2009 also saw sales on the traditional music CD dropping and profits dipping for record labels. While artists revenue has increased some have commented that this is simply because artists have been working harder with schedules more stuffed with live performances than ever before.
So why is it that the movie industry is still making huge profits, even though both entertainment industries are suffering from piracy? To me, I see this as a perfect example of the value proposition that each industry's products represent to the average Joe.
When you pirate an album what do you lose out on compared to buying the original CD? Well, you lose the cover art but you can download that online too. The lyrics potentially but again, easily downloaded. Ummmmm.... You do however, depending on the record label, GAIN from piracy because you no longer need to deal with potentially draconian DRM measures that make your life difficult.
Lets look at the movie industry. What do you lose when pirating a movie as opposed to going to the cinema? Well, in short ... you don't get to go to the cinema! Sure, you can download the movie, then gather your friends at your place to watch it together. But you don't get to "go out" to the cinema! You don't get to share the mob excitement of watching this new movie. Shuffling into your seat in this vast space with other like-minded people. Have your eyes bedazzled by the enormous big screen in front of you and even experience 3D. Have a top of the range surround sound system that would cause the police to come knocking at your door due to noise complaints if you tried that volume at home. In essence, the experience of going to the movies is something substantial and meaningful to miss by just pirating to watch at home. Sure, its a LOT cheaper to just copy that movie over peer-to-peer networks than for each person to have to pay for a seat, but we pay it anyway because the experience is just not possible to duplicate. And besides, the guys who will download and not go the movies probably cannot afford the ticket prices. However, they get to watch it anyway, spread the word on awesome they thought it was, and potentially push more people to go to the cinema.
A pirated MP3 on my MP3 player sounds just the same as the original CD. So why should I shell out a lot of money for something I can essentially get for free. There is some good news, however, on the music front. A new technology called MusicDNA has been touted as the new replacement for MP3 and aims to add more to the experience of a genuinely purchased music file from valid commercial sources by embedding new content into a music file as well as meta-information that can get updated over time. This would be the right thinking amongst the record labels.
The only irreplaceable aspect of the music industry right now for customers is the live performance. You cannot download the excitement and feeling of connection with your favorite band or singer a live performance gives you by downloading it. This, in my opinion, is why artists are making more from live performances. And as I said before, people are attributing this to the fact that artists are now working harder doing more live performances. Well, of course, the only way to fulfill demand for more live shows (apart from doubling the sizes of concert venues) is to have more shows. If you have a lot more people wanting to go to the live show, you're going to schedule more of them. Totally logical. And why are there suddenly more people wanting to go to live shows? Perhaps because piracy of music has meant artists are actually getting more exposure than before because their music is being so widely distributed. An audience is being generated where previously there was no traction due to the relatively high cost of buying genuine media.
The movie industry is still breaking box office records because the cinema-going experience cannot be replicated (at least not all that easily) by piracy, whereas the music industry is essentially stuck offering the exact same thing people can get for nothing. MusicDNA is a good idea that has some merit in trying to do what the movie industry has done; create an experience people are willing to pay for that can't be replaced that easily. In addition, the music industry needs to re-invent itself around the live performance which is the closest corollary to "going to the movies" they have, as this is what people are willing to pay for.