Record Label and Piracy

Life after Napster Photo by: Sammy Kuguru

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Can the Record industry fight the increasing use of illegally downloaded music and the Bootlegging of CD's. Melisa Tang investigates.

For four consecutive years, record sales are down. The traditional business model is failing the industry. CEO Tommy Motolla has been replaced at the helm of Sony by former TV executive, Andrew Lack. Share holders are hoping that the men in grey suits are the answer to the current crisis as questions are being asked as to whether record labels will survive the worldwide economic slump.

Whilst many acknowledge that struggling sales can be attributed to the economic slow down, others believe that the main cause of plummeting sales are a result of digital piracy. The birth of Napster in 1999 threw open a door that the music industry now fear will never be fully shut. The online music service, provided Free downloadable software which allowed thousands of computer users to open their hard drives to one another, giving people near-instant access to hundreds of thousands of songs. Following a series of damaging lawsuits over copyright issues, the service was effectively forced to file for bankruptcy and shut down.

Record companies aren't totally against the net. Almost all have official websites which promote their artist releases and feature music, video and sound clips. Many are also launching subscription based services which allow users to download heavily encrypted music for a monthly fee. In fact whilst BMG was suing Napster for copyright infringement, Bertelsman AG, its parent company was investing millions into it, believing, according to their CEO, Thomas Middelhoff, that, "Napster has pointed the way for a new direction for music distribution." Despite its investment, Bertelsman was denied it's take over bid by a Delaware bankruptcy court, for failing to prove their investment was made in good faith. Instead the sale went over to CD burning firm, 'Roxio' for an approximate $5.3 million dollars.

	"Napster has pointed the way for a new direction for music distribution."


	Thomas Middelhoff - Bertelsmann CEO

Stopping the Free service from Napster far from ended record label nightmares. Millions simply migrated to alternative free service providers, like AudioGalaxy, Morpheus, FreeNet, Gnutella and Kazaa leaving the majors battle to curb bootlegging far from over. In a bid to make downloading copyrighted music an unattractive option, labels are turning to guerrilla tactics, such as 'Spoofing', the name given to bogus decoy music files which labels are reported to be placing on computer hard drives, so that when people request their artists music, they end up with long minutes of silence or 30 second loops of song choruses. Other attempts to beat the bootleggers have been to bring album release dates forward, as was done with the recently released Nas album, 'God's Son', as well as experimenting with the use of advanced anti-copying technology as was done with, 'The Eminem Show' in the summer of 2002. Despite all their efforts, pirate copies of Nas' and Eminem's album still surfaced early on the streets.

The battle to curb piracy was highlighted on the 28th of January 2003 when the British Phonographic Industry (BPI), who was acting on behalf of the UK record industry, won its High Court summary judgment, against 'EasyInternet Cafe Ltd'. The case came to trial as a result of the cybercafe's attempt to provide a chargeable service which enabled its customers to illegally download music and burn them onto CD's. Whilst the record industry succeed in their injunction to stop high street downloading, they remain powerless to stop the sale of blank CD's. The sales figures for recordable compact discs have soared within the last few years, as has the ownership of CD burners. Nowadays CD burners are costing as little as £25, with some basic programs being pre-installed into newly bought computers. CD albums are often copied in a matter of minutes and sold for less then half of their recommended retail price.

The answer from many consumers as to whether CD's are worth the average asking price of £15.00 is more likely to be "No" with the common argument being that far too many CD's released today do not justify such a steep price tag. So could record labels reduce prices in a bid to luring consumers back into the stores? A recent article in 'Rolling Stones magazine' in the US revealed that labels have begun experimenting with such a concept, selling CD albums of new and developing acts as low as $6.99. A similar approach was taken with Ashanti's debut album, 'Ashanti' released in the summer of 2002, when for the first week only, it was sold at a special price of 9.99, almost half of what it would usually be charged. This guaranteed 'Def Jam'/'Murder Inc.', first week sales, as fans rushed to buy the CD at the discounted price. Ashanti went onto sell 3.09 million proving that if costs are lowered for the consumer, projects can pay off.

With CD's under tough competition from the DVD market which is flourishing, labels will have to think on their toes, if they are to retain their market share of the entertainment industry.

If labels can come up with effective ways to boost consumer spending and reduce illegal bootlegging of CD's, then there could be life for our stars and their labels after Napster. If the answer is in downloads, then record labels need to think of more enticing ways of making people pay for what they could get for free. The Key being adaptability and the effective manipulation of digital technology.

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