people have suggested that this is a UK-only phenomenon, but a worldwide study found the same thing as well. And, now it looks like the same is being found in Sweden as well – home of The Pirate Bay, which we keep being told is destroying the industry. Swedish indie record label owner Martin sends in the news on data from the Swedish music industry, which looks quite similar to the UK data. First, it shows that while there was a tiny dip in overall revenue, it’s back up to being close to it’s high, mostly because of a big growth in live music:
Basically, recorded revenues dropped. Collections stayed about the same, but live grew. More importantly, though, is the second chart, which shows the revenue for actual musicians. And that’s going in one direction: up.
And yet, The Pirate Bay is destroying the ability to make music, right? Funny that the numbers don’t seem to support that at all. Basically, these charts are showing the same thing that those other studies have shown. More music is being created. There is greater “discovery” of new music. There are greater revenue opportunities for musicians, and the only part of the business that appears to be suffering is the part that involves selling plastic discs. Yes, that sucks if your business was based on selling plastic discs, but for those who can adapt and adjust, there is more money than ever before to be made. That sorta goes against the claims that “piracy” is somehow destroying the industry, doesn’t it?
Norway 1999 – 2009: Artists Make More Money In File Sharing Age Than Before It
Ernesto at
An extensive study into the effect of digitalization on the music industry in Norway has shed an interesting light on the position of artists today, compared to 1999. While the music industry often talks about artists being on the brink of bankruptcy due to illicit file sharing, the study found that the number of artists as well as their average income has seen a major increase in the last decade.
Every other month a new study addressing the link between music piracy and music revenues surfaces, but only a few really stand out. One of the most elaborate and complete studies conducted in recent times is the master thesis of Norwegian School of Management students Anders Sorbo and Richard Bjerkoe.
In their thesis, the students take a detailed look at the different revenue streams of the music industry between 1999 and 2009. By doing so, they aim to answer the question of how the digitization of music – and the most common side effect, piracy – have changed the economic position of the Norwegian music industry and Norwegian artists. The results are striking.
After crunching the music industry’s numbers the researchers found that total industry revenue grew from 1.4 billion Norwegian kronor in 1999 to 1.9 billion in 2009. After adjusting this figure for inflation this comes down to a 4% increase in revenues for the music industry in this time period. Admittedly, this is not much of a growth, but things get more interesting when the research zooms in on artist revenue.
In the same period when the overall revenues of the industry grew by only 4%, the revenue for artists alone more than doubled with an increase of 114%. After an inflation adjustment, artist revenue went up from 255 million in 1999 to 545 million kronor in 2009.
Some of the growth can be attributed to the fact that the number of artists increased by 28% in the same time period. However, per artist the yearly income still saw a 66% increase from 80,000 to 133,000 kronor between 1999 and 2009. In conclusion, one could say that artists are far better off now than they were before the digitization of music started.
Aside from looking at the reported revenue, the researchers also polled the artists themselves to find out what their income sources are. Here, it was found that record sales have never been a large part of the annual revenue of artists. In 1999, 70% of the artists made less than 9% of their total income from record sales, and in 2009 this went down to 50%.
Live performances are the major source of income for most artists. 37% of Norwegian artists made more than 50% of their income from live performances in 2009, up from 25% in 1999. That said, it has to be noted that only a few artists make a full living off their music, as most have other jobs aside.
In conclusion, the study refutes some of the most common misconceptions about the music industry in the digital age. Musicians are making more money than ever before. It is true that the revenues from record sales are dwindling, but that can be just as easily attributed to iTunes as The Pirate Bay.
The bottom line is that the music industry as a whole is thriving. Record labels may report a dip in their income from record sales, but more money is going to artists at the same time. Is that really such a bad outcome? Well, that depends on who you’re listening to.
Dutch Study: Ups And Downs – Economic And Cultural Effects Of File Sharing On Music, Film And Games (2009)
Mike Masnick at
[ This study] is a very long (128 pages), but very thorough research report analyzing pretty much everything having to do with file sharing in the Netherlands, commissioned by the government. It studies the economic angles, the legal angles, the cultural angles – and then compares the local results to international results.
While you might quibble with some of the methodology here or there, the overall conclusions of the report are pretty strong and clear: file sharing is not a problem for the overall industry. File sharing has, in fact, created a net benefit to the economy and society in both the short and long term, and that will likely continue.
The direct impact on sales of file sharing is minimal (though it depends on the category). In fact, the only areas actually in trouble right now may be the sale of plastic discs (CDs and DVDs), but much of the damage has nothing to do with file sharing, and there are indications that the “lost” money can be made up in other ways. The report recommends moving away from criminalizing user activities, and focusing instead on encouraging new business model development. A quick excerpt from the conclusions:
The short-term net welfare effects of file sharing are strongly positive given that it is practised by consumers whose demand is driven by a lack of purchasing power. To the extent that file sharing results in a decline in sales, we see a transfer of welfare from operators/producers to consumers, with no net welfare effect.
The market for CDs and the market for DVD/VHS rentals are the only sectors of the entertainment industry that are suffering from a slump in sales. Whereas this may be attributed in part to file-sharing activity, file sharing is not solely to blame for the decline. The markets for DVDs and console games continued grow impressively after P2P services were introduced, and the cinema market showed sustained growth between 1999
