Reaction & Strategies
on the Internet has become one of the biggest problems facing
the music industry today. On the other hand, the Internet provides
a groundbreaking new medium in which the music industry can develop
and grow. If key players in the music industry are able to use
this medium wisely, they will be able to profit from new growth.
Members of the Big Six have been diligently
working on strategies to profit from the internet rather than
lose from internet piracy.
corporations are looking at the bright side of the internet- the
huge profits to be made- and limiting the negative side- where
piracy falls into play. The EMI 1999 annual report sums up this
relationship by stating, "Indeed, music and the Internet
were made for each other." They offer various advantages
to be had from Internet use. First, the Internet allows them greater
access and knowledge of the people who buy and listen to music.
This allows greater flexibility in what the music industry can
offer and the speed with which they can offer it. Also, the Internet
is a creative outlet for artists and allows them to be more in
touch with their audience. In a marketing perspective, the Internet
allows for a direct and interactive access to customers allowing
for greater advertising and exposure. EMI attracts more than 3
million visitors a month to its 45 websites around the world.
Not only can companies build on their websites to attract more
customers, but they can also use commercial links with other companies
such as Microsoft, AOL, Amazon.com, and the millions of music
outlets for recorded music. Further investment in R&D, especially
in digital downloading technology and human resources, will help
these companies be competitive in the Internet era.
from the Pirates
harness the market power of the Internet, though, the music industry
must also come together to properly protect their copyrights and
those of their artists. This means investing in solutions to Internet
piracy and new copyright laws.
the rise of the Internet, these copyright laws were useful to
solve piracy problems because the piracy could be materially detected.
Law enforcement agencies had physical evidence from things like
bootleg CDís to arrest the offenders and enforce the law. In 1976,
the Copyright Revision Act made the "willful infringement
for commercial advantage or private financial gain" of recorded
music not even a felony. Punishment included one year in jail
and $10,000 for the first offense. As piracy grew more and more,
the government and the music industry realized that these remedies
were not enough; people were still willing to risk such a small
punishment for such a profitable business. In 1982, piracy became
a felony. In 1992, the stakes went up to 5 years in prison and
$250,000 for individual offenders of $500,000 for organizations.
If someone was caught with 10 copies with a retail value of $2,500
or more, they were liable for committing a felony. Yet, the International
Federation of Phonogram Industries (IFPI) recorded an estimate
of $2.1 billion in the world piracy market, with Russia and China
taking the lead in the industry. In 1996, the U.S. even threatened
trade sanctions with China if they could not enforce their piracy
laws more effectively. Changes and revisions to copyright laws
are constantly being made, especially with the rise of the Internet.
Measures to Limit Internet Piracy
report by Andersen Consulting estimated over 1 billion music downloads
in 1999. MP3 has replaced sex as the most searched for word on
the Internet. What can the music industry do to limit the hazardous
effects of this new industry?
RIAA, funded by major players in the music industry, tracks
Internet sites offering illegally recorded music to download
or listen to by using an electronic Webcrawler to target these
loses case begun in 1998 against Diamond Multimedia company.
Diamond was charged for violating the Audio Home Recording Act
by creating their portable MP3 recording devices, the Rio, which
allows music to be illegally recorded.
Music Entertainment has joined Microsoft
in its new streaming-media platform, Windows Media Technology
4.0, including MS Audio, a new rival for MP3 that includes security
Jukebox was introduced at the same time as MS Audio by IBM,
RealNetworks, and Xing Technology. The Jukebox can play a variety
of audio types from MP3 to its own G2 format. It can record
from a CD to hard drive, making it easier for consumers to distribute
and record from their own collections. This technology has security
features as well.
Secure Digital Music Initiative (SDMI), created by RIAA members,
creates cumbersome security features on MP3 and other digital
audio formats on the market such as Liquid Audio and a2b. SDMI
is able to provide these features because most of these new
formats are in accordance with their standards.
is supported by over 110 technology companies and most major recording
labels. Their goal is to research and establish a secure format
and to create a better, more competitive and secure technology
than the MP3 to lure customers away from piracy. They compete
with other vendors to develop a new technology with a superior
audio quality and a faster downloading time.
problem with these new security features is that they might have
come too late to put MP3 and other audio players back in the bottle.
Yet, the struggle is not over yet for research and development
into new areas in the market.