 @ 10:02am

Re: Re:
So it shows something that is true for every product that exists. Is that supposed to be useful information? If you lower the price on a product, more people will be willing to buy it. This does nothing to show that lowering the price would actually be more profitable, as the seller must consider profit-per-item as well as volume.
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Anonymous Coward, 4 Mar 2011 @ 10:02am

Re: Re: Re:
I don't think the point is that these sites are good or even legal. The point I believe is trying to be made is that if the music industry lowered the inflated prices (they're inflated because they see people spending money at these sites instead of getting it for free). So if they lower the price point (even slightly) and then state "hey the money you spend here actually supports the band" (and hopefully they would pass on more of the money to the bands et al) I believe more people will use their service/buy their product. Those who don't probably would not buy their product at that price point.
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The eejit (profile), 4 Mar 2011 @ 10:14am

Re: Re:
Well, perhaps if everyone wasn't automagically treated like a criminal, and they weren't hypocrites, we migth actually listen to their ideas.
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PaulT (profile), 4 Mar 2011 @ 10:57am

Re: Re: Re:
"How does that make it okay for these sites to resell said music without paying for it?"

I fail to see how he's suggesting that is OK. It's simply an observation that despite these services being infringing, people are still willing to pay for the music. If nothing else, it suggests that the price alone is not the reason for these people using the services - if that were the case then why pay rather than use P2P to "steal" the music?

Attack these sites if you wish, but there are lessons here for the industry if they choose to heed them. Shutting the sites down and doing nothing else will not service the consumer demand that's being met by these companies.
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Mike Masnick (profile), 4 Mar 2011 @ 11:20am

Re:
Isn't it true that these sites are not paying anything to the actual copyright holders?

Not quite true. The one I'm familiar with is Allofmp3, who paid the Russian collection society and offered money to the labels directly -- which they refused.
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Chargone (profile), 4 Mar 2011 @ 11:34am

Re: Re: Re:
when profit per item is 100% (or near enough that the difference may as well be between infinity and infinity+1) then profit per Item is meaningless, and only volume is truly important on any level other than 'more money in the pockets of shareholders and executives'

of course, given that that is the entire POINT in corporations (as opposed to other styles of business, where it varies) one shouldn't be surprised.
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Chargone (profile), 4 Mar 2011 @ 11:36am

Re: Re:
which makes one wonder what the hell the labels were thinking at the time, really.
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Brian Schroth (profile), 4 Mar 2011 @ 12:36pm

Re: Re:
That seems like a fairly insignificant distinction. These sites seem like clear copyright infringement. You can't expect them to agree to take the offer, and thus legitimize the services. If I offer you money for something and you refuse, that doesn't mean I can just take that thing anyway, and it's now your fault because you refused my offer. Obviously the music is not a tangible item, but the point still holds. The actual artists, or the leeches that represent them, are not paid by these websites, so it's not going to matter if this action causes some people to switch from a source of music where they pay someone else to a source of music where they don't pay anyone. In both cases, the artists/leeches who represent them are not getting paid.
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Anonymous Coward, 4 Mar 2011 @ 12:41pm

HOLY CRAP and an ounce of weed taped on the back
Suppose these sites switch to another payment service that can't be blocked. What if they start asking governments to go after the consumers of these sites just as they've requested for them to go after online advertising networks? The MAFIAAs already have a history of shooting themselves in the foot like that. The war on piracy is truly on it's way to becoming the next war on drugs.
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Anonymous Coward, 4 Mar 2011 @ 2:14pm

Credit Card Wars
So, the credit card companies can now be paid-off to block payments to your competitors? I wonder how much it costs? For example, I wonder how much it would cost Pizza Hut to have the credit card companies cut off the little pizza shop down the street? Apparently, it would be completely legal. Of course, it's a free market, so the little shop could make the CCCs a counteroffer (but I doubt they could outbid Pizza Hut).
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Anonymous Coward, 4 Mar 2011 @ 2:48pm

Re: Re: Re: Re:
Yes, they offered a generous split that would basically cut the music label income by 90%. It isn't up to the merchants to determine the supplier's sale price. The supplier sets the wholesale price, the retailer sets the retail price. If they cannot make money at it, they stop.

The tail does not wag the dog.
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Anonymous Coward, 4 Mar 2011 @ 2:50pm

Re: Re:
Except of course Mike, you know that allofmp3 was selling outside of Russia, which violated copyright and made it all meaningless. You also know of course that what they offered the labels was a meaningless amount of money, compared to the lost market.

It was the usual snarky Russian way of acting like they are playing ball, while at the same time stealing the ball, the hoop, and your shoes.
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Brendan (profile), 4 Mar 2011 @ 3:04pm

Re: Re: Re:
What "lost market" are you talking about?

You seem to be missing the point.

The label prices are too high. The buyers at AllofMP3 weren't willing to pay those prices, but they were willing to pay the lower AllOfMP3 price.

This flies directly in the face of "people just want stuff for free," and indicates rather that people want things at a price they deem reasonable. This is up to the market (consumers) to decide, not labels. Except silly mechanisms like copyright monopolies prevent this kind of market balancing.

AllOfMP3 was doing the labels a favour by figuring out the real price people would be willing to purchase more content at.

25% of thousands of album sales at $2 is more than any percentage of ZERO sales at $10-$15.

Listen to consumers. Learn math. Make money.
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BigKeithO (profile), 4 Mar 2011 @ 3:10pm

Re: Re: Re: Re: Re:
Except for piracy, but that isn't an issue right?
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Anonymous Coward, 4 Mar 2011 @ 3:39pm

Re: Re: Re:
"Except of course Mike, you know that allofmp3 was selling outside of Russia, which violated copyright and made it all meaningless."

I think they were located entirely within Russia. People had to connect to servers located in Russia to buy stuff, so they weren't operating outside of Russia or violating copyright.
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sam sin, 4 Mar 2011 @ 3:48pm

none of this has ever been about money. it always has been and always will be about control! on top of which, we are the ones to blame. if we as customers had not thought to ourselves, 'sorry you are getting done for file sharing but i ain't, so hard luck' and made a stand in the beginning, maybe, just maybe, things would not have gotten so far out of hand as they have. since day 1, the copyright industries have been after controlling the internet. if they get control of that, they control everything! and what makes it worse is that governments, politicians, law makers and law enforcers are falling over themselves to help that happen. they dont realise the can of worms they have opened or the consequences for the future. once they do, gonna be too late!
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Anonymous Coward, 4 Mar 2011 @ 6:13pm

This won't affect me.
I don't pay for music.
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Anonymous Coward, 6 Mar 2011 @ 2:21am

Re: Re: Re: Re: Re:
???

What happens to any producer that tries to charge more then people are willing to pay?
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Steph, 14 Mar 2011 @ 1:04pm

Re: Re:
Sadly, I think they don't care one bit about the type of service they offer :(
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Steph, 14 Mar 2011 @ 1:15pm

Re: Re: Re:
What I mean by this, is the term "copyright monopolies" is fairly accurate. They can charge however much they want and treat the public/consumers in whatever way they deem appropriate. They behave as they do and charge what they charge because they CAN. Competitors are squashed and the work remains overpriced. I'm willing to listen to a breakdown though. Does anyone have any idea how much it costs to put out ONE song compared to the typical $1.29 price tag? What goes where and who gets what?
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