The Sky is Rising: report shows that entertainment industry is thriving; anti-piracy laws are about profit-maximization, not survival


The Sky is Rising is a free 36-page report on all the ways that Internet-era "content companies" are making more money than ever, putting the lie to the funny statistics used by entertainment giants to justify brutal, overreaching copyright laws. Written by Michael Masnick and Michael Ho, The Sky is Rising shows that the entertainment industry's legislative battles aren't a fight for survival, but rather constitute a cold-blooded profit-maximization strategy that cloaks itself in the language of emergency as part of a legislative strategy

For years now, the legacy entertainment industry has been predicting its own demise, claiming that the rise of technology, by enabling easy duplication and sharing -- and thus copyright infringement -- is destroying their bottom line. If left unchecked, they say, it is not only they that will suffer, but also the content creators, who will be deprived of a means to make a living. And, with artists lacking an incentive to create, no more art will be produced, starving our culture. While it seems obvious to many that this could not possibly be true, since creators and performers of artistic content existed long before the gatekeepers ever did, we've looked into the numbers to get an honest picture of the state of things. What we found is that not only is the sky not falling, as some would have us believe, but it appears that we're living through an incredible period of abundance and opportunity, with more people producing more content and more money being made than ever before. As it turns out... The Sky Is Rising!

The Sky Is Rising! (via O'Reilly Radar)

Discuss

30 Responses to “The Sky is Rising: report shows that entertainment industry is thriving; anti-piracy laws are about profit-maximization, not survival”

  1. Donaleen Kohn says:

    I don’t consider the download to be “free” when I have to submit that much personal information.  I’d love to read it but the price is too high.

    • marilove says:

      You don’t have to use real information, do you?  I have a throw-away gmail address just for this sort of thing.

  2. Jakob Rooney says:

    FYI I think you meant to say “Not” rather than “Nor” in the title. But thank you for the post! This is just ridiculous.

  3. Yeah, independent game developer 2D Boy that saw an 85% piracy rate on their game “World of Goo” are really just greedy asshats that want more money.  

    • marilove says:

      Except, it seems the Humble Indie people keep releasing more and more titles under their “give as much or as little as you want!” model, so it seems to be working. Otherwise they wouldn’t continue to do it.

      And what about Louis CK?  He made a million bucks in just a few short weeks.

    • giff says:

      This graphic isn’t meant to lambast indie game devs. It’s towards the big movie houses that are pushing all of the “anti-piracy” legislation.

    • Locien says:

      There’s a leap of logic there that you make, and that is the “a non trivial number of pirates would have bought the game if they didn’t pirate it”, and to be honest, I find that entirely unpersuasive. The price of piracy is effectively free, and if you remember basic economics, all other things equal(which is not always the so, but works in this situation) lower prices mean more sales. Drop the price altogether, and many, many more people will go for the product. Price acts as a strong limiting factor here, so piracy rates of “85%” really don’t represent a huge loss at all, but a demonstration of price elasticity; if they couldn’t pirate, you would likely see just under 85% of users drop, and a trivial increase in buyers.

      • johneppstein says:

        You’re perpetrating a specious argument, that saying that lost sales are attributable to piracy is the same as saying that every pirate download is a lost sale. That’s nonsense. The fact is that the figures show that every lost sale in the entertainment industries (gaming included) can if fact be attributed to a pirate download, however only an idiot would try to claim that every pirate download is a lost sale – and nobody has claimed that. It’s a specious argument perpetrated by piracy advocates for the sole purpose of muddying the waters of discussion.

        When a company talks about “piracy rates of 85%” what they mean is that piracy has resulted in an 85% loss of sales. In pretty much all cases the number of pirate downloads are actually much higher. How do they know this? Well, when you release a product and it sells (for example) 10,000 copies in the first week, 20,000 copies in the second week, but the third week it appears on pirate sites all over the internet and sales suddenly plummet to 2250 sales (15% of an average of the first two weeks) I’d say it’s pretty safe to say that piracy has cost you 85% of your sales. Regardless of the actual number of downloads, which will actually be a much higher number than 12,750.

