Illegal File SharingGift or Curse to The Music Business?

Source: Getty Images

Brief History of File Sharing• Since the popularization of the internet and

the compressed MP3 file format, illegal file sharing has been a major concern for the music industry3

• In 1999, Napster was created3, causing panic in the music industry when illegal file sharing became very common and harder to track down

• After Napster was shut down, the recording industry believed that file sharing was over and that sales would reach the levels they did before the piracy occurred, however this was not the case as more peer to peer software emerged1

• To this day, the recording industry continues to blame file sharing for the annual decline in record sales4 , however they fail to mention the revenue change in other music-related endeavours, specifically live concerts

Source: Getty Images

Recorded Music Sales 2001 - 2007

Source: Billboard

iTunes Festival 2008

Source: Getty Images

Other Sources of Revenue• As seen in the chart on the previous slide, the music

industry has been seeing a steady decline in recorded music sales

• Although the recorded music itself has been selling 25% less than it did 7 years ago2, there has been little information said by the RIAA (Recording Industry Association of America) about the other sources of revenue, specifically live concert tickets, and the trend it has followed over the past 7 years

• In this investigation, we will focus on live concert tickets and the change it has undergone since the recorded music crisis

• In the proceeding chart, we will total the top ten grossing tours over the past seven years and investigate the change

Concert Revenue 2001-2007

Source: Billboard

Recorded Music and Live Concerts2001 vs 2004 vs 2007

Source: Billboard, Note* Live Concerts are only the top 10 tours of the year

Change in Other Revenue• As seen on the charts, the concert

revenue has been going up and down since 2001, but the trend line shows that overall it is gradually increasing

• Since 2001, the industry revenue share between recorded music and live concerts has been relatively the same with very little change, showing that the although recorded music revenue is decreasing, the actual ratio between the two products are not much different than before

• Most of the revenue from the industry still comes from recorded music rather than concert ticket sales, the same percentage as it was 7 years ago

Source: Getty Images

The Future of Music• In the future, according to the trends, we

will continue to see a decline in the sales of recorded music but we will see an increase in the revenue made from concert tickets

• Recorded music accounts for almost ten times as much revenue to the music business as concert tickets do, so it is still a long way to go before we see concerts become more important to the industry than recorded music

• Recorded music sales are decreasing quicker than the concert sales are increasing, so there will be a point in the music business where there will be a recession due to the lack of recorded music revenue and not enough money being made from concerts to account for the lost revenue

Source: Getty Images

Bibliography1. Alexander, Peter J. "Peer-to-Peer File Sharing: The Case of the Music Recording Industry." Review

of Industrial Organization 20 (2002): 151-61. 03 Nov. 2004. Business and Economics. SpringerLink. McMaster University, Hamilton, Ontario. 3 Oct. 2008. Keyword: Napster.

2. McGuire, David. "Study: File-Sharing No Threat to Music Sales." The Washington Post 29 Mar. 2004. The Washington Post. 29 Mar. 2004. The Washington Post. 03 Oct. 2008 <http://www.washingtonpost.com/ac2/wp-dyn/a34300-2004mar29?language=printer>.

3. "Napster: Then and Now." The Napster Controversy. University of Florida. 3 Oct. 2008 <http://iml.jou.ufl.edu/projects/spring01/burkhalter/napster%20history.html>.

4. Sisario, Ben. "Pop Tours Still Sell, Despite Economy." New York Times 12 July 2008. The New York Times. 12 July 2008. The New York Times. 03 Oct. 2008 <http://www.nytimes.com/2008/07/12/arts/music/12tour.html?_r=2&oref=slogin&oref=slogin>.

5. "Top 25 Tours." Billboard Magazine 118 (2006): YE90-E90. 6. "Top 25 Tours." Billboard Magazine 115 (2003): YE48-E48. 7. "Top 25 Tours." Billboard Magazine 114 (2002): YE44-E44. 8. "Top 25 Tours." Billboard Magazine 119 (2007): 138-38. 9. "Top 25 Tours." Billboard Magazine 117 (2005): 82-82. 10. "Top 25 Tours." Billboard Magazine 116/117 (2004): YE34-E34. 11. "Top 25 Tours." Billboard Magazine 113 (2001): YT4-T4. 12. All pictures courtesy of Getty Images (www.gettyimages.com