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What’s the real problem behind music file sharing?

by Steve McClure

Share and share alike — that’s what we were taught when we were kids.

It’s an admirable ethos to live by, but it’s anathema to the recording industry, which sees online music file-sharing as only slightly less reprehensible than baby-killing.

The Recording Industry Association of Japan, which represents this country’s major record labels, recently got a lot of media attention when it released a report (which should have been titled “File-sharing: threat or menace?”) claiming that no fewer than 75 million songs have been downloaded — mostly illegally — in Japan since online file-sharing services started becoming popular here a couple of years ago.

That’s a lot of songs. By comparison, the number of CD singles produced by RIAJ’s 24 member companies totaled 110 million units in 2001.

But some people question the methodology used in conducting the survey on which the report is based. The survey, by the way, was jointly undertaken with the Association of Copyright for Computer Software.

“I think there is a good chance that the people who responded are heavy Internet users,” notes Bill Haw, general manager of e-commerce site YesAsia’s Japan office. “However, a large part of the Internet population in Japan consists of people with dial-up connections who only look at their computers once weekly. Thus, the number is probably lower.”

The RIAJ and individual Japanese record labels say file-sharing is at least partly to blame for the Japanese music market’s recent steady decline. In the first four months of this year, for example, shipments by RIAJ members fell 14 percent and 21 percent in terms of quantity and value, respectively.

Another perspective on the file-sharing phenomenon is offered by U.S.-based consumer research firm Jupiter Research, which recently released a report claiming that people who use file-sharing networks to obtain music for free over the Internet are more likely than average music fans to have increased their spending on music.

To my way of thinking, neither side in the file-sharing debate has yet to make a convincing case.

The main weakness in the recording industry’s claim that file-sharing hurts music sales stems from the classical logical fallacy of assuming that because one thing follows another, the former is the cause of the latter.

But as Dr. Samuel Johnson pointed out, subsequence is not always the same thing as consequence. One should not automatically assume that free online music has caused music sales to decline, tempting though it may be to draw such a conclusion. There are other possible reasons.

The most glaringly obvious one is that young Japanese are spending the bulk of their disposable income on mobile phones instead of on CDs or videos.

At the risk of sounding facetious, maybe Japanese record labels simply aren’t releasing the kind of music people want to hear. I think Japanese consumers are increasingly cynical about a system that places too much emphasis on marketing, regardless of the quality of the music itself, to launch mega-hits. Call it the “Morning Musume overkill effect.”

But there’s no doubt that a lot of people do like the music that’s being released by the major labels — and they’re getting it for free off the Internet.

One person who dismisses Jupiter’s findings is BMG Entertainment Chairman/CEO Rolf Schmidt-Holtz. When I interviewed him recently, Schmidt-Holtz said that instead of listening to marketing consultants, he simply listens to what people say in the village of 250 people where he lives in Germany. And based on that, Schmidt-Holtz says that he’s convinced that many, many people are burning CD-Rs and copying MP3 files.

I know what he means. One acquaintance of mine (who shall remain unnamed) has downloaded something like 1,500 MP3 files in total. Odds are this person would have bought more than a few of those songs had they not been available gratis on the Internet.

By the same token, my friend was also exposed to a lot of music she might never have heard had she not trawled various MP3 sites for tunes to download. Some people in the Japanese music biz are coming round to the idea that file-sharing services play a role similar to that of CD rental (which is pretty well unique to Japan). In the early ’90s, CD rental was the be^te noire of the Japanese music industry, but the consensus now seems to be that rental has a role to play in promoting music.

My bet is that a similar modus vivendi will be worked out between the music industry’s powers-that-be and the file-sharing services. The labels will have to recognize that file-sharing can help them promote and distribute music, while the file-sharing side will have to accept some sort of regulatory framework.

The alternative is a bloody, drawn-out fight which is in nobody’s interest.