        • Alexander Sirkman says:

          Why couldn’t it mean that people just weren’t as interested in the product anymore?

        •  Hello sir, you speak of this “specious argument perpetrated by piracy advocates for the sole purpose of muddying the waters of discussion” as if it wasn’t an argument brought into conversation by trial lawyers and lobbyists for media corporations first. 

          Had these corporations not imposed draconian fines treating *EVERY SHARED COPY AS A LOST SALE, THAT THE FILE SHARER SHOULD BE LIABLE FOR*, imposing tens or hundreds of thousands of dollars in fines against  *INDIVIDUALS WHO MAY NOT HAVE EVEN DOWNLOADED SAID WORKS PERSONALLY*, then this discussion would likely not even be in the public lexicon.

          You reap what you sow, and these companies have repeatedly shown that they care for nothing besides their “perceived losses” and how they can re-form a profit system that gouges and exploits artists *and* consumers, that they have carried on for decades, but has now all but slipped through the cracks.

          These companies have garnered nothing but ill will towards themselves.   What you have named as a flaw in the argument of the “pirates” side was originally *their* (MPAA, RIAA, MAFIAA) formula, *their* estimates, and *their* claims.  To not use this against them would be as stupid as Romney campaigning against Obama on the basis of health care, when he enacted same policies in his state as Governor.   You started this discussion.. and now you point the finger at anyone who chooses to still have this discussion as if something is wrong with *THEM*.  Sorry, it’s not working.  We have the internet now and information is not the commodity you would obviously like it to be.  The actions taken by these corporations (and on behalf of them) is something we have a right to discuss, and the facts are clear.

          To not allow us to use their own, albeit very flawed, argument against them and act like it never happened.. well..
          That’s just ignorant.

    • wysinwyg says:

      What does that have to do with the entertainment lobby?  This report is on companies represented by the entertainment lobby.  I think you’re looking for a different thread.

  4. carloscarlson says:

    They left out ‘album sales’ in the bottom, music box.  I’m not trying to argue against their main point, except that this clear omission should make you question what else they left out.  And maybe question the ‘infographic’ in general.  

    • marilove says:

      That’s a fair point, but I do wonder if album sales are even that big of a deal when it comes to it.  Most artists make their money on concerts and other appearances, and merchandise, not album sales.  The album sales generally benefit the large companies that back the artists, and not the artists themselves.  So, maybe album sales have dropped some.  And what about the sales of single songs, rather than whole albums?  That’s been a big change.

      I just wonder, if you were to compare the entertainment gains in the last few decades, including merchandise and concerts, to the (possible and probably fairly slight) drop in album sales (also taking into consideration single sales), if it would all balance out.  I bet the companies still come out way, way ahead in profit.

      • carloscarlson says:

        As someone with over 10 years in the independent music industry, I can say that artists used to benefit tremendously from album sales, but at this point it is very hard to make a profit selling recorded music.  

        I am not pro MPAA or SOPA or any of that nonsense, but it is difficult to feel like we are getting reliable data from either side.  Because as it stands right now, it is the Evil Giant Corporations fighting the Everything Should Be Free All The Time pirates.  

        I’m still not exactly sure where independent artists (especially ones who don’t tour or make T-Shirts), fit into that fight.

        • marilove says:

          It seems to me that as a society, we are way, way too obsessed with large profits.  Not just profits, but large profits.  Billions of dollars somehow isn’t enough.  This is especially true in the entertainment industry.  You aren’t considered a success unless you’ve made billions of dollars.  And if a company loses a couple million in profit, but still have billions in profit, they are somehow in dire straits.  And I don’t buy that.  It’s a lot of greed.

          But plenty of indie artists make a living.  They may not be billion- or even millionaires, but many make enough to live on.  And I’d stil consider them a success.  But they are overshadowed by the big, huge companies who freak out whenever their profit-margins drop even slightly, even though their profits are still huge and they are still billionaires.

