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Pirate Recording Industry - Money, Music and Piracy

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What's included in this Money, Music and Piracy graphic:

  • Total U.S. Music Sales from 1999 - 2008
  • Concert Tickets Sales from 2006 - 2011
  • Most Downloaded Songs of All Time (iTunes)
  • Music Sales Breakdown, How the Money Gets Distributed
  • How Much Artists Get Paid for a Live Concert
  • Countries on the U.S. Priority Watchlist for Piracy
  • Cost of Piracy to the U.S. and Global Economies
  • Music Piracy Compared to Movie Piracy

Piracy: the unauthorized reproduction or use of a copyrighted book, recording, television program, patented invention, trademarked product, etc.:The record industry is beset with piracy.

Money and Music Piracy

Now that the wildly popular music-streaming service Spotify has come to the U.S., all bets are off as to the future of the American music industry. The downward trend in music sales that began with the appearance of Napster and its ilk continues.

Between 1999 and 2008, sales dropped from nearly $14.6 billion to just under $8.5 billion with further decreases in the years since.

As a part of the whole, digital sales now account for some 20 percent of all recorded music sales across the planet. That number is considerably higher in the United States, topping out at closer to 70 percent. The digital model is just more efficient and convenient for consumers and the industry alike.

Gone are costs for manufacturing, packaging, retail space, and retail profit which eat up about 34 percent of the $15.99 someone pays for a CD.

When it comes down to it, the marketplace for physical product more readily benefits the distributors than any other parties in the supply chain. Of that same $15.99 that a music fan shells out for a CD, less than 15 percent will go to the artist and from that small amount, they must cover commissions and fees to their producer, manager, and lawyer. Generally, they also have to reimburse the record label for a bulk of the promotional monies spent.

That's why the labels do a bit better, raking in almost 25% for their contributions, inclusive of expenses whether reimbursable or not from the artist. The record distributors and retail outlets, though, take a whopping 63 percent of the $15.99 pie.

However, a reverse algorithm seems to be in place for the live music business. Since 2006, revenues have steadily risen from $7.3 billion to $10.3 billion in North America alone. The global outlook is just as rosy with increases from $16.6 billion to $23.5 billion across the same time span.

As for an artist's cut of the live revenues, generally speaking, they are paid about half of a show's gross. However, their share must cover their booking agent and manager's commissions, production costs, tour crew salaries, and travel expenses, so the actual artist may or may not pocket considerable cash.

The Impact of Music Piracy

In looking at the bigger picture of music piracy and its impacts, the revenue losses have led to consolidation withing record companies and affiliated agencies. Over 70,000 lost jobs have been attributed to piracy accounting for about $2.7 billion in lost wages and another $422 million in lost tax revenues.

It's no wonder, then, that the U.S. keeps a watchful eye on nations it sees as major contributors to the problem. Among the top offenders are China, Russia, Algeria, Argentina, Canada, Chile, India, Indonesia, Thailand, Pakistan, and Venezuela.

The Recording Industry Association of America (RIAA) is also doing its part to combat piracy by issuing copyright infringement notices to Internet users found to be participating in such acts.

The film industry also suffers its fair share of losses at the hands of content pirates. Total U.S. film revenues amount to an estimated $108 billion annually, with about $20 billion in losses chalked up to piracy. Of those losses, a full 80 percent come from overseas users.