Floating on a Sea of Demand for Music

Tin Cheuk Leung at the Chinese University of Hong Kong published in 2009 a paper entitled, ‘Should the Music Industry Sue Its Own Customers? Impacts of Music Piracy and Policy Suggestions.’ The updated version is available here.

Parts of Leung’s paper need special training to understand (which I do not have) but some of it is easy to grasp. Lots of music makes an iPod more valuable to its owner. People want much more music than they can buy. Demand moves between channels as the cost per track changes, but being a simple pirate is quite rare – most of us buy, beg, and borrow in differing proportions.

I am pulling out just one of many interesting sets of numbers where Professor Leung tries to model worlds with either no piracy, or free music. Killing piracy he suggests would reduce overall consumption of tracks by 68%, where making music essentially free would increase consumption by 527%.

More music translates into more iPod owners, and demonstrates how the cost of a transitioning market falls on content creators, through leakage as well as through the need to get the new means of consumption into as many hands as possible.

Knowledge of the shape of the music industry however highlights another aspect to the complex picture of music demand. Diversity and opportunity in music would seem to come from a middle class market, with hardware manufacturers benefitting from the explosion in consumption free music would bring, and the biggest music companies benefitting from total anti-piracy.

Somewhere between what we have now and making music free there is a sweet spot which can deliver more good music to more people, while at the same time sustaining the skills and infrastructure which will create opportunities for the musicians coming into the market in the future. We owe it to music makers and music lovers to try to work towards that destination.

 

This entry was posted in markets, strategy, technology. Bookmark the permalink.