          I think the internet can go a long way in evening out the field, and in a lot of ways it already has.

          • Mister44 says:

            They need millions and billions of dollars to make Michael Bay films.

          • johneppstein says:

            Plenty of indie artists make a living? Sure they do, driving cabs, tending bar, working at Guitar Center. I’ve been in music since the mid ’60s, both as a performer and on the tech side and, compared to the ’80s and ’90s almost nobody (indie) is making a living in music anymore. The very few exceptions are well publicized by the anti-music business alliance of Big Tech and Pro-Piracy, but the actual percentage is microscopic, whereas 10 or 20 years ago most people who were any good could at least get by. You can’t sell recorded product on a profitable basis, and, contrary to the lies propagated by the piracy advocates, you can’t make money playing live in most areas, either. Contrary to the “conventional wisdom”, only name acts make money touring, and of those only the biggest stars really turn much profit. People don’t understand how amazingly expensive touring actually is, even on a very minimal level. Touring also requires having enough money to cover all your expenses UP FRONT to prevent getting stranded in the middle of nowhere when a vehicle breaks down or the promoter at the last show skips out with  the receipts. 

            And you certainly can’t make much playing your home town if you’re doing original material. If you’re doing that and you book more than one or two gigs a month (in a larger urban area) you’ll overexpose yourself and burn out your audience.

        • wysinwyg says:

          As someone with over 10 years in the independent music industry, I can say that artists used to benefit tremendously from album sales, but at this point it is very hard to make a profit selling recorded music.

          Someone else from the music industry disagrees:  http://www.negativland.com/albini.html

          Edit: Oh, independent music industry. Sorry. Leaving the Albini piece up because it’s relevant to the discussion in general even if it’s not germane to your particular experiences.

  5. liquidstar says:

    I really don’t think it was ever about profits. The issue has always seemed to me to be one of control.  The interested parties are not looking for profit margins, they want a permanent piece of the future – the agenda dovetails nicely with the Canadian, American and British slide into Fascism.

  6. gellfex says:

    Article in yesterdays NYTimes about how HBO & Showtime are “extremely profitable”.  This despite the fact that they are some of the most bittorrented shows out there. Imagine if they had streaming subscriptions, so we didn’t have to pay for 200 cable channels we don’t want.  All they’d have to do is make a streaming deal with Hulu+ or Netflix to charge the same premium as the cable provider, and quite a few pirates would lay down their cutlasses.

    BTW: I paid for World of Goo. It was both sanely priced and easily acquired through the Wii download store. That’s the kind of low friction deals that appeal to some of us.

    • marilove says:

      I was just talking to someone about this last night.  If Showtime and HBO allowed me to pay for content on their website, I’d do it in a heartbeat, because it’d be convenient. They don’t even need to do it through Hulu+ or Netflix; I’d gladly pay for it directly from their website, though of course Hulu+ would probably be easier and make more sense (that way people can easily stream it on their TVs).

      I DO think that we are moving toward that model, though. They can’t hold out forever.

      Did you know that Netflix is possibly going to pick up a new season of Arrested Development?  That is huge! If they succeed and Netflix starts picking up more and more shows, especially those that the big TV companies won’t pick up, then I think we truly will be at the tipping point.

  7. musesum says:

    Wow, maybe I’ve been scanning the IFPI reports wrong; the “global industry value” is a new one. Does that include iPods? Maybe iPhones? Music Apps? All I’ve gleaned from the IFPI reports, in the past, is that global revenue for recorded music has dropped from $37B to $15.9B over 10 years. 

    So, is file sharing the new “airplay” so to speak? I wonder what the breakdown is for “advertising” part? When I try to promote my own music, would that be adding to the “global industry value?” Or is that cost of goods sold? 

    That all may sound a little snarky. But, I’m truly curious. Right now, I’m developing a music app for a musician. He said that he is less worried about making money directly from the app as he is in building his brand.

