Guest Blog: Consumers Love Music. They Just Don’t Want to Pay for It

[Todd Green is as Assistant Professor of Marketing at Brock University’s Goodman School of Business. He offers some interesting insights into the behaviour of today’s music consumer based on recent interviews with consumers and members of the music industry. The timing of this article goes nicely with a recent report that global music piracy was up by nearly 20% in 2015. – AC]

On Thursday, December 17, 2015, a Virginia jury set a huge precedent by ordering internet provider Cox Communications to pay $25-million in damages to music publisher BMG Rights Management LLC, over illegal downloading by Cox subscribers.

That followed comments earlier this fall by Gene Simmons of the rock band KISS, who told an interviewer that downloading and file-sharing have killed rock.

But who’s holding the lethal weapon?

Back in 1981, MTV burst onto the airwaves with the Buggles hit, “Video Killed the Radio Star,” a commentary on the music industry’s shift requiring bands to develop a strong visual image through videos. If you Google that song today, one of the first results to pop up is “Video Killed The Radio Star download.”

Twenty years ago, as consumers moved from MTV to MP3, acquiring music no longer meant lining up at the record store, but getting it with a mouse click. Often those clicks were illegally downloading songs or entire albums from file-sharing sites that emerged in the early 2000s. Some analysts estimate illegal downloading cost the music industry between $7 billion and $20 billion a year in the United States alone. How does that affect artists? In Canada, research in 2013 found that the average independent musician earns just over $7,000 annually.

Where does the blame actually lie? With illegal downloading sites like Napster, Pirate Bay or Pirate X? Is it Apple, for selling songs at 99 cents on iTunes? Or is it consumers who think music should be free?

While technology has made stealing music much easier, it’s consumers who decide to use the technology. Why do people not value music enough to feel they should have to pay for it? Some consumers rationalize it by claiming musicians make most of their money from touring and merchandise, not record sales. Do these people also feel they should eat for free at restaurants because they have higher margins on drinks?

I’ve been discussing the state of the music industry with various stakeholders, including musicians, broadcasters, label owners and tour managers[1]. One musician, who earns money from touring and recorded music, wondered why we vilify technology companies for copyright abuse, or chastise “evil major labels,” when it is consumers who are to blame. The Internet doesn’t make the decision to download music.

A newer entry on the suspects list for devaluing music are streaming services like Apple Music, Spotify and YouTube, giving listeners access to millions of songs. It’s a wonderful time to be a consumer. Ironically, streaming services were initially a strategy by the industry to curb free downloading, and evidence suggests it works in some markets. Research I conducted with my colleague, Dr. Gary Sinclair (University of Stirling), found that many consumers who were prolific illegally downloaders now use Spotify Premium as a form of a moral cleanse. In fact, several of our interviewees, said paying $9.99 removed any sense of guilt they had associated with downloading upwards of 20,000 songs.

But recent media discussions challenge whether streaming is actually a positive development for musicians. Artists who speak out against streaming services are often dismissed as whiny millionaires upset that they can’t add further to their fortunes. What does not appear to be understood is that the revenue earned from record sales is what allows labels to invest in the next generation of emerging artists.

While there is resignation in the industry that streaming is inevitably where music consumption is going, artists themselves are not in consensus on its merits. Some don’t expect to make much from record sales anyway, so aren’t upset over low royalties from streaming services, hoping instead to make a living from touring and merchandise sales. It’s a sad state of affairs when musicians embarking on careers don’t expect to be paid for their hard work in the studio.

Several musicians I spoke with doubt that streaming is making the industry better. They say it just makes music easier to acquire, and further devalues it in the eyes of consumers. Artists I’ve interviewed resent comparing an illegal method of obtaining something (downloading) to a legal method (streaming), just to legitimize a process that is destroying digital music’s value. They say this wouldn’t happen in any other sector. If we want our dry cleaning at 4 am, we can’t break the window, snatch our shirts, then simply say the business practices don’t meet our needs. Musicians say the customer isn’t “always right,” and consumers shouldn’t always get something for free simply because we want it.

Music is an important part of many people’s lives, and musicians provide value that is difficult to measure. We need to take responsibility as consumers and know when to pay for what we love. We all expect to be paid for our jobs, and should expect musicians to want that, too.

[1] I offer anonymity and confidentiality to my participants so I am not able to provide their names.