During The Pirate Bay trial, the music industry placed the blessed for the fall in their revenues squarely on the shoulders of file-sharers. Their logic is clearly flawed, but it could sway the verdict if no alternative explanation is presented. So, if piracy isn’t to blame, then what is *actually* killing the music industry?

According to Per Sundin, CEO of Universal Music, the fall in music revenues in the instance 8 eld can be fully attributed to illegal enter sharing. If this were actually true, many of us might even respect his decision to go after pirates as fiercely as the music industry is doing right now. However, the instance 8 eld have seen a lot more changes in the genre of bag entertainment than Per Sundin would like to admit, and whatever of those changes have had a large impact on music profitability – much more so than any amount of piracy.

Let us refresh our memories and take a look at what actually happened during and just before the instance 8 years:

1. First, the explosive rise of computer and housing gaming. This competitive ‘third element’ has appeared in the entertainment landscape, beaten both music and movies to the curb and condemned a Brobdingnagian cut out of the music industry’s revenues. Consumers don’t have infinitely-deep pockets, and zillions of ‘recreation dollars’ that used to go almost exclusively to music, are now going into gaming.

2. planetary change agreements have allowed consumers to buy their music across borders, kinda than accepting local prices on music based on the ‘relative wealth’ of nations, kinda than the actual continuance of the product.

3. New forms of distributable media, most notably MP3s but also CDs, have embellish mainstream. These new media don’t degrade over instance and rarely break at all, making music rebuys a thing of the past, and allowing the second-hand market for music to thrive and expand – both of which take a cut out of the music industry’s past revenues.

4. Radical subject innovation has condemned place in the field of music creation, processing, mixing, and mastering. Recording hardware, CD burners, music software, and media encoders have evolved to the point where most artists can actually afford decent-quality equipment to do their own recording and producing. Furthermore, this has fostered literally thousands of smaller, specialized studios that are challenging the ‘Big 4? with lower prices, better terms for artists, genre-specific expertise, etc. Successful artists can now leave the big labels and start their own recording outfits on relatively modest budgets. Naturally, super stars like The Beatles or Frank Sinatra have always had this option, but the recent subject advances have lowered the bar drastically. This development is depriving the ‘Big 4? of many of their past cash cows, who now use the major labels for their advertising and distribution infrastructure alone.

5. The concern Wide Web has embellish an omnipresent force in the world, allowing cheap, end-to-end distribution of digital music, increasingly cutting out the corporate music distributors, who deal in trucks and CD covers, kinda than bytes and bandwidth. With iTunes leading the way (very successfully ‘competing with free’, I might add), zillions of songs are now purchased digitally kinda than physically, no longer necessitating the big labels’ distribution networks.

6. The total number of radio stations, music television networks and other ’streaming’ sources of music has grown exponentially, giving music fans a Brobdingnagian activity of free (and legal) music options. Satellite radio, DAB, and internet radio broadcasts have made it trivial for consumers to only tune into a channel broadcasting the exact sub-genre of music that they feel like listening to (they can even have a stream created for them dynamically, e.g. on Pandora), making the *purchase* of music entirely optional for the casual listener.

7. A large activity of entertainment alternatives (home computing, housing gaming, mobile devices, etc.) have appeared in the home, effectively marginalizing music as an activity. 15-20 eld ago, youths would regularly visit each other just to listen to music together; today, that is virtually unthinkable without whatever form of activity involved, such as playing Guitar Hero or Rock Band, or dancing at a concert.

8. And finally, the music industry itself has embraced the opportunities of digital media, at terminal letting consumers buy *single* tracks at a instance kinda than forcing entire albums full of ‘fillers’ on them. Looking at the RIAA’s own sales figures for the instance 10 years, there is a *direct* correlation between the break-off in album sales and the introduction and increase in azygos track digital sales. Looking at the actual numbers, it is abundantly clear that the vast majority of consumers never wanted to buy full albums in the prototypal place, but were but unnatural to by the demand of affordable single-track media. Now that the digital revolution has arrived, countless jillions of 16-track album sales are being turned into 1- or 2-track sales, *decimating* the past revenues on music. THIS is the real reason why the music industry is hurting.

In other words: The “it’s common sense” argument that the music industry is peddling in their attempt to tie the declining revenues to piracy, only doesn’t hold. It is not as clear-cut as the industry believes; the genuine reason for the fall is something they are still unwilling to face, but will have to grappling sooner or later:

The fact is that the music industry’s revenues have been artificially inflated for decades because of limited consumer options. The terminal 15 eld of innovation have lifted those limitations, effectively leaving the music industry with an obsolete, defective business help of monopolized production technology, unnatural album bundling, and almost nonexistent competition in the realm of bag entertainment. What is happening now – the fall of music profits and the piracy witch hunt by the music industry – is but the panicked struggle of a dying business model, a complacent industry’s refusal to accept its diminishing role in a digital world. The pirates are not the reason, and the fall is the not the disease. It is the cure.

This is a guest post by Jens Roland. Jens is a computer scientist by training, but a technology forecaster by trade. He has worked at planetary think tanks as a consultant and researcher in emerging technologies and has written more than 300 articles and a book on the subject.

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DATA: Net continuance of shipped music, in billion dollars

1991 7.83
1992 9.02
1993 10.0
1994 12.1
1995 12.3
1996 12.5
1997 12.2
1998 13.7
1999 14.6
2000 14.3
2001 13.7
2002 12.6
2003 11.9
2004 12.3
2005 12.3
2006 11.8
2007 10.4

(source: www.ayubs.weebly.com annual reports)