  8. johneppstein says:

    Utter bullshit here. While things got slightly better after the Limewire shutdown and getting rid of Megaupload will probably make a dent, things are still horribly bad for most creatives, especially indie, entry level, and cult following musicians.

    It should also be noted that although there was a slight increase in total sales relative to last year, industry sales are still down well over 100% relative to the inception of widespread internet piracy with Napster in 1999. So claiming that “sales are up” is highly misleading. It will take a long timer and an extremely large yearly increase to recoup the sales lost to the widespread looting of music caused by piracy.
    Furthermore the figures quoted at the top of the chart are widly inaccurate and grossly misleading. If you want the truth, look here: http://money.cnn.com/2010/02/02/news/companies/napster_music_industry/

    Yeah, that’s right – $6.3 billion in 2009 compared to $14.6 billion in 1999.

    While there are many options for a musician to have his work circulated for no real return the options for actually being exposed to a viable audience are nil outside the traditional content industries. It’s pretty disingenuous for people like Trent Reznor and Corey Doctorow to make their names in the traditional content publishing industries and then suggest that unknown creatives have the same options open to them outside the system as a “name” person. Because the fact is, they don’t. If you don’t have an existing name or an organization with some real PR expertise being you your chances of being noticed on the internet are lower than your chances of winning the lottery. As anybody who is actually involved in those sectors of the creative industries will tell you – in private. In public the majority are afraid to speak out because opposing the freetards in public is really bad press these days.

    Up until a few years back I bought into the bs about how all this “sharing” and “free access” was going to bring about a revolutionary new utopia for independent creatives. My life resembled something out of one of Doctorow’s novels. The only thing is, it DOESN’T WORK.  Scrounging of the surplus of society is only viable when there’s excess to scrounge, and it’s still not productive. It leads nowhere, and it’s a parasite that eventually saps the life of the supporting system. Giving your stuff away for “exposure” doesn’t put food on the table – unless you’re already famous enough to use it as a loss leader to monetize your other revenue streams. “Building your brand” is meaningless if that “brand” does not  give you a meaningful return on your investment in time, energy, and expenses.

    I’m interested in building my SALES.  If I can build my sales, my brand will take care of its self. To claim otherwise is nonsense and does a grave disservice to those who buy into the rhetoric.

    Here’s an example of how well your way of doing things works. I have a friend, a very talented guitarist and songwriter who plays in my band. He also plays in two other bands which are internationally known with followings across Europe and Japan as well as the US. One of these bands is in the Rock and Roll Hall of Fame. My friend buys into your freetard philosophy lock, stock, and barrel. He’d rather have his stuff available to his fans for free than to have it sporadically released for commercial sale after the initial run of the recordings sells out. His “brand” is well built, according to your way of looking at things. He must be doing great, right? So why is this internationally known artist sleeping on the floor of my studio and subsisting on$40 a week he makes teaching guitar? At the age of 55. That’s where this nonsense leads, children. Take note and beware.
    >?

    • Alan Twelve says:

      The problem, though, with the “freetards are destroying everything!” argument is this: the iTMS sells around two billion songs a year.

      I notice, also, that figures quoted by the industry are always sales or revenue, never actual profit from those sales.

    • myke says:

      Hmm, the cnn.com link where you get your numbers from are values sourced from the RIAA.   I’d have to say if my choice is believing those numbers or the skyisrissing pamphlet,  which at least appears to be a much more thorough analysis, I’d take the non-RIAA one.  Taking both of them at face value would indicate that the RIAA co’s (i.e. very large media companies) have been losing value over the  last decade but that the music industry as a whole has been gaining value greatly.  It’s been gaining as much as an order of magnitude more than than the RIAA co’s have been losing.  So let’s say our goal as a society is to promote the arts and the artists and  at least according the constitution, 

      To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

      it is. And say we are going to judge the success based on monetary valuation, just like the RIAA wants us to.  Then this so called ‘piracy’ is apparently not a problem for attaining our goal and we are doing just fine.  In fact, the less money the RIAA co’s make, the better for the arts, the artists and for society.  We should probably encourage more of whatever it is the RIAA is calling ‘piracy/theft/pillage/etc.’.

