London School Of Economics Study Shows, Yet Again, That The Music Industry Is Thriving, Not Dying

from the how-many-more-times? dept

Fri, Oct 4th 2013 9:08am — Mike Masnick

As you may recall, a few years ago, we published a report called The Sky is Rising, which showed how -- contrary to the claims of some -- the entertainment industry was growing (and even thriving) over the past decade or so. More content was being produced, more money was being spent, and artists were able to make more money. We did note, however, that there was a lot more competition, since the barrier to entry was much lower, and the avenues from which the money came were often shifting. That meant that overall, the industry was thriving, and in terms of cultural richness, the public was much better off. However, for some artists, things were certainly a lot more challenging. For many other artists, though, things are much, much better. We weren't the only ones to come to such a conclusion. In many ways we had built on earlier research in the UK (done by PRS for Music), Canada, Sweden and Norway that all showed the same basic thing: if you actually added up all the revenue in the music world, it had continued to grow, not shrink. Yes, recorded music revenue was down (often significantly), but that is only one part of the industry.

It's great to see yet another report make this point, and this one coming from researchers at the prestigious London School of Economics. In many ways, the report covers similar ground, highlighting that the overall music industry continues to grow, that copyright infringement isn't killing the industry, and that policy recommendations -- especially things like the Digital Economy Act -- need to look more closely at what's happening, rather than listening to the moaning and whining of one particular group of special interests in that community. The report includes the following chart:

Which looks remarkably similar to other charts we've highlighted in the past -- like this one from Canada:

Or this one from Norway:

Or this one from Sweden:

Point being: the data have been shown over and over and over and over again and yet we still have people insisting that copyright infringement is decimating the music industry. It's not. It may be making it difficult for record labels who focused exclusively on recorded music sales for revenue, and it may be making it challenging for musicians who aren't used to competing in this market. And those are legitimate questions to raise and to think about. But, we still hear people -- often entertainment industry execs/lobbyists and politicians -- insisting that copyright infringement is somehow decimating these industries. It's not. It's changing them. Sometimes in ways that are challenging to certain parts of that industry, but not in a way that harms the public, or the creation of content. Instead, it's quite the opposite.

The report from the LSE goes even further, highlighting what a disaster policies that focus on ratcheting up enforcement have been in terms of actually having an impact on the overall industry. It also points out that the industry tends to rely on studies it created itself. The report also highlights the growth of things like Creative Commons, and how tools like Soundcloud have resulted in massive output in creativity as people build new works. Its key recommendation is as follows:

We recommend a review of the DEA and related legislation that strikes a healthy balance among the interests of a range of stakeholders including those in the creative industries, Internet Service Providers and internet users. Fitting the digital sharing culture and new forms of cultural production into a copyright enforcement model that is out of touch with today’s online culture will only suppress innovation and dampen growth.

It further suggests "broader fair use/fair dealing provisions, proposals for private copying exceptions" and a focus on targeting businesses, rather than individuals for any enforcement actions.

While there may not be much new in this report compared to other reports (including our own), it's great to see this point being highlighted yet again, and from such a prestigious university. Hopefully the point will finally start to sink in with policy makers.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: copyright, growing, industry, london school of economics, music

36 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Ninja (profile), 4 Oct 2013 @ 7:19am

Copyright maximalsit
Grifters, that's what all those artists self-publishing are! How preposterous of them giving their stuff for free! They are preventing me, ME, the great gatekeeper from enjoying my yachts, hookers and weed! We hates it! My preciousssss...
[ link to this | view in thread ]
fogbugzd (profile), 4 Oct 2013 @ 7:44am

Re: Copyright maximalsit
You raise another point that none of the studies cover. The totals do not consider how much music is given away for free. That has value to society (although some of it has very, very little value).

It also does not seem to count things like the sale of musical instruments, lessons, and other indirect economic contributions. Even musicians who give away their music for free are contributing to the economy in those indirect ways.

I'm not advocating that these studies should include the indirect costs because that is the sort of mentality that leads to grocery store clerks being counted as part of the IP industry. But it is important to realize that even "free" music makes money for someone.
[ link to this | view in thread ]
That Anonymous Coward (profile), 4 Oct 2013 @ 9:10am

Re: Re: Copyright maximalsit
"But it is important to realize that even "free" music makes money for someone."

