Ethix Forum – Issue 34

What approach would you recommend for addressing the piracy issues in software, music, video, etc.?

Rarely have marketers been confronted by a purely customer-driven change. Indeed, customers are now demanding new products and new distribution modes, more convenient and better tailored to their “on the go” lifestyles. For some time now the industry has addressed this issue by trying to teach customers the negative consequences of not paying royalties, even attempting to change laws that would make it “illegal” to download music. This, much like every other fear-based appeal (e.g. smoking, drugs), has met with limited success. This is not to say that education campaigns should be eliminated.

Perhaps a more successful strategy would involve giving consumers what they want: convenience, flexibility, and choice. The business model on which music/video distribution is based needs to be revised. No longer are customers willing to pay for a 20-song CD, even when it includes “extras” (e.g. booklet of pictures of artist, lyrics, etc.), when in fact they only desire one or two songs.

Second, the industry (defined broadly to include manufacturers, distributors, retailers, etc.) will need to devise more user-friendly modes of acquisition (“downloading for dummies”), payment, and consumption (e.g. Apple’s I-Pod). Manufacturers will have to create devices that will make it easy to download and also easy to pay. For instance, consumers can now use their cell phones to pay for vending machine soft drinks, even parking meters … why not to download songs? Music labels will also have to pool their catalogs together to increase consumers’ choice.

Is this wishful thinking? Consider the situation: BMG Music Group reports its third (or was it fourth?) year of decreasing revenues from CD sales, and other players are also seeing their market share erode. When will change come? When the cost of not changing outweighs the cost of changing.

Jordan LeBel
Assistant Professor of Marketing
John-Molson School of Business, Concordia University
Montreal, Quebec

“Piracy” is an evil in the present market. Piracy at any level must be discouraged. It does no more good to the sellers (artists, companies) on one hand than to the customers on the other hand.

The relation between buyers and sellers is friendly and cooperative, with the product as the link and market as the avenue. Why spoil this wonderful basis and make something awful? After all, what utility results from piracy?

Some of the “pirates” may ultimately change by asking these questions of themselves. But pirates who don’t change should be detected and penalized, for the good of all.

Nibedita Deb

SOCAN–the Society of Composers, Authors and Music Publishers of Canada–the performing rights organization of Canada, has been a strong advocate of the Internet as a distribution vehicle for music. Like ASCAP and BMI in the United States, SOCAN has been licensing broadcasters and cablecasters for decades granting them licenses to allow them to communicate copyright protected music to the public.

We feel that the Internet is nothing but another mass medium in the overall system to disseminate music. Hence, since 1996, SOCAN has proposed a tariff before the Copyright Board of Canada (similar to the U.S. Rate Courts that sets tariffs for ASCAP and BMI), that would have Internet Access Providers (IAPs)–among other parties–pay for the right to communicate musical works via the Internet to their subscribers. This proposal has been argued before the Copyright Board, at the Federal Court of Appeal, and finally at the Supreme Court of Canada. SOCAN is awaiting the Court’s decision. SOCAN is also seeking amendments to Canada’s Copyright Act that would clearly create liability for IAPs. It is hoped that our efforts will allow us to properly remunerate composers, lyricists, songwriters, and their publishers when their music is transmitted on the Internet.

Our adversaries have been arguing that it is only websites that should be licensed, and, indeed, some are, but, as I’m sure you will understand, licensing the few “legal” websites would do nothing in terms of compensating rightholders for the vast and increasing amount of file sharing on the Internet. We believe that licensing IAPs is the only practical solution. They would then have to decide whether or not to pass on the related cost of their license to the consumer, in whole or in part, or absorb it into their operating expenses. Either way, this would legitimize the transmission of the music and ensure remuneration for the creators and their publishers.

André Le Bel
Chief Executive Officer
Toronto, Ontario

Piracy issues in software, music, and video are a catch-22 situation. More laws and efforts to control privacy from the RIAA (Recording Industry Association of America) just lead to more laws being broken because of the proliferation of online budding peer-to-peer file-swapping services in the like of Napster, Morpheus, etc. It is simply human nature to seek things for free. Yet companies also will want to pursue their interest of profits, so will want to continue working through the RIAA to clamp down on downloads of music, software, etc. I see the two sides reconciling to overcome their differences with the record company providing cheap downloads in the range of $1 to $2 from their website with the help of peer-to-peer file swapping services, or end-users being paid by record companies to run peer-to-peer file-swapping services at the range of $1 to $2 for online downloads, whichever is more valuable to both parties to do so.

Colin Gan
Minneapolis, MN