The High Price of Free Music: How Illegal Downloads Are Silencing Artists

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Silence music the industryWhen we want new music, there's a strong temptation to get it for free through file sharing, ripping it from our friends, or downloading it illegally. So perhaps it shouldn't surprise us that four out of five digital music downloads are illegal, according to the Recording Industry Association of America. In today's struggling economy, it's tempting to cut costs where we can, and easy to think the practice doesn't have any negative consequences.

The problem is, when you steal music, you aren't just hurting music executives, who are often stereotyped as greedy, rich businessmen exploiting the creativity of the musicians you love. You're also hurting the musicians -- and maybe yourself, too. The wide prevalence of music theft is changing the musical marketplace for the worse, reducing the incentive for musicians and labels to develop and finance new projects.

A Hostile Market for Musicians

Emily White, an intern at NPR's All Songs Considered blog, recently revealed that she has some 11,000 songs in her music library, though she's paid for just 15 CDs' worth. She says, "I honestly don't think my peers and I will ever pay for albums. I do think we will pay for convenience."

But as musician and University of Georgia instructor David Lowery points out in his open letter to Emily, this behavior hurts musicians, who earn an average of about $35,000 per year and get no benefits.

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As Lowery notes, most record contracts include provisions for both royalties and advances to artists. Advances are paid before the release of a recording. If the album or songs bring in enough sales, the record companies recoup the money paid out in the advance. If not, they write off the loss. As music sales decrease, record companies will offer fewer (and lower) advances to minimize their risk of financial losses. Royalties are paid to artists for each song purchase. When we steal an artist's work, neither the record company nor the artist receives compensation.

Lowery asks us to imagine a neighborhood that is loaded with record stores but lacks a police force. Many people steal from these record stores, because they know they will rarely be punished for their crimes. Record stores allow this behavior, because they can gain a profit from selling ad space on their walls, and can eliminate expenses associated with paying musicians for their work.

The record stores in this fable, says Lowery, correspond to illegal downloading sites like The Pirate Bay and Kim Dotcom's Megaupload, which make money from selling ad space through companies like Google (GOOG), which also makes a profit from this shady behavior.

Everybody gets paid -- except those who created the music.

But the negative effects don't end there, says Lowery. Consumer behavior in this unpoliced neighborhood shapes the decision-making processes of legitimate businesses such as Spotify that follow the law. Spotify has faced endless complaints about how little it pays artists.

So how do illegal downloads alter the behavior of businesses like Spotify? First, the prevalence of illegal downloading and other music theft reduces the pricing power held by Spotify and its peers, encouraging them to generate profits by cutting costs in the form of artist compensation. Second, the ready availability of free music gives musicians less pricing power. Since their music is available for free elsewhere, they are forced to take what they can get for their work.


The Sound of Silence

This theft not only harms the musicians you love, it also harms music lovers by reducing the incentive for labels to develop and produce new music. In other words, it's likely to reduce our access to good music in the future.

The High Price of Free Music: How Illegal Downloads Are Silencing Artists

The first task in attending a festival is finding a way to get there; unfortunately, some of the best take place in some of the most out-of-the-way venues. Several festival organizers noted that carpooling can save cash, and Kelly M., a veteran participant in the unique cultural event that is Burning Man, noted that "sharing food and transport with a group is definitely the way to do it."

On the other hand, at urban events, like Chicago's North Coast Music Festival, it's parking that can be the problem. Zach Partin, North Coast's publicist, suggests that attendees ride a bicycle or take public transportation: "We've worked closely with the city, and they provide extra public transportation for the festival."

Photo by Dustinj, Flickr.com

Another problem is finding a good place to stay. After all, festivals draw tens of thousands of visitors to areas that often aren't well-equipped to house them. Veteran festival-goer Chris Burgoyne favors budget hotels, and plans ahead to book them: "I just need a bed where I can crash after a long day of music. I don't pay for comfort and luxury on a festival trip." Some festivals even negotiate with area hotels to offer discounted rates.

Burgoyne also suggests camping: "It is usually much cheaper than a hotel, and can be quite a fun experience. If you want to save on camping supplies, most universities have outdoor clubs where you can rent good equipment cheaply." Some festivals even add the cost of camping into their ticket prices, eliminating the hidden cost of lodging.

Photo by Gentlebird, Flickr.com

The food options at festivals are attractive, but can quickly add up. Most festival planners advised packing at least one meal per day, and some noted that in-festival camping facilities make it easy to cook your own food on site. A fan of the All Good Festival suggested that festival goers "try not to buy food that requires ice, since you spend a lot of money keeping things cold in the summer."

Photo Dani P.L., Flickr.com

Bottled water can get expensive, too. Most organizers advise that visitors bring their own bottles and refill them at the venue. Partin notes that North Coast offers hoses and water fountains, and that, when it gets especially hot, "We've even given away bottles of water for free."

An added tip: freeze your water bottles ahead of time. As the day goes on, they'll defrost, offering you cool, clean water in the afternoon -- when you'll need it most.

Festival organizers like to plan ahead, to ensure that they have sufficient facilities to take care of all their attendees. With that in mind, they often offer discounts to early ticket purchasers. As Partin explains North Coast's "Ticket prices go up with every announcement" as the festival releases further information about the musical acts.

Groupon isn't just for manicures and restaurant discounts: Many festivals also offer huge price cuts on tickets through the coupon site.

Veteran festival goer Burgoyne suggests a great way to save on admission. "Most festivals employ volunteers to staff up for what is usually a once-a-year operation," he notes. "Volunteers usually get in free in exchange for a fairly light schedule of work ripping tickets or emptying trash or whatever the fest needs." In addition to the free pass, he pointed out that volunteering has other benefits: "You might get a T-shirt, you'll get backstage, and you'll meet people, which will make the experience better."

North Coast's Partin agrees. "We have a tab on our website for volunteers. In return for a handful of hours worth of work, you can go to the festival for free. Alternately, members of our street team also get in free."

Photo by MoBikeFed, Flickr.com

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It stands to reason that musicians in need of money will turn to other alternatives for making a living. Love for one's occupation only goes so far, as suggested by Lowery's claim that "the number of professional musicians has fallen 25% since 2000."

Without stricter regulations or changes in consumer behavior, we risk silencing the musicians who inspire us.

Motley Fool contributor M. Joy Hayes, Ph.D., is the principal at ethics consulting firm Courageous Ethics. She doesn't own shares of any of the companies mentioned. Follow @JoyofEthics on Twitter. The Motley Fool owns shares of Google. Motley Fool newsletter services have recommended buying shares of Google.
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