And the cartels want laws to make sure that that someone is always them.
[ link to this | view in thread ]
This comment has been flagged by the community. Click here to show it

out_of_the_blue, 4 Oct 2013 @ 9:37am

Blows away your notion Hollywood is "doing it all wrong"!
That's my basic take. Despite all YOUR notions of imminent demise, it's NOT happening.

Here's a better written article:

Study accuses media companies of cooking the books on piracy losses

http://www.theregister.co.uk/2013/10/03/study_accuses_media_companies_of_cooking_the_books _on_piracy/

Meanwhile, Hollywood has enjoyed a boom in recent years, with revenues reaching a record-breaking $35bn in 2012, up 6 per cent on the previous year. Sales of DVDs are down, but digital profits more than make up for this, not least because there's no physical media to manufacture and ship out.

As for some of the conjectures put forth: I'll just ask why do you think Microsoft sticks to its old, flawed copyrighted model, WITH heavy DRM, too? (Because it WORKS!)

BUT leaving Microsoft out and focusing on entertainment makes the pirate case look better.
[ link to this | view in thread ]
This comment has been flagged by the community. Click here to show it

out_of_the_blue, 4 Oct 2013 @ 9:47am

Re: Re: Copyright maximalsit
@ "fogbugzd"
You raise another point that none of the studies cover. The totals do not consider how much music is given away for free. That has value to society (although some of it has very, very little value).

You haven't read the report! I haven't either, and not going to, but apparently you read only Mike's slanted take, and I also read the better coverage in The Register:

Musicians are also moving towards releasing music under Creative Commons licenses the paper note, with the

By the way, just because music (and the grifting parts of the industry) thrives DESPITE piracy doesn't say much about how well creators would do IF people paid, nor does it address the immorality of NOT paying for what you enjoy.
[ link to this | view in thread ]
Ninja (profile), 4 Oct 2013 @ 9:48am

Re: Re: Copyright maximalsit
It wasn't on purpose, I merely wanted to joke around but you have a strong point. However I do agree that it could fall in the grocery store rationale. However if you establish clear limits this could be quantifiable as much as the real indirect jobs that Hollywood sure generates.
[ link to this | view in thread ]
S. T. Stone, 4 Oct 2013 @ 9:48am

Re: Blows away your notion Hollywood is "doing it all wrong"!
Doesn�t the study you linked to kinda�you know, disprove the notion that piracy hasn�t really hurt Hollywood all that much?

I mean, if Hollywood enjoyed a �boom� with 35bn USD in revenue last year and rising revenue for digital products, piracy can�t have hurt Hollywood all that much�
[ link to this | view in thread ]
Anonymous Coward, 4 Oct 2013 @ 9:51am

It can't be decimating them - 10% of all recording industry execs haven't been killed by rampaging pirates.
[ link to this | view in thread ]
Anonymous Coward, 4 Oct 2013 @ 10:04am

Re: Re: Re: Copyright maximalsit
Fine. Then they need to get into musical instrument and electronic equipment sales, and quit whining about how they're being cheated out of their entitled profits.
.
[ link to this | view in thread ]
Lonyo, 4 Oct 2013 @ 10:14am

Missing stuff
While this article is nice and all, there are things which could/should be discussed which are absent.

Revenue may be down, but does that mean profits are down? Given the rise in 100% (well, 70%) margin sales such as digital sales, even if revenues are down, that doesn't necessarily mean profits are down.

The music industry itself loves to focus on revenues because they are down, even if the revenues are entirely irrelevant due to massive changes in technology which impact the entire structure of the business model (from physical to virtual goods), meaning revenue over time can go down, while profits can stay flat.

The other thing it misses is "disposable income", as in, money which people have available to spend.

To really discuss the "problems" of an industry which is seeing declining revenues in one area, you have to consider society overall.
People already had too much debt (arguably), and we have seen a recession, so less disposable income for most people.
We have also seen increases in other industries, such as movie sales and video game sales.

Now, given that there is a finite pool of money, it means that there should be give and take, and if something, such as gaming, has grown massively (both "traditional" and "casual/microtransactions"), it makes sense that people have less money to spend elsewhere, such as on music.