    • Matt Dunphy says:

      You lost me when you said Trent Reznor was disingenuous. Please, find me any place where Trent Reznor has said that anyone can be successful like him by using his methods. I’ll save you some time: He’s never said that. For the last dozen years I’ve been running a Nine Inch Nails website, and as a result have read or listened to or watched pretty much any interview that he’s ever done which has made it to the internet. His views on the topic are far, far more nuanced, and he has a pretty great understanding of the strange landscape a musician has to face right now. 

      I would have more sympathy for these industry leaders if they had turned their profit toward bettering their own market, instead of blowing it or hoarding it. Given the absurd profit margins these industries had in the 80s and 90s, why weren’t they the ones who developed the iPod? Why is it that the big publishing companies didn’t develop a universal and affordable eBook reader? Both of these came out of tech companies, often times struggling against those controlling the content they sought to disseminate. I’ll give Hulu some credit, as they had some backing from television networks, but even they’re too cautious about certain absurd things.

      So often, artists are paraded around as victims of rampant piracy – but if you’ve ever had a glimpse into the world of record industry accounting, you’re fully aware that the pirates sit in high-rises in New York and LA, strip-mining talent with insulting contracts (we’ll loan you money, you write and record songs, which we then own, and through accounting magic, will never break even, so we probably won’t pay you past your advance). Your guitarist friend only makes $40 a week teaching lessons? Does he only teach one student one hour a week? Anyhow, I know a guy who had a hugely successful band that got started right around 2000, who during the peak of this alt-rock band’s career was touring the world – and said he earned more money when he worked full-time at McDonalds in his youth. I’ve heard stories about bands who got more from their Amazon Affiliate commissions on their own albums than the record labels paid them for the same albums. 

      You’re employing the ever popular false-dichotomy of EVERYTHING MUST BE FREE vs. PRESERVE THE OLD GUARD. It’s far, far more nuanced than that. There are no easy solutions right now, it’s basically the wild west. There were plenty, PLENTY of signs that this was coming down the pike. The folks in charge of the old distribution channels chose not only to ignore those signs, but to drive harder despite them. When the road got curvy, surprise! They flew off the tracks, even though they had the resources to get them through such a dramatic shift in scenery. To trot out the artists they’ve been ripping off for decades, now that their own wells have dried up, is a travesty.

      •  Well said. 

        While I disagree that any media company should be charged with being on the forefront of technology, and releasing said technology to the masses, they certainly could have partnered with tech companies to get a better picture of where things are going.  As you said, they certainly have the resources.

        Instead where did they invest their (to coin a pun) “record-breaking profits”?  Churning out endless numbers of talentless pop musicians and marketing them into every aspect of our lives, while finding ways to pay them (the artists) less and less, knowing most just wouldn’t give a shit because they were getting their chance at stardom.   The American Dream is a thinly veiled Corporate Nightmare.  There is no “Art” to these people.  There is no consideration for the sake of “music” or “fair compensation of artists”.

        There is only Profit. 

        Indie and direct-donation or purchase from an artist is the only way many of us who consume music today can feel confident that the artist themselves are getting what they deserve.  We have the power to connect directly with artists today with the internet, so why do it any other way, and sponsor corporate greed that has perpetuated for decades by this industry? 

        It’s an easy choice for me to make.  I pay less for music I love.  The artist sees more of that money than a company– as they should.  I see them when they tour in my area and show support through merchandise purchases, etc.   Not all small groups can afford to do this, just starting out.. but if you connect with your fans, and show your appreciation to them, as much as they appreciate you (through your music, organized discussion, community interaction, etc.)  I think you won’t have much to worry about.

  9. Wiki-Truths says:

    If people were paid a proper wage to eat and live they would gladly pay for any and all media. 

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