p2pnet.net News Feature:- Phil Tripp’s themusic.com.au has an intriguing guest editorial analysing Australian music "new release" information.

Just as intriguing, it’s by ex-ARIA (Australian Recording Industry Association) in-house lawyer and ex-senior legal officer Alex Malik.

Read on >>>>>>>>>>>>>>>>>>>>>>>>

How the spin doctors spun a tale about peer to peer file sharing and piracy
By Alex Malik - themusic.com.au

Introduction

For the past few years the Australian recording industry has been disseminating two messages to the public beyond all other messages. Those messages are as follows:

(1) The Australian recording industry has suffered a reduction in sales and has performed relatively poorly compared to market expectations, and
(2) This reduction in sales and relatively poor market performance is due primarily to internet based and peer to peer piracy.

The purpose of this analysis is to use publicly available information to test the accuracy of both of these statements.

The public statements

In 2002, ARIA claimed that "Internet piracy had … substantially affected the local market and was estimated to cost it $70 million a year." ¹ According to ARIA, much of these losses were due to Peer To Peer ("P2P") file sharing. In 2003, ARIA said "Recorded music sales continued to be hit adversely by online and offline piracy." According to a media report at the time, "While not specifically targeting peer-to-peer networks as eroding music sales figures, ARIA has often echoed the sentiments of its US counterpart, the Record Industry Association of America, which wages an ongoing war with peer-to-peer networks and their users." ²

In 2003 ARIA commissioned a survey, whose results purported to support claims of a link between P2P file sharing and reduced CD sales. According to the press release that accompanied the survey "Internet file-sharing and CD burning have now been confirmed as having a negative impact on the Australian sales of recorded music, according to a ground- breaking study released today by … ARIA." ³ At the time, Mr Stephen Peach the CEO of ARIA said "Internet file sharing (is) significant in Australia, and (is) having a real impact on sales of legitimate music."

This survey and the results of this survey have received a great deal of publicity. ⁴ They have been quoted in correspondence to the Federal Government, such as ARIA’s submission to the committee considering the US/Australia Free Trade Agreement ("FTA"). ⁵ It is understood that this message has also been carried to the Federal Government through the activities of ARIA’s lobbyists, Government Relations Australia. ⁶ ARIA has also claimed in various government enquiries, such as the Enforcement Enquiry that P2P file sharing was a major threat to the long term viability of the Australian music industry.

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1 "Stealing for a song costs music industry millions", by Kirsty Needham, SMH.com.au, January 8, 2002.

2 "Online piracy hurts 2002 music sales: ARIA", by James Pearce, ZDNet Australia, January 23, 2003,
http://www.zdnet.com.au/news/communications/0,2000061791,20271487,00.htm.

3 http://www.aria.com.au/pages/news-and-press-releases-file-sharing-cd-burning.htm

4 For example:

* "Millions of Australians pirating music", SMH.com.au, July 16 2003,
http://www.smh.com.au/articles/2003/07/16/1058035063632.html, and

* "Australians rip into illegal CD burning, file sharing: Survey", by Steven Deare, PC World, July 16, 2003,
http://www.pcworld.idg.com.au/index.php?id=258739158&fp=2&fpid=1.

5 http://www.aph.gov.au/Senate/committee/freetrade_ctte/submissions/sub133a.pdf government enquiries, such as the Enforcement Enquiry that P2P file sharing was a major threat to the long term viability of the Australian music industry.

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A good news bad news kind of day

Picture this scene … it’s March 2004 and the Australian recording industry has recently applied for and obtained Anton Piller (civil search) orders from the Federal Court against the proprietors of the Kazaa Media Desktop ("KMD"). After obtaining these orders the Australian recording industry has not only raided business premises, but they have also conducted raids and seized items from private homes in Sydney.