THAT is the sort of thing people should care about. Politicians, when forming a budget or talking about the economy generally, hopefully don't assume that money is infinite. They recognise when budgeting that when they want to give more money to, for example, schools, they need to take it away from somewhere else, or get more taxes.
They should be able to apply the same logic to people. But they don't, because they listen to the movie industry and the music industry, complaining about piracy and lost revenue, and then they listen to parents complaining about the growth in videogames being a problem due to violence.
They are apparently unable to put 1+1 together and realise that they are opposite sides of the same budgetary coin, where people have finite disposable income and are spending it in different ways, so of course not everything is going to grow equally.
[ link to this | view in thread ]
Anonymous Coward, 4 Oct 2013 @ 10:17am

Re: Re: Re: Copyright maximalsit
"You haven't read the report! I haven't either, and not going to,"

That says it all about your comments then. You don't even bother to read the report that you comment on. LOL
[ link to this | view in thread ]
malund66 (profile), 4 Oct 2013 @ 10:27am

Larger scope
Looking at the trend in recording sales, it strikes me that there is a sharp drop-off coincident with the tanking economy starting in 2008. Since the music industry tends to thrive on the youth, and the youth has disproportionately failed to benefit from the economic recovery, it seems like the recording industry might want to lobby hard for college loan programs, job programs, and the like. Now that is the kind of trickle down economics that might actually work.
[ link to this | view in thread ]
Ninja (profile), 4 Oct 2013 @ 10:35am

Re: Re: Re: Copyright maximalsit
You haven't read the report! I haven't either, and not going to

But it doesn't stop you from taking things out of your ass without an inch of evidence to back it up. He raised a point. You replied with an absolute belief devoid of any factual base.
[ link to this | view in thread ]
Ninja (profile), 4 Oct 2013 @ 10:38am

Re: Blows away your notion Hollywood is "doing it all wrong"!
Actually Microsoft built a monopoly by largely ignoring piracy. As their products became widely used, developers ignored all other systems and focused. I'd argue that Microsoft OWES their market dominance to piracy. Let's not forget about how it started and how they disregarded any respect towards IP at the time. Hypocrisy at its finest.
[ link to this | view in thread ]
Anonymous Coward, 4 Oct 2013 @ 10:40am

Re: Blows away your notion Hollywood is "doing it all wrong"!
You know that Microsoft is investing in free games right?

http://arstechnica.com/gaming/2013/10/ascend-hand-of-kul-review-free-to-pray/

No money shall exchange hands until the gamer is hooked first.
[ link to this | view in thread ]
Ninja (profile), 4 Oct 2013 @ 10:40am

Re: Missing stuff
Revenue may be down, but does that mean profits are down? Given the rise in 100% (well, 70%) margin sales such as digital sales, even if revenues are down, that doesn't necessarily mean profits are down.

Another bit of evidence piracy is not killing music.

And agreed with everything else!
[ link to this | view in thread ]
Anonymous Coward, 4 Oct 2013 @ 10:41am

Re: Re: Re: Copyright maximalsit
Without monopolies everybody wins, those are the tools that others use to screw everyone including artists.
[ link to this | view in thread ]
Anonymous Coward, 4 Oct 2013 @ 10:44am

Re:
They jumped out of the executive class with their golden parachutes into oblivion.
[ link to this | view in thread ]
Anonymous Coward, 4 Oct 2013 @ 11:08am

the main point that comes out of this and all the other unbiased, factual reports and studies isn't that Hollywood and the entertainment (mostly US) industries dont understand the figures or just disagree with them, they dont want to take notice, they dont want to understand them, they dont want to admit that they are right and all the industry sponsored ones have been heavily loaded in their favour after being doctored and are wrong!
what is even more wrong is that all politicians, governments and so called technology groups like the European Commission join the industries in ignoring the factual reports but jump all over the reports that are from the industries themselves, knowing what is going to be said in them!
of course we say that it's because of the bribes and other encouragements that are provided to those people and groups, but surely there has to be an even bigger reason, just as there has to be a bigger reason than just the financial side of things for the industries themselves. that has to be control but also the then availability for governments to conduct the surveillance they want to, by passing laws giving those industries permission to watch who is doing what on the internet. the governments are actually the ones doing the watching, not specifically for the industries but for themselves primarily and when there is an instance of suspected 'file sharing', the government concerned passes on the information to the industries and they take that matter further. the government gets away with citizen spying, the entertainment industries get to sue another poor fucker for sharing a music track with his mate! everyone is happy, except the people that both of these bodies work for, who have just been screwed yet again!!
[ link to this | view in thread ]
Anonymous Coward, 4 Oct 2013 @ 11:11am

