How Has The Increase Of Internet Piracy/File Sharing Affected The Music Industry’s Sales And Revenues?

How Has The Increase Of Internet Piracy/File Sharing Affected The Music Industry’s Sales And Revenues?

The rapid growth of the internet has ushered in a new era of rapid file sharing hitherto un-witnessed. With the ever-increasing number of internet users, digital file sharing has become the preferred mode of sharing music records. The sharing of files through the internet has sparked heated debate across the music and legal sectors across the world due its adverse effects on the sales and revenues of the music industry.  Low sharing cost is perhaps the main cause of file sharing across the continent. Controversies between the copyright owners and the internet sharing technologies have resulted in intense debates bordering on the effect of file sharing. The essay focuses on the effects of increased file sharing in the sales and revenues in the music industry.

Increased lawsuits due to copyright infringements, as well as intense debates on the impact of digitization on music sales has prompted a lot of research in the music industry. Most studies have established that internet sharing of files impacts the music industry negatively. The act of file sharing over the internet brings harm to copyright owners, but also there have been shown to have negligible adverse effect on the sales made. According to Liebowitz (2006), there are over one billion downloads of music files per month in the US alone, which is a far higher number than the purchases of music from legitimate music stores and outlets.  Nevertheless, Liebowitz (2006) argues that since the number of downloaded files surpasses the purchases of the original music files, the downloads play a crucial role in promoting the purchase of the original files due to their ability to reach a huge market within a short time, thus popularizing the music. In addition, music downloads and sharing works like samples for users from which they can select the music of their choice and then proceed to make purchases of the original files. The argument raised in this case is that internet file sharers and downloaders do so for the sole purpose of selecting the music for which to acquire the original copies (Oberholzer-Gee & Strumpf 37).

In the year 2000, there was recorded massive decline of sales in the music industry, Soundscan and RIAA, which are responsible for measuring this, recorded an enormous drop in sale around this year. The huge drop coincided with the invention of the Napster, a program allowing the internet sharing of music files. The birth of the internet file sharing quickly gained popularity and gathered millions of users to adopt it. It was at this time that an enormous decline in the music industry sales was reported. The simultaneous occurrences clearly indicate the relationship of increased internet file sharing and reduced music sales that are; internet file sharing is responsible for the reduction of original music copies. The music industry mainly base their arguments on such declines to point out that internet file sharing has nothing, but adverse effects on the economic aspect of the music industry. Further support of the allegation that file sharing negatively affects the sales, and revenues from the music industry were provided by the 2004 results from the sales made in the music industry. Sales for this year showed an increase from the previous year’s decline; this is associated with the lawsuits that was filed seeking to stop the internet file sharing resulting in a decrease in file sharing. This reduction in internet file sharing and increase in sales revenues was evidence that file sharing affected the music sales and earnings (Liebowitz 27).

Economists have also shown that the potential and perhaps already felt impacts of file sharing and downloading is that in many cases shared and downloaded copyrighted files  eliminate the need to buy the original works. Substituting the original file with downloads and shared files directly and negatively affect the sales of the music industry and consequently lower the revenues received. This is in support of the argument that internet sharing of files is harmful to the sales and revenues of the music industry.

Another argument raised by economist regarding the effects of internet file sharing in the music industry is that file sharing may have network effects towards music listening. The graph in appendix 1 shows the analysis by  of trends in sales over the years in the music industry. From the graph, the sales of music increases gradually in all the years after people have shared downloaded Videos or Audio records. In essence, after listening to the music, shared through the internet, they might develop an interest to purchase original copies of the music for themselves or their friends. Another effect observed with internet sharing is that it might increase the sales of the music industry because of purchases made by the providers of the music files on the internet platform. The initial sources of the internet files must buy the original copies although this may not account for a significant increase in sales it nevertheless, increases the sales made. This argument goes towards showing that internet file sharing does not result in adverse effects on the music industry, but rather positive results that improve the sales and thus revenue of the music industry.

The increased internet usage and penetration for entertainment purposes cause a reduction in usage of television and radio. Initially, the radio and the television were the primary sources of entertainment for the people and the main way through which music industry advertised its products. The two media devices acted as the sources of music samples from which the listeners and viewers could choose the music that matches their tastes and then purchase the original copies of the music. With the increased internet usage, music was not sampled and marketed as in the radios and the television where an individual did not remain with the copy of the song, the internet allowed the users to download  music at a very low cost and share it among other users. This habit saw the decline of the music sales by a large extent exemplifying the harm that internet file sharing caused by the music industry sales and revenues.

The internet file-sharing habit has been cited to have positive effects on sales and revenues in a music industry. They argue that internet file sharing is not the cause of the decline in the sales and revenues re.............