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Music Piracy: Streaming to an App Near You

The distribution of music has evolved over time, from records, tapes, and CDs, to downloading and streaming online from computers, mobile devices, and a growing array of connected devices in the home and car. Music piracy has also evolved as those peddling and consuming infringing content adapt to new technologies. A new study from MusicWatch (a research firm that focuses on the music and entertainment industries) highlights the changing nature of music piracy and shows that while there is no “silver bullet” to combating online piracy, stakeholders involved in protecting intellectual property need to adapt their efforts to meet this evolving challenge.

The study has four main findings: music piracy is still prevalent; “streamripping” of music has emerged alongside the rise in legitimate music streaming services; music apps and app stores play an increasingly important role in music piracy; and piracy has a substantial negative impact on musicians and content owners.

First, the MusicWatch study shows that music piracy is still rampant, with an estimated 57 million Americans engaged in some form of illegal online downloading or streaming of music. In December 2015, the study surveyed 1,000 U.S. respondents aged 13-50 who were pre-screened for use of one of seven unlicensed forms of online illegal music access, such as peer-to-peer file sharing, streamripping, and access through mobile apps.

Second, the study shows how piracy is shifting with changes in technology and consumer preferences. The rise in many legitimate streaming services, such as Spotify, has been matched by a corresponding rise in streamripping—programs that allow the copying of audio or video from streaming sources, which are readily available on the Internet. Opponents of online copyright protection have long tried to justify piracy by arguing that content owners have failed to provide consumers with attractive, reasonably priced legal alternatives. But legal options abound. There are more than 400 licensed music services around the world, with a vast collection of over 43 million tracks. Yet, the number of people streamripping increased 50 percent between the end of 2013 and early 2015. The report estimates that this puts streamripping nearly on par with the number of people illegally downloading files through peer-to-peer networks, which has long been a leading target for more online enforcement.

Third, the rise of mobile apps has also led to an increase in piracy on mobile devices. The study found that people trust the legitimacy of the products and services offered in app stores—if it’s on iTunes or the PlayStore it must be legit, right? The majority of people surveyed assumed that the music app they download from an app store was accessing legal music content, which is not necessarily the case. Mobile piracy apps often are highly downloaded. In 2014, Music Maniac had been downloaded more than 10 million times and afforded free access to all top 10 songs on the Billboard’s Hot 100 list. This highlights the public awareness and enforcement challenges of piracy’s new business model and how app store owners are another stakeholder that need to be included in discussions on how to better fight copyright infringement in all its forms.

Fourth, the study highlights the economic impact of piracy for musicians and content owners. The study shows that people who pirate music still buy legitimate music at a greater rate than the average person who doesn’t pirate music ($33 vs. $19 per capita) largely because they are more likely to be a music fan, but less than the amount the average music buyer spends ($45 per capita). As ITIF work has already shown, there is a growing body of research and analysis that shows that piracy has a measurable, negative impact on content creation and profits.

Governments have an important role to play in protecting property rights, whether it is the right of a homeowner to not have their house burgled or the right of a copyright holders to not have their work consumed without permission. You can’t have innovation without the protection of ideas. The MusicWatch study shows that the focus for online enforcement needs to change with the times and that it needs to consider the implications of mobile apps and streaming technology. As ITIF has long argued, such as in Steal These Policies: Strategies for Reducing Digital Piracy, the government should support anti-piracy innovation, including the development of new technical means to combat infringement, as well as support voluntary agreements between different private-sector stakeholders.

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