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Been down so long, it looks like up

by Steve McClure

Special To The Japan Times

I’ve been to a lot of music-industry conferences over the years, and for the past decade I’ve listened to the same old song: How can the recording industry fight online piracy, which it blames for plunging music sales?

So at this year’s Music Matters (MM) conference in Singapore on May 23 and 24, it was refreshing to hear big names cautiously herald, “The worst is over.”

But is it?

“We’re in an industry that’s finally on the path to recovery,” said Frances Moore, CEO of the London-based International Federation of the Phonographic Industry (IFPI) in her May 23 keynote speech. The IFPI says recorded-music sales rose year-on-year in 2012 — the first time that’s happened since 1999.

“We’ve passed the bottom — things are leading to new opportunities,” said Ralph Simon, chairman emeritus and founder of the Mobile Entertainment Forum, the global trade body of the mobile media and entertainment industry.

Simon made that comment while interviewing Rob Wells, Universal’s president of global digital business. “The story’s really compelling,” Wells replied, citing the fresh revenues digital is bringing to the industry.

It’s not time to break out the bubbly yet, though. Recorded-music sales increased just 0.2 percent in 2012 to $16.5 billion, according to the IFPI.

The IFPI says sales by music-subscription/streaming services rose 60 percent last year, an encouraging sign that (some) people are prepared to compensate creators and other rights-holders for their work. Moore added that downloads are holding their own despite the rise in subscription revenues.

I think next year’s numbers will tell a different story — the subscription model is the horse to back in the online music-delivery sweepstakes.

After witnessing the music industry’s stumbling attempts to come to grips with the digital revolution, I found it somewhat amusing to hear Moore say the music industry “gets” the Internet. Better late than never, I suppose.

“Our digital business has gone truly global,” Moore told delegates, noting 30 million tracks are available digitally and that there are 500 licensed digital-music services worldwide.

Moore was somewhat more guarded in her assessment of Japan’s digital market, saying it is “in a challenging phase of transition.”

Wells said one effective strategy is to buy out or partner with unauthorized file-sharing services, instead of taking legal action to shut them down. He cited the industry’s licensing deal with Chinese search engine Baidu as an example.

That approach seems to have worked in South Korea, where the industry came to terms with unauthorized file-sharing site Soribada in 2006. However in more rough-and-ready markets, such as Vietnam (where Universal recently signed a licensing deal with pirate site Zing), new illegal sites often pop up to replace ones that have gone legit.

The prospect that the industry will keep playing that “Whac-A-Mole” game is very real — especially because many major brands support and legitimize pirate sites by advertising on them.

Critics say online advertising services such as Google’s AdSense exacerbate the problem. There was relatively little discussion at MM of Google’s controversial role in the digital-music ecosystem. But at the recent Canadian Music Week conference, American copyright lawyer Chris Castle delivered a blistering attack on the California-based search engine.

“The way it works is that Google drives traffic to pirate websites through Google search, and then sells advertising to fund the pirate sites,” Castle says in his Music Technology Policy blog (www.musictechpolicy.com). He refers to “Google’s usual shakedown business model — we will steal from you until you get tired of litigating, then you will give us a deal on our terms.”

A Tokyo-based Google spokesperson responded to this by saying, “We fight pirates every day. Our tools make it easy for rights-holders to submit DMCA (Digital Millennium Copyright Act) take-down requests across Blogger and Search.” (Note that the onus is on rights-holders to bring problems to Google’s attention — not the other way round.)

Speaking on condition of anonymity, because he wasn’t cleared to speak to the press, the spokesperson continued: “We also have a strict set of policies that forbids publishers participating in the AdSense program from displaying copyrighted material without the rights to do so.”

But the recording industry wants Google to do more.

“I want to see the first page of Google with legal sites, not pirate sites,” said Moore at MM. “We need to pressure advertisers not to advertise on illegal download sites.”

Memo from the recording industry to Google: don’t be evil — please?