Digital NARM Day 2 Panels - Piracy & Consumption

Much of the discussion on yesterday’s first panel “Digital Copyright Crossfire” focused on how the industry should respond to unauthorized file-sharing. The panelists offered many of the typical arguments - ISP policing, litigation, and new business models that can compete with free music.

On one side, Cary Sherman (RIAA) and Rick Carnes (Songwriters Guild) seemed to suggest that if illegal downloading were curbed sufficiently, file-sharers could be converted into paying customers. But Jonathan Potter (DiMA) and Michael Petricone (CEA) argued that the music business is now consumer-driven and monetizing these customers depends on offering innovative, valuable alternatives.

Clearly, there is disagreement about what drives piracy and what to do it about it. The “Data, Trends & Analysis” panel offered findings on the nature of file-sharing, purchasing and music consumption:

Eric Garland (BigChampagne) said a large portion of P2P users also purchase music legitimately. However, when those people stop their P2P activity and only acquire music by...

buying it, the amount of purchasing they do does not increase. Garland also reported that of all the music downloaded illegally, 75% gets listened to at least once, but much of it does not receive repeated listens.

COMMENTARY: The fact that people didn’t buy more music when they stop using P2P suggests that reducing file-sharing – to the extent that’s possible at all – won’t necessarily increase download sales. The fact that people don’t really listen to a large portion of the music they download from P2P could mean: that they listen once and decide they don’t like it; that they forget about it or it gets substituted by other content; or that they download just because it’s there but don’t necessarily intent to interact with it in the first place. Either way, it’s unclear what portion of P2P activity could truly be monetized.

Glen Lipsky (SoundThinking NY) described the path from discovering a particular piece of music to purchasing as a long one – sometimes months – that varies from person to person. She noted that the more listeners interact with free content, the more likely they are to make a purchase at some point in the future. The key for sellers, according to Lipsky, is to make content available and easy to acquire at the moment that listeners make the decision to consume content. Because listeners will take the path of least resistance when it comes to acquiring music.

COMMENTARY: These findings suggest that the digital music market is indeed a consumer-driven, and that sellers will have to find a way to be accommodating and patient with listeners in order to engage them economically.