Is piracy killing the record industry, or is the record industry just too slow and inert to adapt to the way business should be run nowadays, and that is online? My vote goes to the latter; in fact, I think they aren’t even trying hard enough.

An interesting article from Torrentfreak tells the story of a German indie record label Dependent Records which was forced to shut down and then decided to upload its entire catalogue to The Pirate Bay.

Interestingly enough, the company’s CEO Stefan Herwig claims that Dependent Records was forced to shut down mostly because of piracy, and that indie record labels are the ones which are struck by piracy the most. ?A popular claim often seen on Internet fora maintains that the P2P culture weakens the majors and bolsters the independent labels. This is, we can assure you, 100% bullshit,” he says. He’s angry but not bitter, though; he seems to think of this as the natural course of events, and thus he decided that the least he can do to make his music available to the public is offer his label’s catalogue freely on The Pirate Bay.

I do not agree, however, with Herwig’s assertion that the main reason for his company’s demise is because “there are simply too many people who enjoy our bands and their songs who do not wish to pay for them.” The problem of record companies - especially small, indie ones - is not that people don’t want to pay; it’s availability. An average user simply doesn’t have the time to walk from one small record store to the other and search for new records; especially since new albums are often available on the internet weeks before they physically come to the store.

Big stores at least offer a wide variety of products, so you can hope to find most of what you’re looking for in one place. But small record stores, as cute as they are, are simply too much hassle compared to the armchair-shopping that the internet offers. The indies thus are forced to change their business model even more than large record companies. If you’re thinking of starting a record label/store today, the first thing on your mind should be an online shop; and this online shop has to be at least as easy to use as The Pirate Bay.

One important thing here that the entertainment industry doesn’t understand, is how piracy works. Piracy works very, very well. The albums and videos and movies come quickly; they’re thoroughly checked by the community, they’re well organized, they have standards of quality, and they’re free. To beat that, you need to offer content that’s just as fast, just as good, just as organized, and then give something extra to compensate for the “free” part: higher quality bitrates, extra digital content, extra physical content (shirts, concert tickets, coupons). You can’t miss out any of these elements because your content will ultimately be worse than the stuff on Mininova or The Pirate Bay.

Not realizing this, the industry stabs itself in the foot. They add those annoying “piracy is a crime” trailers to DVDs which you can’t skip and which just make you go and download the XviD version. They add DRM and rootkits to their media which makes pirated content, well, a 100 times better than theirs simply because it’s annoyance-free. They often have crappy online shops and support some weird media formats instead of using what most people use. Their content, simply put, sucks compared to pirated content.

Ultimately, I think the “free” element of piracy is not crucial. It’s the fantastic organization, speed and quality that piracy offers that makes most people download pirated content. If the entertainment industry - movie studios and record labels, big or small - should offer content that has the same quality as the pirated content; and perhaps even strive to offer just a tiny bit more, they’d see their profits surge.

[image credits: wickedwhammy.com]

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