It’s March 2004, and Music Industry Piracy Investigations ("MIPI") and the Australian Recording Industry Association ("ARIA") are continuing their policy of applying one of the toughest and most aggressive civil "anti-piracy" regimes in the world. In the 18 months up to that date they had commenced legal proceedings against three universities, the host of an MP3 website MP3s4free, an individual involved in the development of an unauthorised CD vending machine, and many other so-called "pirates". They had shown no fear of ISPs, nor apparently anyone else. Their legal proceedings had been conducted in various jurisdictions including the Federal Court, the Federal Magistrates Court, and Local Courts located throughout Australia. Their enforcement, public relations and education activities continued to be superior to any other copyright owners group in Australia. Perhaps MIPI were setting benchmarks for world’s best practice in the area of copyright enforcement and the protection of intellectual property rights …

In the meantime ARIA continued to be the pride of the International Federation of the Phonographic Industry ("IFPI"), the group representing recording industries on an international basis, and the organisation responsible for of all global anti piracy operations. The relationship between ARIA and IFPI continued to be a strong one. IFPI’s CEO Jay Berman, General Counsel Allen Dixon, and Internet Anti-Piracy Unit Manager Jeremy Banks had visited Australia on numerous occasions prior to 2004, while ARIA’s CEO Stephen Peach had visited IFPI head office in London. Throughout this time ARIA had repeated the same mantra - that internet and P2P file sharing was a serious problem, and had resulted in substantial losses to the Australian recording industry, and then in March 2004 disaster struck.

The announcement

No … ARIA did not lose a significant court case, nor did ARIA discover a hitherto unknown form of music piracy. Rather, ARIA announced its Australian sales figures for 2003, and rather than showing a P2P based disaster, they demonstrated a substantial sales increase over the previous year. According to ARIA, sales in the Australian market reached an all time high in 2003. Sales of recordings increased by 26% from $115 million in 2002, to $145 million in 2003. The market share held by Australian recordings also increased from 20% to 25% over the same period. ⁷ Australian artists such as Kylie Minogue, Delta Goodrem, Holly Valance, The Androids, Dannii Minogue, Silverchair, and Keith Urban were highly successful in international markets including the US and UK. ARIA’s related organisation the PPCA

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6 According to music industry analyst Phil Tripp, "ARIA has made its representations to government at all levels through a paid lobbyist group called Government Relations Australia. I’ve heard that the company and its mouthpiece, Les Timar, are being paid about $20,000 a month with a bonus plan for any success they have in changing or blocking legislation. They have been extremely active in the past few months pushing the party line of their clients-which is what lobbyists do. You can check them out by going to the website http://www.govrel.com.au …" See "Loose Cannon: Lobbying Media & Government for Music Industry Changes", by Phil Tripp, November 18, 2003, http://www.themusic.com.au/im_m/archive/2003/031118_381_tripp.php.

7 http://www.aria.com.au/pages/documents/2003ARIAYearlyStatistics.pdf.

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reported that of the 100 most broadcast sound recordings on Australian radio in 2003, 24 were Australian recordings. 30% of the elite "top 20" most broadcast sound recordings on Australian radio in 2003 were Australian recordings. ⁸ The performance of the Australian recording industry in 2003 was in stark contrast to ARIA’s claims about a struggling industry, as a result of the impact of P2P file sharing.

ARIA’s response to these sales figures was a press release entitled "Music DVD continues its rise whilst CD singles slide further". ARIA’s focus was to downplay the success of the music industry. The final sentence of their press release says, "The adverse impact of illegitimate CD burning and internet file sharing continues to be of significant concern, particularly in relation to CD singles where there has been a significant decline in both volume and value." ⁹

At least one media report identified this apparent inconsistency between the sales figures and the ARIA "spin", and responded with the following commentary:

"The Australian record industry has just had its best year ever. But it doesn’t want you to know about it. This month ARIA announced its sales figures for last year. In its press release, it talked about Delta, it talked about falling CD singles sales, it talked about the rise in DVD sales, but at no stage did it tell us it was the industry’s best year ever. Why bury the good news? Record industry types aren’t usually shy about success. But this time their success is a little embarrassing. For the past few years the industry has argued that file-sharing and CD burning is having a negative impact on sales. But, unfortunately, their own sales figures don’t back up their arguments." ^{1 0} The commentary suggested that if it was publicised that the Australian market for sound recordings had out-performed much of the world, it would contradict claims that P2P activity had damaged the Australian music industry.

The truth?

