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Comment by nostromo | Hacker News Reader

The music industry is changing so fast. I feel sorry for the industry, despite their bad karma.

Illegal digital downloads disrupted everything, and cut profits substantially. Luckily, Apple and Steve Jobs showed up and offered a brief reprieve. But now, just a 10 years into paid digital downloads, when the new revenue is still a tiny fraction of the old revenue, the field is disrupted again by streaming. And as with previous disruptions, it appears revenue will again be cut dramatically.

I'm not sure what the takeaway is. Maybe the importance of owning your distribution channels?

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"Illegal digital downloads disrupted everything, and cut profits substantially"

Only because a decade beforehand the RIAA decided that instead of working on ways to monetize the Internet, they would work on ways to make computers less useful for music distribution. Basically the recording industry's shortsightedness and failure to embrace the greatest communications revolution since the printing press led to everything else you described.

To put it another way, the RIAA could have pushed for Congress to set up a micropayments system for music downloading, before most people even knew about music downloading. Instead they lobbied for the DMCA and spent their money developing DRM schemes that failed before they were ever deployed. Their "bad karma" is a result of their response to the complete failure of those efforts: abuse of the legal system on a massive scale.

> I'm not sure what the takeaway is. Maybe the importance of owning your distribution channels?

Supply of all types of media content is way up. There are only so many hours in the day, so demand is comparatively inelastic. This means per-unit cost has to go way down.

This is the general trend for pretty much all media, including things normally categorized as something else, like news and stage productions.

On the plus side, distribution is basically free and gatekeepers are losing their monopolies and monopsonies, so creators and consumers of niche products can connect better than ever.

Connecting with more people is only as good as your ability to monetize those connections, though.

Unless you're a twelve-year-old showing off your Minecraft mods or your new styling tips. Then you're getting non-monetary value (friends, fun, reputation) from creating content, and you're unintentionally competing for the attention of kids and tweens that used to buy comic books and Backstreet Boys albums.

You said 'creators and consumers of niche products' which implies commercial intent to me, and we are having this discussion in the context of music publishing. You're not wrong, but I think this is a loss of focus.

Hardly. Commercial content has been challenged and displaced by non-commercial, purely cultural content like never before. Young people would rather see a goofy image macro that their friend made than some lame sitcom by old white guys in Hollywood. For the first time ever, this non-commercial content lives side by side with commercial content on massively popular portal sites like Faceebook, reddit, and YouTube.

That's not the point. This is a thread about a particular set of contract provisions YouTube is apparently offering to publishers, not a general shift in consumption patterns.

This. In addition to distribution being free, content creation has become far more accessible. Supply is way up.

> cut profits

Every year, the average household spends proportional more money on entertainment than the year before. If you only look at one part the market, the conclusion will be equal incorrect. First it was radio, the cassette tape, VHS, P2P, streaming, ectra ...), and each time someone proclaimed this was going to doom the "industry".

The music industry could argue that illegal music is pushing purchases to the movies, and the cinema could argue that illegal movies is pushing purchases to music services. Why should anyone believe either claim when the total profits from entertainment is going up?

just because more is spent by households doesn't mean profits have gone up. Maybe companies have to spend more to sell their products now (which might seem silly but I'm pretty sure advertising is one thing which _hasn't_ gotten cheaper in most cases).

Have you got concrete fact that illegal downloads cut profits?

You know I don't. And I know you don't either. Unless we can run a study whereby some portion of the population is entered into a control group and doesn't have access to the internet, it'll remain a question about interpreting data and not of fact.

So your statement was just a guess, just checking. I don't know the data from the record companies because I wouldn't bother reading it for fear of bias, I just know that a lot of the 'anti piracy' groups never actually put money back into the music industry, its just more money to fund more lawsuits.

> I wouldn't bother reading it for fear of bias

That's a dangerous stance in general, probably better to listen to both sides whilst acknowledging that they are both likely to be biased in their own favour.

Yeah true, I just know MPAA and RIAA have been know to publish information that is later found out to be false.

A study like this one? That found that illegal downloading INCREASED sales, not decreased?

http://musicfeeds.com.au/news/study-confirms-illegal-downloa...

I have no concrete facts, but my intuition tells me that commodity CD-Rs played as big a role. I think that whole line about illegal downloads is industry propaganda. You never hear about how illegally burned CDs brought down the industry, when everybody I know was ripping CDs from each other for a period of years. Why? Because record labels' parent companies were the ones selling CD burners hand over fist.

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