One of the most common previews to see in an American movie theater today is a reminder that piracy of movies is illegal, and does irreparable harm to the entertainment industry. However, piracy of movies, music, games, and software has been rising almost exponentially with the growth of the Internet, and the size of the entertainment industry does not appear to be shrinking in any appreciable way. To understand the effect that digitization and globalization has had on the entertainment industry, there are many different issues to consider. Piracy is not the only type of digital media-- legitimate, legal sources of digital movies, music, and games exist as well. Both legitimate and illegitimate digital media have changed the face of the entertainment industry forever, and the American entertainment industry must change its business methodology if it wants to remain relevant in the changing world.
Legitimate digitization of media is an often-overlooked issue in the discussion of digital entertainment media. The rise of digital storefronts like the iTunes store, Google Play, Amazon’s Kindle store, and even the game company Steam’s online store have changed the way that consumers consider digital media (Adkins). When using these storefronts, the consumer chooses what he or she wants in the form of digital media and receives a copy of it immediately.
The effect of this change is twofold, and it has had a far-reaching effect on the way that companies do business. For example, if an individual wants to have a copy of a particular song to listen to, he or she used to have to get in a car and drive to a music store, where he or she then had to pick out a CD, cassette tape, or other form of physical media. The company’s costs in producing that media were factored into the price of the media. However, a digital file has no manufacturing costs at all, outside of the creative work it took to create the music, software, or movie in the first place. Digital stores, then, are big money-makers for entertainment companies-- they can keep overhead manufacturing costs low, while still charging similar prices for the media file itself (Adkins).
The second effect that the legitimate digitization of media stores has had on the entertainment industry lies with the complex nature of ownership. Once an individual has purchased a copy of a digital file, do they own the file, or does ownership remain with the entertainment company that produced the file in the first place? The legal aspects of digital ownership are complex because most of the laws that have been written on the issue of ownership have dealt with a physical object, not a digital object (Goldsmith and Wu 23). This issue becomes increasingly complex when the issue of piracy in media is raised.
Piracy of media has always existed. Before digital files gained popularity, people would burn CDs for their friends; before CDs became popular, people copied cassette tapes; before cassette tapes, vinyl was copied using rubber molds (Goldsmith and Wu 15). No matter how hard the entertainment industry has tried to curb piracy in the past, it has always prevailed. However, in the past, piracy’s effect on the entertainment industry was relatively negligible. One individual making a copy of a cassette tape for one friend is a relatively small loss for a massive entertainment conglomerate; there is no way for the industry to control this loss or stop people from participating in this type of sharing (Goldsmith and Wu 19). The Internet, however, has changed the face of piracy forever.
When an individual has access to a digital file, however, he or she has the potential to share that file with everyone on the Internet. File-sharing and Bittorrent sites have been growing in popularity; on these sites, users can download nearly any media they can imagine. The entertainment industry spends a lot of time and resources attempting to stem the flow of digital media into these torrent sites, but with very minimal success. According to Adkins, “The RIAA reports that music sales in the United States have dropped 47 percent since Napster first debuted in 1999. The availability of free music has cost the music industry $12.5 billion in economic losses. To recoup some of these losses, the music industry has filed lawsuits against individuals who have been found to have illegally downloaded music” (Adkins). Thanks to the anonymity of the Internet, and file-sharing sites, however, the success of the entertainment industry has been very limited.
There is no denying that the entertainment industry is in a time of upheaval as a result of the rise of digital media. The free access to music and movies has, as previously discussed, cost the industry billions of dollars. The solution that the industry has come up with, however, does not seem to be solving their problem; instead, it is costing them more money on top of the money already lost by piracy.
The entertainment industry has engaged in a series of lawsuits against people who participate in file sharing of copyrighted media and software. Each individual named in these lawsuits is being sued for thousands upon thousands of dollars-- all for sharing media via sites like The Pirate Bay and Bittorrent (Adkins). This war between the individual, the Internet, and the entertainment industry has been going on for over a decade, and the result has not been a particularly good one for the entertainment industry (Economic Research Associates).
The entertainment industry has a variety of different strategies and options available to them in regards to remaining profitable in the digital age. One thing is clear: appealing to people’s ethical sensibilities regarding file-sharing is not a viable option. It is common knowledge that file-sharing and piracy is illegal, but people participate anyway, because most people do not see the harm or and adverse moral reasons to avoid file-sharing.
Some research suggests that in the future, digital ownership will become less and less important for the consumer. This means that the consumer will be less concerned about having a copy of a song or movie on his or her hard drive, for instance, and more concerned about having access to that movie or song from anywhere-- his smartphone, his laptop, or perhaps even his digital television (De Fontenay). If the entertainment industry can become involved in this area, then they could very well become even more successful than before.
A good example of this type of access-based consumer model is Amazon’s Kindle store. The Kindle itself is a physical device, an electronic book-cum-tablet, but the books, newspapers, and media that a consumer buys can all be stored in Amazon’s Cloud. This means that the individual can log into the Cloud from anywhere and access those books, newspapers, magazines, etc, even if he or she does not own a Kindle device (De Fontenay). The Amazon model even allows customers to share books between Kindle and Kindle Cloud users, creating an environment where media is shared in such a way that Amazon receives payment for its services, but the consumer does not feel fettered by restrictions on digital media he or she has bought the rights to use.
The traditional entertainment industry has been in decline since the advent of the digital age, but the entertainment industry as a whole does not need to die out as a result. With some innovation and changes in the way leaders think about digital media, the entertainment industry can exist in harmony with consumers, rather than being antagonistic against them.
Works cited
Adkins, Amy. "How Does Illegally Downloading Music Impact the Music Industry?." Houston Chronicle. n.d.. Web. 9th March 2013. [http://smallbusiness.chron.com/illegally-downloading-music-impact-music-industry-27748.html].
De Fontenay, Eric. "Impact of the Internet/New Media on the Music Recording Industry." 1999. Web. 9 Mar 2013.
Economic Research Associates. Louisiana Motion Picture, Sound Recording and Digital Media Industries. Baton Rouge: ERA, 2009. Print.
Fox News. Mottola: Digital Media has Changed Music Industry. Digital video. 2010. Web. 9th March 2013
Goldsmith, Jack L, and Tim Wu. Who Controls the Internet?: Illusions of a Borderless World. New York: Oxford University Press, 2006. Print.
MirraMari. "Digital Media and the Music Industry.." 2012. Web. 9 Mar 2013.
Zhu, Kevin and Bryan MacQuerrie. "The Economics of Digital Bundling: The Impact of Digitization and Bundling on the Music Industry." Communications of the ACM, 46. 9 (2003):
