Ian and plxi - yes, its exactly the record companies that are at fault.
As I alluded to before - they're working on an obsolete business model thats built around exchange of material (CDs; an object that has to be made, and the object itself cant be replicated without some serious production capacity).
Now, its pretty clear that CDs (or comparable 'to have and hold' object that has music on it, or any media) arent going anywhere, but they need to take a different place in the business. Most music now, in terms of shear number of songs out there is probably digital. I dont know any stats, but thats a (fairly well) educated guess. Anyone thats a big music lover that associates with other music lovers, especially younger folks can make their own assesment of that and we can (in principle) add them all up and see if its true.
The younger people are, the more I guess this is true - MP3 is the dominant format.
But its also true that illegal downloaders spend more money on hard-copy music than non-illegal downloaders, because they're exposed to more music because theres no compunction to download because theres no outlay, so theres no risk. We've all not bought CDs because we didnt like the music quite enough, or handnt heard enough and werent sure, or didnt have the money at the time. I suspect we've all had CDs that we didnt like that much at first, but grew on us and we've come to love them.
Having a zero-outlay means to listen to the music whenever you want means that these risks are removed, and you can get the fence-sitters (the folks that will wander round HMV with a CD like a teddy bear only to put it down again) to buy and the slow-boil music that takes a while to grow on you to sell. The data supports this, too. So does my personal experience - the last time I bought a batch of CDs, the time I mentioned before where I spent more than the years average sum for illegal downloaders, it was to get music that I only had on MP3 (by copying mates CDs and illegal downloading) on hardcopy, because I like it and wanted A: the object B: the best quality sound C: a permanent and reliable source in case of loss of data.
I'd guess/argue a significant majority of people around and under 30 do much the same. I cant say real numbers but among my circles of friends its probably about half follow a similar patter, with the rest being CD-only or almost-download-only. I dont know anyone that doesnt buy CDs.
So what have labels done to address this change in listener consumption patterns?
Started payed downloads and gone on a legal battle to crucify people that download illegally.
Payed downloads are an insult. About £1 per song, the same or more than I can order a CD for from an american distributor on amazon.uk, and its MP3 or equivelent, medium/low bitrate. $%&# off. It doesnt cost near that much to set up and run some servers, even huge ones. Look at free sites like Wiki, that have massive traffic, a handful of employees and huge amounts of data to store - they do it for a few million. There are overheads, but there are no material losses - youre not exchanging anything; youre paying for people to replicate the data from your source. This exploits precisely what makes illegal downloading not stealing to make a huge profit margin - that no one actually loses anything; its all copies.
Going after people that do it to make examples of them is also absurd given the number of people doing it. The measures that have been taken against those that have been singled out smack of trying to lay the whole phenomenon of peer to peer on the first person they can find. Example.
http://technology.timesonline.co.uk/tol/news/tech_and_web/article721133.ece these punishments do not fit the crime. They are fitting with the record labels huge reserves of cash being able to pay for armies of lawyers to crucify everyday folk.
The sensible option would be to allow illegal downloading, to modify copyright law to state that its illegal to sell music on as a distributor, but not to share/copy for free, lower the prices of paid downloads and increase the quality to high end vorbis or flac and use it as a marketing device to promote CD sales, gigs and merch.
Of course, most of us know this. The mystery is why the labels arent making such shift - its in their financial interests (even if only to be able to throw less money into the legal system to lynch people) and its an easy shift to make.
They could even promote and derive revenue from free download - if sony started making peer to peer client software, for example, then A: they could bring it to the awareness of technological luddites and promote music to broader demographics, then letting the no-risk aspect sell more CDs to the indecisive and selling more 'grow on you' cds take effect in a larger population and B: they can take revenue from advertising in the software, or charge some reasonable monthly subscription for it (15 or 20 a month per copy, or something to that effect). Spotifys model is great for that - free with advertising, paid without, and its doing great.
We'll gloss over for a moment that its unlikely that sony in particular could resist making any software thats not laced with DRM, overcomplicated, unstable and designed to treat people like commodities that owe them their deserved riches, rather than customers that provide them their living. In principle it would work, regardless of the fact that big business will find a way to $%&# it up.
