At a House Commerce Committee hearing today on “The Future of Audio,” Recording Industry Association of America (RIAA) Chairman and CEO Cary Sherman has told lawmakers how the music industry has “transformed how it does business,” touting the fact that digital formats now account for more than half of industry revenues and pointing to an array of licensed formats and services for fans. Sherman also testified that CDs are no longer the primary format for the music business but that digital music is the leading way to distribute music. Digital music reached a whopping, nearly 20 times more revenue in 2011 than in 2004 with a total revenue of $3.5 billion.
But digital music was already very popular before it was a big revenue maker for music industry, large Peer to Peer (P2P) networks as Napster, KaZaa and Limewire distributed the music for free and pirating of music thrived. Now finally the music industry adapted to the new digital era and many music download services have been launched over the years.
And according to the RIAA Chairman and CEO, the closure of e.g. Limewire had a positive effect on music sales. “For example, most people are familiar with Limewire, which was the world’s most popular peer-to-peer (P2P) file-sharing service. Between 2007 and 2010, about 2/3 of filesharers on the Internet used the service”, she said. ” At the end of October 2010, a federal court finally shut them down for inducing massive copyright infringement”, she continued.
She went on to say ” The very next month, digital sales of music improved and they’ve remained higher ever since. While this may not be the sole cause, it is not a coincidence, just a couple of months ago, market research firm NPD released a survey showing that more than half of the people who had used Limewire did NOT go to another illegal music site to get their music after the shutdown, thanks to the availability of legal music download services.”
While the RIAA thinks fighting piracy is a key element in their strategy, the Chairman also considers innovation just as important as she added; “We continue to believe that the best and single most important anti-piracy strategy remains innovation — experimenting and working with our technology and Internet partners on consumer-friendly new business models”.