Tuesday, August 5, 2008

Music industry ‘should embrace illegal websites’

By Andrew Edgecliffe-Johnson in New York

The music industry should embrace illegal file-sharing websites, according to a study of Radiohead’s last album release that found huge numbers of people downloaded it illegally even though the band allowed fans to pay little or nothing for it.
“Rights-holders should be aware that these non-traditional venues are stubbornly entrenched, incredibly popular and will never go away,” said Eric Garland, co-author of the study, which concluded there was strong brand loyalty to controversial “torrent” and peer-to-peer services.

Radiohead’s release of In Rainbows on a pay-what-you-want basis last October generated enormous traffic to the band’s own website and intense speculation about how much fans had paid.

He urged record companies to study the outcome and accept that file-sharing sites were here to stay. “It’s time to stop swimming against the tide of what people want,” he said.

The study by the MCPS-PRS Alliance, which represents music rights holders, and Big Champagne, an online media measurement company, found that legal downloads of In Rainbows were far exceeded by illegal torrent downloads of the album.

Almost 400,000 illegal torrent downloads were made on the first day and 2.3m in the 25 days following the album’s release, compared with a full-week’s peak of just 158,000 for the next most popular album of the period.

“The expectation among rights-holders is that, in order to create a success story, you must reduce the rate of piracy – we’ve found that is not the case,” said Mr Garland, chief executive of Big Champagne, who highlighted the benefits that Radiohead received from the album’s popularity, including strong ticket sales for its concerts this year.

The findings could add impetus to rights-holders’ efforts to license digital services that are at present beyond their reach, following the pattern of the MCPS-PRS Alliance’s recent move to license YouTube, the Google-owned online video-sharing site.

“Developing new ways and finding new places to get something as opposed to nothing” was important, said Will Page, MCPS-PRS chief economist and co-author of the report.

Those new places could be peer-to-peer sites or internet service providers, he added.

Record companies should ask themselves: “What are the costs and benefits of control versus the costs and benefits of scale?” said Mr Page.

He also challenged the assumption that no other band could achieve the same benefits, saying Radiohead’s experiment had reduced the marginal cost and risk for those following their lead.

He described the launch of In Rainbows as “stunt marketing at its best”.

Original here

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