Latin Music Industry Problems
The global music industry has suffered a three fold attack on its profitiabiithy in the recent years. From three separate sectors new technology has affected the abilty of the music industry to make a profit, and continue to support the artist which make the industry possible. If these three areas are not addressed in the political, and legal arena in the near futre, the health and well being of the entire industry, expecialy in developing regions such as Latin America could be doewn graded from satisfactory to critical. Without intervention, the industry could be force onto life support in the near futre, with its overall existence threatened.
These three factors have affected all areas of the Latin American and global music distribution businesss. The problem has become one of increasing importance in Latin America because the market was previously one of the fasted growing music markets in the world, but today has become one of the markets which is in the swiftest decline. The supply of the music is being flooded by pirated music. As the supply had gone up, the prices have fallen, leaving music distributors with an oversupplyu of product and falling demand in the market place. Further affecting demand is the availability of home digital recording equipment, and Peer to Peer file sharing on the internet.
According to Buckley (2000) While U.S. recording industry officials wring their hands over Napster, the worldwide black market for illicitly copied music is growing even faster, with sales of pirated music topping half a billion units last year and costing the music industry $5 billion in lost revenues. As of the turn of the 21st century, one in three CDs sold around the world last year were copies, churned out in pirate's hidden factories that can press up to 100,000 discs a day, according to the International Federation of Phonographic Industries. In Brazil, Latin America's music piracy leader, "40% of CDs and 99% of cassettes sold were illegal copies, a total value of $180 million, said IFPI. In Mexico, the 1999 pirate music market was worth $70 million, or 40% of all music sold, the agency reported." (Buckley, 2000) "For the first time in the format's history, CD sales are dropping globally... Worldwide sales of recorded music fell 6.5% last year, according to the London-based International Federation of the Phonographic Industries. That meant a drop in revenue of $1.7 billion, the worst in the annals of the industry. Sales in industrial countries like Japan, Germany and Canada took an average 9% hit, while those in developing nations such as Brazil and Poland -- drained by an epidemic of professionally pirated CDs -- fell as much as 28%." (Taylor, 2002)
These numbers are the proof of what an average consumer, and a few determined pirates can do with a minimal amount of technical knowledge. A small investment in computers and CD duplicators will create a duplicating studio, and produce home recorded copies of their favorite artists. The significant difference between this technology and the Cassette recorders of the late 20th century is that CD music is digital quality, and has a virtually unlimited shelf life. In the past, home cassette tape recorded were limited in the music quality they could produce. But digital recordings are studio quality, and do not decay with age. This technology puts the consumer in a level playing field with the music producer when it comes to creaqting personalized recordings.
Thirdly, the Peer to Peer file sharing technology, pioneered by Napster is making available at no charge digital libraries to internet users around the world. In the same way CD's can be purchased and recorded, individual songs can be downloaded and burned onto personal CD's. The result is an even further diminishing of the demand for new CD's in the marketplace. This final factor has worked to diminish demand of original music recordings around the globe. Music pirates still need distribution channels to sell their products, and can be limited geographically. But the internet-based music services have no geographic boundaries. Because their 'product' is free to the world, the demand for new music is negatively affected on a global scale.
According to Williams, (1997) Piracy of copyrighted materials around the world has resulted in trade losses of $14.6 billion in 1995. These figures are based on estimates from the International Intellectual Property Alliance (IIPA). The total includes losses incurred in 97 foreign countries; it does not include losses to piracy within the U.S.
We've long known that inadequate copyright protection and enforcement are a major trade barrier for U.S. creative industries," said...
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