Introduction to Music Piracy Problem

Online piracy has caused a drop in digital and physical sales of the music industry in the United States (U.S.) because instead of buying legitimate song tracks, people download it for free. As a result, trade value of the U.S. music market decreased significantly by 10.7% in 2009 (Borthakur, Brandle, Cobo, Ferguson, & Paine, 2010). Regardless of the rising concerns of the artists, record label companies, and others seeking compensation in the music industry, the pirate community persists. In essence, file-sharing sites are a big part of the pirate community. They usually offer free peer-to-peer software programs which are powerful tools that illegal file-sharers use to transfer files such as music tracks, movies, games, and software. A few peer-to-peer sites were seized by the government in October, 2010. One example is limewire.com The others still openly operates and challenges American music companies and authorities. Many of them are owned and operate in different European countries where the U.S. authorities do not have jurisdiction.

Acknowledging the economic impact of music piracy to the recording industry is very important to measure the significance of the problem. During a six year period since 2004, the digital section of the music industry has expanded its net income by 1000% world-wide. On the other hand, in the same time frame, observers see a decline in the digital and physical sales of the global music market by 31% because of the digital pirates (RIAA, 2010). The Internet revolution clearly has a negative impact on the music industry. The emergence of digital distribution channels such as iTunes or Amazon music store in the U.S. and Spotify in Sweden did not compensate for the losses of the overall industry. Without the implementation of current copyright law regulating music downloading practices, newly invented techniques for peer-to-peer file transfers such as BitTorrent seem to benefit the pirates.

South Korea may be the first government that has been successful in protecting its domestic music market. In 2008, this country enacted a new policy called the three-strikes law. The provisions of this policy give Korean recording industry the right to require Internet service providers to mail notifications to their customers once these providers find irregular activities. The letters inform the violators that their Internet services might be cut if they continue to commit illegal sharing activities. The name three-strike law relates to the maximum number of warnings one receives before their Internet services are terminated. This approach seems working for Korea because their digital sales in 2009 went up to 27% after two previous flat years (Borthakur et al., 2010). However, more research needs to be done by legislators before similar law could be adopted in the U.S. The reason is that legislators do not want new provisions of the copyright law to violate American civil rights which support consumerism and user privacy.

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