So what were the implications of this sales increase? If sales had increased instead of decreased in 2003 and ARIA’s spin doctors had turned this "good news story" into a bad or mediocre news story, what others facts were ARIA failing to tell the wider community?

As discussed above, ARIA’s 2003 internet piracy survey painted a very negative view of P2P file sharing and its impact on the sales of recorded music. However the survey was subject to very heavy criticism at the time of its release. ¹¹ Some commentators viewed the methodology attached to the survey as being flawed. A series of questions on the methodology and results were put to ARIA in a public forum at the time, and ARIA failed to respond in any meaningful way. ¹² The results of the survey were also called into question - it was suggested that the survey was dated by the time the results were released, and the questions attached to the survey were either unclear, or were designed to produce results linking P2P activity to reduced sales. In any event, ARIA never released the scripting of the questions used in their research campaign. This raised another question - could the results of this survey be trusted?

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8 http://www.ppca.com.au/most_broadcast_recordings.htm.

9 http://www.aria.com.au/pages/AustralianRecordSales-2003FullYearFigures.htm.

10 "Music industry way off track with song and dance about falling sales", by Steve Cannane, smh.com.au, March 29, 2004,
http://www.smh.com.au/articles/2004/03/28/1080412234274.html.

11 For example, "Doubt cast on ARIA download survey", Rocknerd website, July 20, 2003, http://rocknerd.org/article.pl?sid=03/07/20/1141231&tid=7 .

12 "ARIA refuses to answer queries about survey", by Sam Varghese, The Age, July 23 2003,
http://www.theage.com.au/articles/2003/07/23/1058853112352.html.

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Eventually the criticism directed at the ARIA regarding this survey dissipated, yet this survey continues to be important to ARIA. For example, the survey continues to appear on the ARIA website, and as discussed above, was referred to in ARIA’s US/Australia FTA submission.

The issue: new release quantities by record companies

An important issue at the time of the ARIA internet survey related to the trend in record company music releases in the years preceding the survey. Had the number of new releases by record companies been reduced in the years preceding the survey? If so, has the trend continued since the ARIA survey? If the answer to either of these questions is yes, what impact has this trend had on Australian consumers?

Many industry observers suspect that Australian record companies have reduced their quantities of new releases, but ARIA and the individual record companies have not been forthcoming with respect to this information. If quantities of new releases have been reduced this could explain any decrease in Australian CD sales, or any underperformance of the Australian market for sound recordings relative to international markets. I investigated this issue, using publicly available information, and made a number of surprising discoveries.

Methodology

I examined music new release information from July to September 2004 inclusive, and the corresponding periods from 2001, 2002, and 2003, using publicly available information such as the ARIA Report. I characterised releases as CD, cassette, vinyl, or DVD new releases. I collected new release numbers from these periods and analysed them in order to identify any trends.

Results

My findings were that Australian consumers visiting CD stores are finding themselves with less choice in their music selections than ever before. Australian record companies have reduced the number of their CD, DVD, vinyl and cassette new releases by 43% over the past 4 years. While there has been an increase in music DVD releases by record companies since 2001, this increase has not been large enough to make up for the reduction in new release CD albums and singles. While this analysis does not include new release digital downloads, this trend of reduced record company releases has been apparent since well before the introduction of paid digital downloads.

The biggest reduction in new release repertoire has been in the area of new release CD albums. From July to September 2001, 1894 CD albums were released by record companies in Australia. From July to September 2004, only 955 CD albums were released by record companies in Australia. This represents a 49.6% reduction in CD album releases since 2001. Recently, some commentators (especially in the UK) have lamented "the death of the single". These concerns are also warranted. From July to September 2001, 291 singles were released by record companies in Australia. For the corresponding time period in 2004, only 205 singles were released by record companies in Australia. This represents a 29.5% reduction in singles releases since 2001.

These figures show that despite the introduction of parallel imports legislation several years ago - a change which was designed to give Australian consumers greater choice - there seems to be less choice for Australian consumers than ever before. Consumers have to increasingly turn to other sources for their music. Recently, the Australian market has seen a growth in "alternative" sources of music such as:

* so-called "authorised" CD imports, which are available from some larger retailers in Australia on "indent",
* CDs purchased on the internet from CD e-tailers or EBay, and
* downloads obtained from paid and unauthorised websites, located in Australia and overseas.

