Research Proposal: P2P and the E-Music Industry

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¶ … P2P and the E-Music Industry

The focus of this work is on the impact that the development of the peer-to-peer (P2P) file-sharing model has had on the commercial e-music industry. Firstly, an overview of e-business and the evolution of the Internet are presented. This is followed by a short discussion and classification of business to business (B2B), business to consumer (B2C) and peer-to-peer (P2P) market types. The marketing mix elements of price, product, promotion and place for digital content e-music businesses are then explored. Customer value, implications for the value chain and related ethics are then considered. Finally recommendations will be presented. This report is based on a survey of recent literature and text books on the topic of P2P networks and the e-music industry.

Plain and simple: piracy is bad news. While the term is commonly used, "piracy"? doesn't even begin to describe what is taking place. When you go online and download songs without permission, you are stealing. The illegal downloading of music is just as wrong as shoplifting from a local convenience store & #8230; and the impact on those who create music and bring it to fans is equally devastating. For every artist you can name at the top of the Billboard music charts, there is a long line of songwriters, sound engineers, and label employees who help create those hits. They all feel the pain of music theft. The law is quite clear here, and frankly, legal downloading is very easy and relatively inexpensive and yet illegal downloading of music and music products is still occurring at an alarming rate. Record companies have licensed hundreds of digital partners offering download and subscription services, cable and satellite radio services, Internet radio webcasting, legitimate peer-to-peer (P2P) services, video-on-demand, podcasts, CD kiosks and digital jukeboxes, mobile products such as ring backs, ringtones, wallpapers, audio and video downloads and more. All of these services are attempting to curb illegal infringement by competing with free low quality copies that are prolific and in many ways dominant on the e-market, and in addition they all cost the provider money to create, offer and market to a public that by utilizing other means could get similar services, all be it lesser quality copies for free.

The high volume of illegal uses, and the low return to suing any one individual, make it more cost-effective to aim litigation at targets as far up the chain as possible. From the perspective of the Music Industry, it was easier and more effective to shut down Napster than to sue the millions of people who illegally traded files on Napster. (Lemley & Reese, 2004, p. 1345)

Early litigation of individuals may have provided a deterrent for some users, and yet these same users are now being ignored in litigation for the purpose of choosing defendants which bigger pockets, capable of actually paying lawsuit rulings to partly compensate for known and unknown losses on the part of the industry.

There are two categories to consider here: losses from street piracy " the manufacture and sale of counterfeit CDs" and losses from online piracy. One credible analysis by the Institute for Policy Innovation concludes that global music piracy causes $12.5 billion of economic losses every year, 71,060 U.S. jobs lost, a loss of $2.7 billion in workers' earnings, and a loss of $422 million in tax revenues, $291 million in personal income tax and $131 million in lost corporate income and production taxes. (Siwek, 2007, para#3) as you can imagine, calculating loses for online piracy is a difficult task as the occurrence of piracy events is largely untraceable, beyond broad estimations for different upload and download speeds as well timed traffic, and as technological advances in the speed and ease at which such events can occur estimates become even more far reaching. All the industry can do is estimate the number of downloads that have occurred and compare it to a legitimate P2P or other source sale. Though the legitimate services are both cheep, easy and guaranteed to provide quality copy, the lure of getting something for nothing, at least in theory is strong and only one "Peer" in literally millions need purchase a legitimate copy of a file to share it exponentially, and this doesn't even consider bootlegging at live events.

It is important to note that across the board, piracy is a very real threat to the livelihoods of not only artists and record label employees but also thousands of less celebrated people in the music industry from sound engineers and technicians to warehouse workers and record store clerks. Piracy undermines the future of music by depriving the industry of the resources it needs to find and develop new talent and drains millions of dollars in tax revenue from local communities and their residents. (Johns, 2002, p. 67) Some communities in fact rely so heavily upon the music industry that the ensuing changes caused by piracy could create bankruptcy situations for whole communities. (Gnuschke & Wallace, 2004, p. 18)

The ultimate goal with all any anti-piracy efforts is to protect the ability of the recording industry to invest in new bands and new music and to give legal online services a chance to flourish. That's why education is an essential aspect of change. Users must be aware that what may seem innocuous, when multiplied equates to millions and millions of dollars earned, and that there are very few "big guns" per say, in the music industry who earn enough to cushion the blow. That's also why record companies license music to legal services. And that's why, when necessary, enforcement of rights through the legal system occurs, at every level. (Lobato, 2005, p. 357) Just as we must hold accountable the businesses that encourage theft online, individuals who engage in illegal downloading must also know there are consequences to their actions. If you violate the law and steal from record companies, musicians, songwriters and everyone else involved in making music, you can be held accountable. With so many great legal music options available, there is really no excuse for music theft, other than intentional theft. Fans have a choice: pay a little now or a lot more later.

E-Business and Internet

The Internet and developments in e-commerce technology has made it possible to capture and share large amounts of information in real time, this has enabled greater collaboration and integration between supply chain partners. Almost all businesses have or an in the process of adopting some type of e-commerce technology to streamline their SCM activities. The Internet has now surpassed EDI technology with greater flexibility and relatively low costs. The direct impact of e-commerce technologies on supply chain performance is not clear, and supply chain executives should not expect to justify it investment based on immediate performance results, as such estimates are often misleading and non-inclusive of the whole picture. In order to receive strategic benefits, process re-design must be incorporated into the implementation of it, and all real and potential gains and investments must be accounted for. (Sevcik, 2002, p. 8) This is certainly the case with the music industry, as changing technology further challenges the workable revenue the industry and artists have to call upon to demonstrate further gains. At some point the music industry will ask itself, why they should invest in online services, i.e. licensing activities and legitimate download options when such sites could potentially feed piracy and therefore remove any realistic revenue they expect to receive. This is clearly where anti-piracy enters the scene and all involved must make efforts to ensure the strength of anti-piracy technologies and practices. (Schwartz, 2003, p. 163) (Godwin-Jones, 2005, p. 27)

Business 2 Business (B2B)

The realistic development of business structure change, as a result of technological advances is not something that should be curtailed, simply to develop better ways of protecting intellectual property rights. The real manner in which such systems, as business 2 business communications should instead be invested and protected with technology that exceeds the technology of piracy. B2B is an essential aspect of technology that has seriously changed the manner in which business communicates and exchanges information and resources. Materials ordering, file sharing and most importantly financial transactions over, encoded and encompassing communication systems that allow businesses the ability to much more rapidly and less labor intensely exchange information is essential to the way that the world does business in a global economy. (Tie, 2001, p. 49) B2B is the language of potential growth, and yet like anything else must be realistically weighed in association with increased cost and risk. The B2B systems that are already in place to ensure the safe transmission of goods and information may be an essential aspect of where the music industry looks for solutions to the piracy question. The challenge then becomes the need to balance exclusivity with availability to legitimate users, willing to pay the minimal fees to use the service, without feeling as if the work of getting through the system makes… [END OF PREVIEW]

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