Re: Blows away your notion Hollywood is "doing it all wrong"!
https://torrentfreak.com/jail-for-file-sharers-does-nothing-to-increase-music-sales-131003/

There another article showing how bad anti-piracy actually can be bad for sales and moral.
[ link to this | view in thread ]
art guerrilla (profile), 4 Oct 2013 @ 12:40pm

Re: Re: Blows away your notion Hollywood is "doing it all wrong"!
not to mention:
A. gates was a dumpster diving thief who *stole* the original s/w he went on to monetize, and paid for it after-the-fact...

B. gates himself has said it was PIRACY which allowed windoze to penetrate the world market; no piracy, no worldwide domination...
[ link to this | view in thread ]
Anonymous Coward, 4 Oct 2013 @ 12:44pm

Re: Re: Re: Re: Copyright maximalsit
There will still be a market for instruments, but in the future it will take a dive as computers take over part of the market for amateurs and certain genres. They shouldn't need these kinds of market-advantages!

It reminds me of a 3-step program getting stopped on its tracks in a small european country where the record industry had stopped caring much about domestic musicians since the market was too small for them to earn back the investment and the language too rare abroad. The publishers were furious when the cordcutting was dropped, while the artists were happy.
My point is that as soon as the artists realize that they do not need the publishers, the game changes to the advantage of both artists and customers regardless of how much the publishers scream.
[ link to this | view in thread ]
Jay (profile), 4 Oct 2013 @ 1:26pm

Re: Larger scope
I'd argue that there are other things to consider about the 2008 downfall.

For the past 30 years, people don't have the money to spend on music and their behavior has changed in how they consider them. They consider free music a cheap alternative and spend the money on larger consumables. So the very same money is still going to other aspects of the economy as shown above (or maybe grocery stores).

What would make the recording industry come back would be the things the lobbyists and CEOs don't really want in the RIAA... Namely, higher taxation on their profits, subsidized music, more work done in understanding consumer behavior in the economy, and less copyright advocacy.

That would problably put the RIAA out of business as it doesn't work to help them or their argument.
[ link to this | view in thread ]
Musical Dunce, 4 Oct 2013 @ 1:53pm

Vi Hart makes some of Mike's points musically
This video by Vi Hart is totally awesome and makes some of Mike's arguments about Copyright law musically.

https://www.youtube.com/watch?v=4niz8TfY794

It's 30 minutes long and best watched in one sitting.
You might even learn a thing or two. I certainly did, though admittedly, where music is concerned, I'm an empty vessel.
[ link to this | view in thread ]
Anonymous Coward, 4 Oct 2013 @ 3:40pm

Did the study take into account inflation? Concert prices have skyrocketed as well.
[ link to this | view in thread ]
Anonymous, 4 Oct 2013 @ 5:54pm

Re:
When it costs more to see Justin Bieber than it does to see Madonna, something is wrong in the world.
[ link to this | view in thread ]
Postulator (profile), 4 Oct 2013 @ 9:05pm

The London School of Economics is "prestigious"? It certainly wasn't that back in the 80s, when James Hacker was Prime Minister and a graduate of the LSE. Certainly Sir Humphrey and Bernard Woolley were happy to ridicule his qualifications.
[ link to this | view in thread ]
Anonymous Coward, 5 Oct 2013 @ 2:32am

Re: Re: Larger scope
More mercantilism in music wouldn't seem like the ideal solution for anyone. Teach the politicians to ignore RIAA and MPAA and others who want to hamper competition legally. They will be out of the business or relevant in areas where they do not need the massive lobbying to have a profitable business model.
[ link to this | view in thread ]
PaulT (profile), 5 Oct 2013 @ 4:01am

Re: Re: Re: Re: Copyright maximalsit
He's admitted on several occasions to not reading the article before spouting his crap, so why would he read the material being written about?
[ link to this | view in thread ]
PaulT (profile), 5 Oct 2013 @ 4:09am

Re: Missing stuff
"Given the rise in 100% (well, 70%) margin sales such as digital sales, even if revenues are down, that doesn't necessarily mean profits are down."

