4a. Advantages & Disadvantages of Piracy (Multimedia Industry)

The fact that digital products are virtual instead of physical affects the economic mechanisms behind the production and distribution of content, and how piracy works for digital as opposed to physical products: "the main consequence of the non-physical form of digital products is their virtually negligible marginal cost of reproduction and their ability to be digitally delivered.”  

With the growing tendency toward online distribution among legitimate and illicit distributors alike, the expense of distributing shrunk further from the costs of printing and transporting CDs to merely the costs of maintaining a website . By sheer volume of file transfers, though, distributing music/video/software through traditional web servers and FTP servers were not as popular as peer to peer (P2P) now, because the traditional direct download method is slower.

·        Multimedia Industry

Downloading music and movie from the internet has become such an easy task to many. Without having to leave home, one can listen to the songs he/she likes almost instantly. But then, instead of downloading from legal sources, people ended up downloading illegally. There are definitely some benefits as well as disadvantage to illegal downloading.

Ø  Advantages:

1. Piracy keeps music “alive”. Music albums will eventually go out of production when the music company decides not to print old albums anymore.  So, the only way people get to listen and enjoy old song is to download from illegal sources. This way of illegal sharing does effectively keeps “dead” music “alive”.

           2. On a long run, downloading music actually increases sales of albums. It creates a love for music in teens who can yet afford to buy albums. But when the teens grow up, the amount of time they have to spend on music downloading decreases. Instead they would rather spend money on good quality music, hence increase sales on a long run.

            3. Being available for download, music reaches the crowd in a relatively lesser amount of time thus boosting its popularity. With the increased in popularity, it will drives up the sales of legal music.

           4. Legal online file-sharing services exist at fair prices and are much safer.

           5. Piracy benefits visual art students. For example, an idealistic art would be ecstatic if each of his film were to be pirated and watched by millions around the world. Whereas for films made by big name directors, they would be angered by such piracy.

           On one hand, the film is made for art while the other is made for money. But without piracy, the film made by the art student will have minimal opportunity in showcasing his work or even worse, they might not even be able to get the chance to fully publicized they work.

Statistics:

           An examination of the RIAA’s marketing and sales charts shows that the real decrease in CD sales actually began in earnest after Napster ceased operating. In fact, during the 2 1/2 years that Napster was operating, CD sales increased by over $500 million dollars from what they were in 1998. Since 2001, CD sales have continued to decrease steadily.

          

Ø  Disadvantages:

1. In order to protect the rights of originality, laws have been imposed to stop people from downloading.  Thus, people are taking the risk of getting caught and receiving a criminal record when he/she downloads illegally. The penalties might be a fine, a ban or even imprisonment. Is it really worth taking such risk just to download illegal property?

             2. Free file-sharing sites often transmit viruses and ad-ware.

           3. Quality of pirated movies and songs might not be as accurate and précised as compared to original copies. It may not be as pleasant to watch or listen as compared to the original copy.

            4. Though downloading music and movie makes it easily available to the masses, it also makes it spread far and wide. But considering something that is very easily available is usually of a lesser value. Something that is scarce is precious while something that is plentiful tends to be of a lesser value. Therefore, this results in the price of the music or movie to depreciate.

       Statistics:

          Case 1:
           According to Recording Industry Association of America (RIAA) (2009), they estimated that music sales declined from $13.7 billion in 1998 to $8.5 billion in 2008.

          Case 2:
           In Australia, tax losses due to movie theft amounted to $193 million. Direct consumer spending losses to the movie industry, i.e cinema owners, local distributors, producers and retailers, amounted to $575 million (equivalent to more than three times the combined revenues of AFL clubs Collingwood, Hawthorn, Carlton and Geelong.)

           Case 3:
           The Institute for Policy Innovation concludes that global music piracy causes $12.5 billion of economic losses every year, 71,060 U.S. jobs lost, a loss of $2.7 billion in workers' earnings, and a loss of $422 million in tax revenues, $291 million in personal income tax and $131 million in lost corporate income and production taxes.

These records has thus shown how piracy has improved or declined the sales of hard copies legal music.