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Music piracy is the copying and distributing of copies of a piece of music for which the composer, recording artist, or copyright-holding record company did not give consent. It is a form of copyright infringement, which is a civil wrong and, under certain circumstances, even a crime in many countries. The late 20th and early 21st centuries saw much controversy about copyright piracy, regarding the ethics of the act redistributing media content, how much production and distribution companies in the media were losing, and the very scope of what ought to be considered "piracy"—and cases involving the piracy of music were among the most frequently discussed in the debate.
The fact that digital products are virtual instead of physical affects the economic mechanisms behind the production and distribution of content, and how piracy works for digital as opposed to physical products: "the main consequence of the non-physical form of digital products is their virtually negligible marginal cost of reproduction and their ability to be digitally delivered.". The cost of burning a CD drastically lowered the overhead for record companies, as well as for music pirates, and with the growing tendency toward online distribution among legitimate and illicit distributors alike, the expense of distributing shrunk further from the costs of printing and transporting CDs to merely the costs of maintaining a website. By sheer volume of file transfers, though, distributing music through traditional web servers and FTP servers were not as popular as peer to peer (P2P) now, because the traditional direct download method is slower.
The 2008 British Music Rights survey showed that 80% of people in Britain wanted a legal P2P service. This was consistent with the results of earlier research conducted in the United States, upon which the Open Music Model was based. In addition, the majority of filesharers in the survey preferred to get their music from "local sources" such as LAN connections, email, flash drives, sharing with other people they know personally. The other most common method of filesharing was with P2P technologies. By 2007, P2P networks' popularity had grown so much that they used as much as 39% of the total volume of information exchanged over the internet.
Piracy's real effect on music sales is difficult to accurately assess. In classical economics prices are determined by the combination of the forces of supply and demand, but the participators in the digital market do not always follow the usual motives and behaviors of the supply and demand system. First, the cost of digital distribution has decreased significantly from the costs of distribution by former methods. Furthermore, the majority of the filesharing community will distribute copies of music for a zero price in monetary terms, and there are some consumers who are willing to pay a certain price for legitimate copies even when they could just as easily obtain pirated copies, such as with pay what you want vendors.
Another issue is that because some people, like many in China, illegally download music because they cannot afford to purchase legitimate copies, not every illegal download necessarily equates to a lost sale. This has some effect on music sales, but as Lawrence Lessig points out, there is wide asymmetry between the estimated volume of illegal downloading and the projected loss of sales:
|“||In 2002, the RIAA reported that CD sales had fallen by 8.9 percent, from 882 million to 803 million units; revenues fell 6.7 percent. This confirms a trend over the past few years. The RIAA blames Internet piracy for the trend, though there are many other causes that could account for this drop. SoundScan, for example, reports a more than 20 percent drop in the number of CDs released since 1999. That no doubt accounts for some of the decrease in sales... But let’s assume the RIAA is right, and all of the decline in CD sales is because of Internet sharing. Here’s the rub: In the same period that the RIAA estimates that 803 million CDs were sold, the RIAA estimates that 2.1 billion CDs were downloaded for free. Thus, although 2.6 times the total number of CDs sold were downloaded for free, sales revenue fell by just 6.7 percent... [So] there is a huge difference between downloading a song and stealing a CD.||”|
In face of the growing encroachment on potential sales from internet piracy, industry associations like the Recording Industry Association of America (RIAA) have lobbied for stricter laws and stricter punishment of those breaking copyright law. Record companies have also turned to technological barriers to copying, such as DRM, to some controversy. These organisations have tried to add more controls to the digital copy of the music to prevent consumers from copying the music. For the most part, the industry has come to a consensus that, if not DRM, then some similar measures are necessary for them to continue to make a profit.
Critics of the record companies' strategy have proposed that the attempts to maintain sales rates is impeding the rights of legitimate listeners to use and listen to the music as they wish. When the US Congress passed the Copyright Act of 1909, it deliberately gave less copyright control to music composers than that of novelists: "Its fear was the monopoly power of rights holders, and that that power would stifle follow-on creativity". According to the internationally established Organisation for Economic Co-operation and Development, "Existing laws and regulations may be too broad and general to deal adequately with the rapid technological developments that facilitate digital piracy, and policy makers may need to consider enacting some specific provisions to deal with these infringements. Such provisions should not unduly impede legitimate digital communications, nor unreasonably impact on the Internet as an effective communications platform, commercial channel and educational tool..."
The RIAA, a powerful lobby for the recording industry, is responsible for carrying out most of the lawsuits against music piracy in the United States. Some claim that the enforcement against music piracy, which may cost copyright violators up to $150,000 per infringement, is unreasonable, and that it may even violate United States constitutional protections against cruel and unusual punishment. Some have accused the RIAA of outright bullying, as when one of their lawyers, Matt Oppenheimer, told the defendant in one lawsuit, “You don’t want to pay another visit to a dentist like me". In that same case, according to Lawrence Lessig, "the RIAA insisted it would not settle the case until it took every penny [the defendant] had saved".
Alongside with The RIAA and BPI's industry anti-piracy service sit a number of other independent companies offering anti-piracy solutions. These companies tend to have a better reach and success rate than the slower industry bodies and provide an alternative solution. Notable market leaders include Web Sheriff, Detecnet, Muso and Attributor.