Piracy and its Impact on Philippine Music Industry

Based on Danny Yson's report:

• The Philippine music industry was a P2 billion thriving industry, selling local and international artist songs, before the vicious tentacles of music piracy choked it to near collapse starting year 2000.
  
• It is estimated that the pirate audio disc piracy was a P1 billion a year illegal business while the legitimate industry has dropped by 25% in the year 2000.
  
• In 2001 alone, sales plummeted by 42.5% because of piracy.
• The loss of revenue in the local music industry continues to date.
  
• As an indication of poor sales, Philippine Association of the Record Industry (PARI) certified gold and platinum awards given in 2001 were only 18 compared to 35 in 2000.
  

The PARI has also reduced the required sales units for a gold record to 7,500 units from 20,000 units for international repertoire and 12,500 units from 20,000 units for OPM. There are is an average of 15 to 20 albums hitting a gold record while up to 3 albums may reach platinum in a year these days.

In the early years of music up to 2003, majority of records sold is from international artist pegged at 70% while OPM sales is only 30% at that time. However, the campaign for Original Pilipino Music (OPM) and the popularity of bands resulted to a market shift. Majority of sales today is OPM pegged at 70% while international labels is at 30%. (for further validation)

The local music industry has not grown much since the year 2003 where sales have not even reached P1 billion since that time - as the music piracy business is eating most of its market. Therefore, today in the year 2008, the local recording music industry is a struggling sector earning revenues up to P840 million a year from CDs, mobile phone tones, and Internet music download purchases. (for further validation)

The pirated music sector, victimizing local and international music, is growing at 40% to 50% per year and earns around P2 to 3 billion a year on local pirated music in terms of duplication, non-payment of performance rights, print rights, and digital performance rights. (for further validation)

Music piracy has shown that people love music but may not necessarily find it worth paying to the usual prices it is marketed today. Unlike movies and games where a person needs to have a player and set a time to watch, music can be heard almost anywhere and mostly for free (radio, coffee shops, bars, establishments, online radio, among others).

In addition, pirated music is so affordable that even artists that are not that popular are being purchased by Filipinos out of curiosity at the time of purchase. If no pirated CDs are available, it is still possible that pirated music buyers will not buy legitimate copies in the first place. Therefore it can be assumed that a big percentage of pirated music customers are not really the paying customers.

Music can indeed be heard everywhere but somebody (record label, radio, tv, bar or malls) paid for its cost. It is hard and perhaps even unfair to go on a price war with pirates as they do not incur expenses other than manufacturing cost. They did not spend money on production and marketing. As a result, record labels are reducing the number of releases. Just a few years back, big record labels will have 12 albums scheduled for release in one year. Today, most labels only have 5-6 albums planned releases for the year. While 1 to 3 big players will likely launch up to 12 albums a year.

We heard of international popular artists leaving their record labels to go on their own, partner with retailers, concert organizers, and even online music sites. This is caused by the dwindling sales of CDs and as a result, everybody's looking for other revenue streams. CDs are now being bundled with concert tickets, merchandise, among others. Independent artists have the freedom to do whatever they want with their songs and albums such as selling whatever price the consumer is willing to pay. In the end, music can be made cheap but it's not free.

Of course, if the artist has not established a following or name in the industry, the above options may not possibly work out without working with a record label. Especially if they want to profit from their music.

Minimize or eliminate piracy
In the eyes of intellectual property rights advocates, possessing a pirated cd/dvd or whatever copyrighted works should be criminalized. If nobody buys pirated work, then the pirates will stop or reduce their production. However, that's wishful thinking as eradicating piracy is a tall order but tougher Intellectual Property Rights Law implementation can perhaps minimize it.