While I make no attempt to defend downloads obtained from unauthorised sources, this study does serve to demonstrate that it many circumstances, fans of particular genres of music may well have had no choice but to obtain music through P2P services such as Kazaa and eDonkey, because their musical demands were simply not being met by Australian record companies and retailers. Anecdotal evidence seems to suggest that in particular, fans of urban adult contemporary music, country music, world music, contemporary Christian music and folk music are more poorly served now by record companies than ever before.

Limits on CD stores

As an individual with wide and eclectic tastes in music recent visits to CD stores have been an increasingly depressing experience. Such visits find increasing numbers of DVDs, accessories and other non-music related product. In terms of music, in the words of associate of mine, "if you go to a typical store these days, there’s the new Australian Idol CD, and of course there’s the other new Australian Idol CD". Helpful staff may also point you towards the commercially viable greatest hits collections by Robbie Williams, Live, Powderfinger, Shania Twain, Neil Young, Pearl Jam, Ronan Keating, Kylie or Britney. Of course these alternatives are not especially desirable if you already own a copy of "Throwing Copper", "Ten", "Internationalist", or "Rust Never Sleeps". There are also compilations such as Ministry’s latest "Annual", Now 7, Kids Hits 6, Coastal Chill 5, So Fresh 4, Party Girl 3, Barbie Summer 2, and Aussie Legends, which are targeted at a narrow youthful demographic.

If consumer tastes go beyond the "top 40" they may have difficulty purchasing their selections. For example, try finding the latest albums by heritage acts like Patti LaBelle, John Fogerty or Hall & Oates. Even a "commercial act" like Sarah McLachlan found her latest CD being "released" in Australia many months after its US release. And her record label wondered why the CD release was relatively unsuccessful!

"Idol worship" - not for all

As discussed above, in 2003 there was no reduction of sales, and in fact there was a substantial increase in sales in the Australian market. The contention that the Australian market for sound recordings underperformed the rest of the world is unsustained, and in any event, even if it were true at least some of this trend could be attributed to Australian consumers having a reduced variety of musical choices.

Consumers are tired of having record company "priorities shoved down their throats". If they have specific tastes which don’t fit precisely in the mainstream they are simply skipping the bricks and mortar retail experience entirely. If consumers can’t find Patti LaBelle’s CD, they are not purchasing a Destiny’s Child CD as a substitute! These consumers are downloading music from overseas based websites. Disaffected music consumers are also replacing music purchases with competing forms of entertainment such as games, software and DVDs.

With continued mergers in the marketplace, this trend of reduced choice for consumers will probably continue into the future. The newly merged Sony/BMG entity won’t release as many CDs as Sony and BMG individually released in the past. Australian recording artists rumoured to have been dropped by Sony/BMG include Jerk, Sunk Loto, Merrill Bainbridge, Wendy Matthews, and Nikki Webster. This replicates past patterns. After Polygram and Universal merged a few years ago Stephen Cummings and the Fauves were dropped. ¹³ Tina Arena has reportedly left Sony/BMG by mutual assent following the release of her recent greatest hits album. With respect to other majors, David Bridie was recently dropped by EMI, and 28 Days were dropped by FMR. And what happens to consumer choices when the "big 4 Majors" become the "big 3" or "big 2"?

In the meantime, if there is a reduction in CD sales in Australia in the future, ARIA and the record companies will probably continue to blame P2P technology and internet piracy, rather than their own diminishing new release selections. Record companies fail to understand that while these artists have their fans, not all consumers want to be pushed into purchasing the latest CDs by Casey Donovan and Anthony Callea. For them, there has to be more to life than idol worship.

13 http://www.abc.net.au/thingo/txt/s1180522.htm.

 

CD new releases in Australia: Source - The ARIA Report

Alex Malik has a B.Com (Finance) and LLB from the University Of New South Wales and a LLM from Sydney University. He is in the final stages of a PHD in Law with a specialisation in intellectual property rights enforcement, at the University Of Technology. He can be contacted at Alexmalik@hotmail.com

This entry was posted on Wednesday, January 19th, 2005 at 11:13 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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