It was no longer than a year ago that the American Supreme Court ruled in favor of the entertainment industry in MGM v. Grokster, a public indictment showcasing the classic battle between capitalist fascists and a general public refusing to pay for a pricey, yet poorly organized, product. Can you blame them?
I will admit that I am guilty of illegal downloading, mostly as a result of the ridiculously high prices that the record labels force me, the consumer, to pay for an album that has twelve tracks from which I might enjoy listening to only one or two.
The music industry is facing quite the predicament. Its entire revenue is derived from public consumption, that is, the selling and buying of compact discs and DVDs, so the prices will ultimately follow the fundamental rule of profit maximization: set your costs equal to your returns. Illegal downloading allows the consumer to purchase music for nothing, which affects the market demand for CDs and DVDs and alters the supply and surplus of audio and visual entertainment.
The industry is basically screwed by its inability to earn a profit, leading to the downsizing of individual firms, eventually raising the prices even higher and deterring an even greater amount of consumers. Is there a remedy? Not really. The emergence of legal downloading (e.g. itunes) might alleviate the situation, assuming that the public's enthusiasm for any and all free goods will miraculously disappear upon presentation of an honest alternative.
My current position as an intern at an independent record label has triggered a personal understanding of how I am preventing myself from obtaining a job in the entertainment industry. I don't actually buy the albums, I don't contribute to the company's accumulation of revenue, I take away from the employees' salaries, and my actions give rise to numerous layoffs in the field as well as my own inability to be hired by a firm that has no money to pay its workers due to low aggregate income. Solution: I ought to purchase CDs/DVDs instead of using i2hub, dc++, Limewire, Kazaa, Gnutella, BearShare, Napster, etc., etc. (you name it, I've used it). It's not so much that I sympathize with the artists because, as we all know, most of their revenue stems from consumption of concert tickets and merchandise (shirts, posters, stickers, dolls, perfumes, personalized jewelry, candy, gum, handbags, stationary...the list goes on...just look at the Spice Girls and *Nsync as examples).
These preposterous law suits against peer-to-peer programs such as Grokster and Napster are ultimately detrimental to the businesses and artists rather than the pioneers promulgating the software online. Think about this. I was once a huge Metallica fan (once being the operative word) until they filed a suit against Shawn Fanning, the twenty-two year-old creator of Napster. What a brilliant method of encouraging your fans to hate you by suing them for wanting to hear your music.
The fact that the public isn't paying for the music shouldn't constitute as a massive problem, since popular consumption of the band's records doesn't largely contribute to the members' proceeds, especially after taking into consideration the standard publishing royalty which usually accounts for less than 50% of the artist's earnings on the sale of an album.
Metallica lost a tremendous portion of its fan base, and that DOES have an effect on income in the sense that fewer people will now be willing to buy concert tickets to see a band that sues its own fans out of greed (hence giving rise to "Metalligreed," a term coined by big-hair band rival Motley Crue circa the Musician v. Napster controversy in 2000). The consequences are similar for the record labels, which will earn a lesser profit now due a shift in consumer preference. Because the label's entire income is completely dependent on record sales and NOT on the selling of merchandise, this puts the employee (i.e. me) in a far worse situation than the artists signed on to the label.