Music piracy is down but still very much in play

Apple’s biggest rival when it launches its $10-a-month streaming music service on Tuesday might not be Spotify or Tidal, but piracy.

About a fifth of Internet users around the world continue to regularly access sites offering copyright infringing music, according to the International Federation of the Phonographic Industry.

In the U.S. alone, 20 million people still get music through peer-to-peer file-sharing networks, according to research firm MusicWatch. And newer methods have emerged, such as mobile apps and software that rips audio from YouTube.

Comparatively, just 7.7 million Americans paid for a music subscription service last year.

“It’s a tremendous problem,” said analyst Russ Crupnick of MusicWatch. “The good news is some of the very traditional ways of stealing are down pretty dramatically.”

The rise of convenient, licensed streaming has helped cut U.S. file-sharing rates in half in the last decade. Anti-piracy efforts of the Recording Industry Assn. of America — representing Universal Music Group, Sony Music Entertainment, Warner Music Group and others — have also contributed to the drop off.

But the music industry is still trying to recover from piracy’s heyday. Last year, total music industry revenue was about $15 billion worldwide, well below the 1999 peak of $38 billion.

Free downloads have maintained their allure for people who want to build music collections and refuse to go to iTunes, Amazon or Wal-Mart.

Part of the problem is getting people who grew up in the age of Napster, LimeWire and Kazaa to pay anything for music, industry experts say. Many young people don’t see anything wrong with downloading from unauthorized sites or ripping from YouTube.

“We now have a generation of people for whom the value proposition of music has changed,” said Larry Rosin, co-founder and president of Edison Research. “A lot of people saw this as revenge for being ripped off by the industry for years.”

The RIAA brought thousands of lawsuits against individual alleged thieves early on. While the legal actions brought widespread attention to copyright theft, many viewed them as heavy-handed. Even elderly suspected culprits and teenagers were sued.

“At the time, what put a thorn in my ass was seeing fans get sued,” said Mötley Crüe bassist Nikki Sixx. “Now I can just pay a subscription and get all this music… I think it is a healthier answer. You ask a lot of kids today how much pirating are you doing, and I think it’s down.”

The failed 2011 anti-piracy congressional bills known as SOPA and PIPA were an added black eye for the RIAA and fellow Hollywood supporters.

Industry groups have since emphasized softer measures to combat illegal downloads. The record companies have worked to get Internet service providers to help prevent copyright theft and pushed search engines to demote sites in users’ results. The RIAA has also tried to pressure brands to not allow their advertisements to appear on offending web destinations.

“Infringing site operators don’t care about music, they care about eyeballs,” said RIAA Deputy General Counsel Victoria Sheckler.

Taking down file-sharing sites, many of which operate offshore, is akin to whack-a-mole. The founders of the website The Pirate Bay were convicted of aiding copyright theft in 2009, but it remains one of the most popular sites for free music and movies. Swedish police raided and shut down Pirate Bay late last year, only to watch it rise again with a new Phoenix logo.

Others have been added to the wall of defunct services. LimeWire was discontinued in 2010 and agreed to pay the record industry $105 million to settle a 2011 copyright case. And Kim Dotcom’s Megaupload was shut down in 2012.

Most recently, the music industry forced the demise of Grooveshark, the streaming service that once counted tens of millions of visitors and got its music from user uploads, rather than from the labels.

Facing $736 million in potential damages, Grooveshark’s parent company Escape Media agreed to close the site in April as part of a settlement with the record companies. “We failed to secure licenses from rights holders for the vast amount of music on the service,” the company said in an apology letter on the site.

Former executive John Ashenden said in a blog post he was “overwhelmingly impressed” that Grooveshark was able to “fight the line” for so long.

“How many young people do you know that still download music (legally or illegally) instead of using a paid or ad-promoted streaming music service? I would wager that it is quite few— likely a minority,” he wrote.

[email protected]