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july 31, 2007:
illegal music downloads hit record high

Iran across a good read from the UK Telegraph today, entitled “Illegal Music Downloads Hit Record High”: “Four out of every ten social network users have music embedded in their personal profiles, rising to 65% among teenagers. Russell Hart, chief executive of Olswang Entertainment Media Research, described this phenomenon as the democratisation of the music industry. “Social networks are fundamentally changing the way we discover, purchase, and use music,” he said. “The dynamics of democratisation, word of mouth recommendation, and instant purchase challenge the established order and offer huge opportunities to forwardthinking businesses.

My comment:
This guy is hitting the nail on the head, for sure. Yet, I still don’t see a concerted move from the labels to simply offer a new, default license for the use of streamed tracks on these networks (radio, anyone…?) in exchange for a nice share of revenues and zero-cost access to hundreds of millions of music buyers. This sounds like a great job for the PROs (performing rights organizations) that represent the master recording rights such as the PPL (UK), or SoundExchange (U.S.). But once again, the only thing you hear from them is that they don’t have the mandate for this, yet, and on and on. Now, whose fault is it if there is no license to be gotten? My prediction: On-demand streaming of each and every song will be offered, licensed or not (not is more likely since there are already hundreds of apps available that do this perfectly, and without a license), on all of these networks – and there are already approximately 750 of them, serving approximately 700 million people, and their number is estimated to grow to over 5,000 within 12 months.

If the record labels (and to a lesser degree, the music publishers) think they can just deny this license in their usual “go away – permission not granted” style, simply in order to be able to extract larger sums out of the market, they will just put another nail in their coffin. Because today, non-participation means that everyone just routes around you! The biggest trend here is access replacing ownership. Hundreds of millions of people go to those networks and listen before they will consider buying anything (provided that the buying of digital music may even be attractive, which it is clearly not, right now).