The LSE paper on copyright and creative industries - theory over reality

9th October 2013

A new paper by the London School of Economics (LSE) claims that copyright infringement does not hurt the creative industries and that measures designed against it are not effective. The paper in fact brings no new evidence to the debate, rehearses well-worn arguments and smacks more of academic theorising than commercial reality.

First, there is the claim that the damage done by copyright infringement has been overstated since, while recorded music revenues have declined, other sectors such as live and publishing have been growing. This argument is flawed. Live music cannot simply be regarded as the new funding source for artists, supplanting recorded music. A look at the most successful live acts of recent years shows that these stadium-fillers are mostly artists who have built their careers over many years through recorded music. As we aimed to show in Investing in Music, published in November 2012, recorded music is the platform on which artists build a career and it unlocks many other revenue streams, from branding to live. Mark Mulligan develops this point in his thoughtful blog.

Second, there is the criticism of the music industry for supposedly not adapting to the digital environment sooner. This is a tired, old-fashioned sideswipe, uninformed on what is happening in today's music world. As we wrote in the IFPI Digital Music Report in February, we see the music industry as a case study of a business that has transformed itself for digital. Licensed digital services, from subscription to cloud services, span the globe. Last year, for the first time in 13 years, digital helped us return to growth.

Third, it is suggested that a new "collaborative digital culture" has in some way has rendered copyright obsolete. Examples cited include that "sharing can stimulate music creation" while "many musicians share their music and are very happy for their fans to download their music, envisaging future sales." These examples do not undermine the importance of copyright. In fact, few sectors have embraced the "collaborative digital culture" as much as the music industry. The example cited by the LSE academics themselves helps prove the case: Gangnam Style, with millions of user-generated videos shared across the world. The many licensed music services now providing millions of tracks free to the consumer are also proof of how "free", when it is licensed, is no longer a foe of the music industry. On the contrary, it is just one of the many models used to engage consumers in the digital world.

None of the LSE authors' claims undermine the case that copyright infringement hurts the legitimate business. As we have often noted, the large bulk of studies into the subject show that copyright infringement has a net negative impact on music revenues - even accounting for the fact that there is some overlap between legitimate music consumption and infringing file-sharing.

Finally, the LSE writers doubt the impact of anti-piracy measures such as the UK's Digital Economy Act. They produce no new evidence to support this, but plenty of rhetoric against "large companies and their lobbyists in the creative industries". This is not objective analysis. If it were, the authors would also note that there are many powerful technology companies in this debate. They have a strong commercial interest in weakening copyright. And they have huge lobbying budgets at their disposal.

Our view is that the recorded music industry is a success story in the digital world. It has turned itself around via a mixture of investment, innovation and a sheer refusal to give up. But that turnaround has been built on copyright - and that is why effective measures preventing copyright infringement remain so important.

By Adrian Strain, Director of Communications, IFPI

For further information contact: Adrian Strain, IFPI London Email: adrian.strain@ifpi.org

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