Well, yes and no. I often say that one of the major causes of the music industry';s current difficulties is unbundling. That is, whereas before someone had to buy a $4 CD single or a $15-20 CD album in order to obtain a track, now they just buy the $1 MP3 single. This is great for the consumer, but obviously not so great for an industry that was built on selling the expensive bundled package. The profits per item may have increased, but people aren't buying the same number of tracks as they were once forced to.

Nothing to do with piracy, of course, which is why the industry's whining has always been so pathetic. Even if they somehow managed to eradicate piracy overnight, and even if people could be convinced to buy everything they used to pirate, they wouldn't necessary regain their "lost" income. Given that neither of these is a real possibility, their wasted time in attacking those rather than addressing the industry's real problems is what's killing them.
[ link to this | view in thread ]
Anonymous Coward, 5 Oct 2013 @ 9:39pm

Re: Re: Re: Blows away your notion Hollywood is "doing it all wrong"!
A. Facts not in evidence. This has never been proven, thus remains a rumor.

B. Gates was great at marketing, and knew that the more people that used the software, even without paying for it, the greater the demand would be amongst those willing to pay.
[ link to this | view in thread ]
I'm_Having_None_Of_It, 7 Oct 2013 @ 3:51am

Re:
Erm, Postulator, you do know Yes, Minister and Yes, Prime Minister weren't actually documentaries, don't you?

Well, you do now.
[ link to this | view in thread ]
Anonymous Coward, 8 Oct 2013 @ 4:09pm

Re: Re: Re: Re: Re: Copyright maximalsit
It's really too bad that the LSE would taint their reputation with such an obviously ludicrous "study".
Unfortunately the "research" was no doubt done by some piracy-favoring, college age underlings, and then simply stamped for approval by some out-of-touch superiors.
[ link to this | view in thread ]
PaulT (profile), 9 Oct 2013 @ 2:37am

Re: Re: Re: Re: Re: Re: Copyright maximalsit
"I don't like what it says so I'll ignore it without any counterpoint, and call people names instead".

How typical...
[ link to this | view in thread ]
Niall (profile), 10 Oct 2013 @ 4:50am

Re: Re:
You may wish to recalibrate your sarcasm/irony detector.
[ link to this | view in thread ]
Stevo (profile), 14 Oct 2013 @ 6:25am

LSE
It's almost cute how naive and clueless this study is.
Just like similarly clueless academic reports that because Wall Street profits are up, the economy is good.
But it's true there is as much money in music as ever. Actually profits are higher than ever before because almost no money is spent developing new acts!
All the money is going to 'legacy' acts like Madonna, the Stones, U2�
Ticket sales are markedly down in numbers but drastically higher in price.
(average ticket for Rolling Stones: $500)
So the music economy, just like the rest of the economy is only benefiting the 1%
The accurate part of the study mentions how useless take down notices are. It's also true that not all the news in the music business is bad:
The music festivals that are getting bigger and longer and new artists are getting great exposure. The problem is that touring is never profitable for smaller acts and even mid-level artists have only sustained their careers from broadcast royalties .
The transitional stage the music business is in is no worse than pre-Motown/British Invasion or pre-Punk/New Wave. The commercial and artistic breakthroughs of those eras happened because of the entrepreneurial incentives for people like Berry Gordy, Brian Epstein and Andrew Loog Oldham. But the entrepreneurs of today are internet cloud-barons reigning over a feudal structure of unpaid musical serfs.
If the music streaming services can graduate from a venture capital-Ponzi scheme model into truly viable businesses, then maybe they can fill the gap being left by dwindling radio and television royalties.
Advertising is what supported musicians for the last 90 years and music is even more integral to commerce than ever. Torrent sites lower the bar for ad rates, helping to create a junk mail landscape of online advertising.
This hurts music much more than downloading.
If the torrent sites are allowed to continue unmolested but cut out of the advertising business they will provide a very healthy underground community that promotes creativity, while the streaming services would get higher ad rates which would save the music scene.
[ link to this | view in thread ]