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Internet Commons and Its Impact on Entertainment Industry in US: A study on impact of Music CD Sales to Warner Brothers Assignment on Preparation of Research Proposal Submitted by George Maliyeakal Antony 26-04-2010 Introduction Rationale and Objective Introduction In the era of modern technologies in the digital world with the internet access has created a huge amount of digital resources which can be accessed through the web. These resources are widely accessed by the people around the world and referred to have the nature of a common property.
There is several studies on the common property has been under taken from the past five decades which can be stated as “everybody’s property is nobody’s property” Wantrup, C. and Bishop, R. (1975. pp:1). As majority of these internet resources doesn’t have legal access rights protection it leads to the free access these online resources by the communities. Internet is considered to be a ‘no-mans land’ where no one has really a control over it, all over the world Internet consists of 15000 computer networks linked to twenty million users in more than 175 counties and the users increasing drastically (Smith.
R 1997 P: 01). The lack of international institutions for the monitoring and control of internet piracy and most of the nations crafting their own rules which is not sufficient to tackle the cases reporting from other nations because it might be not directly related with their concern. People started using resources as a knowledge base and a tool for information sharing, online trading, banking and entertainment. When the people started using internet for entertainment purpose there was a huge demand for music and video downloads using credit cards.
Mean time people started searching for less priced or free downloads which given a boost for the piracy industry exploit this opportunity. With the invention of newer technologies day by day people’s traditional music concepts started changing and people started accessing internet for the purchase and download the music rather going in to the CD outlets. From 2001 onwards there was a drastic reduction in the sales music CD’s as people preferred to download from peer-to-peer[1] service providers.
The Warner Brothers one of the leading Music Company which is started in 1918 by four brothers is the worse hit with internet piracy as it had reduced its music CD sales more than 20 % in 2008 and 2009. The company is now trying to control the internet piracy by recruiting student interns from universities to locate and spy on pirates. In US the counterfeit of pirate CD is 2,795,693 in 2001 and 5,298,368 in 2002 with growth of 89. 5% (RIAA-2002) Statement of Issue The music industries in US and all over the world are trying to control the internet piracy of music as it directly affecting the sales of CDs and cause huge losses.
There isn’t much success for such efforts because internet still remains as a common property and the current institutional framework lacking the international policies to prevent such illegality. Apparently the skill and technological expertise of piracy industry is remaining unchallengeable and they keep on upgrading their system. In this study it is tried to understand the actual impact of music piracy on the CD sales of Warner Brothers a leading music company in US.
There are two types of piracy online piracy and off line piracy, in online piracy one person downloads the music and use by him where as in offline piracy one person downloads and share it with his friends. In offline piracy the rate impact is up 500% than online piracy because single downloaded material normally shares more than 5 persons (Peitz, M. and Waelbroeck, P. 2004 P: 11). This is one of the main reason that the sales of ‘CD and DVD Writes’ showing higher growth even though the Music CD sales reduced considerably.
Even though much effort has been taken to tackle issue of online piracy by the US government it is still on increasing trend since 1999. As the government say it is illegal to download songs from piracy sites people doesn’t accept it they believe that internet is part of common property and they have all the rights to use such internet resources. This perception clearly reflects three major concepts of common property by Hardin in 1968 in his article “The tragedy of commons”, where he used these concepts to describe the uses of natural resources.
The three concepts are ‘Excludability’, where one user cannot exclude others from using the resource so if compare this concept in the scenario of internet piracy, peoples perception is that even I am not using pirated resources someone might be using it then why don’t I?. The second concept ‘Substractability’ refers that one resource unit remain after substraction by one user for further substraction by others. As the natural resources shows higher substractability where as the internet resource is characterized by no substractability because the resource remain same with end number of users.
Here people claim that he is not only the one user in this entire world for this pirated resource so his contribution to piracy is very negligible. The third and final concept of low Divisibility refers that the degree which a resource can be divisible in to smaller units for better management (like ocean and Atmosphere etc). Where as the internet resource is also as vast like an ocean as it spread all over the globe and shares boundaries and access with almost all the nations. This low divisibility characters of the internet resource makes it so complicated and less viable to have an actual control over it.
The purpose of this study is to understand the impact of internet piracy on the CD sales to Warner brothers Company and it also attempts to bring ‘Common Property’ concepts to explain the various challenging characters of vast internet resources. Objectives of the study • To assess the impact of internet piracy on the CD sales of Warner Brothers. • Analyze the common property nature of the internet resources using ‘Common Property’ concepts by Hardin (1968). • Describe the peer to peer file sharing system used by the internet piracy sites. • Analyze the people’s perception towards pirate file sharing from the internet. Recommend an effective and feasible policy intervention to control the internet piracy of music CD’s in US. Keeping in mind the research objectives the following research questions where drafted for the study. Research questions • At what extend the music CD sales of Warner Brothers has been affected by Internet piracy? • How the ‘Common Property’ nature of internet resources can be described? • How the peer to peer file sharing system used for internet piracy? • What are the people’s perceptions towards the pirated file sharing from the internet? Is it possible to have an effective intervention to control the internet sharing of pirated music files? Hypothesis • Warner Brothers CD sales has bee severely affected by the Internet piracy. • There is no control over the internet resource use by the resident users by the US government • It is difficult to control the internet piracy with peer to peer file sharing as it does not have involvement of a server. • People believe that internet net resource in a common property so they consider it as their right to use such resources. Internet resources highly resemble the characters of a common property. Literature Review There are very limited number of studies is available about the internet piracy, some of the scholars such as Smith. G (1997), Peitz, M. and Waelbroeck, P. (2004), Hofmokl, J. (2010), Moores, T. (2003), Boorstin. E. S (2004), Liebowitz, J. (2006) smith, D and Telang (2008), and R, Driscoll, M (2007) are conducted relevant studies based on internet piracy. Where as the common property concepts mainly adopted from Hardin. G (1968), Moor, D. (2009). It is important to ensure the talents of successful artists and song writers are rewarded. It is crucial both to the creative side of the music industry and commercial activity of the record company. ” (Lewis. G. J et al (2005). Many of the scientists and experts from the music industry claim that as result of internet piracy the legitimate CD sales have come down drastically. It is mainly because of illegal sharing MP3 downloads through the ‘peer to peer’ file sharing using the internet and it is least possible control such file sharing as it is not involving usage of any server. Peitz, M. and Waelbroeck, P. (2004) P: 1). The peer to peer file sharing system was first developed by Shawn Fanning who named it Napster which allowed sharing of files among strangers. The Napster was introduces in the mid 1999 soon became so popular and the after 2005 US music industry has faced down turn and they started arguing that the spontaneous growth of peer to peer file sharing was the reason for the down turn. There are 70 million people are registered users of peer to peer music sharing sites. Boorstin. E. S, (2004) pp: 13). The companies started suing thousands of people with huge amount of fine had lead to heated debate between the industry and Internet file sharers. (Liebowitz, J. (2006) P: 2) Warner Brothers, EMI, Universal, Sony Music and BMG are the major players in the US music industry and they receives a combined revenue of $14 billion yearly which consist of 75% of the global music record sales. (Boorstin. E. S (2004), Choi and Perez (2006), and Penz. E (2007)).
The Warner Brothers is accounted more than 20% loss in the year 2008 due to internet piracy. According to Lysonski and Durvasula (2008) consumer behavior to download pirated resources is decide by each individuals ethics because such decisions are made on each individuals ethical code of conduct. The total of 18% of United States internet users mainly youngsters download full length movies and music in regular basis. The 80% of such users uses peer to peer file sharing and the number of users doubled during the period of 2005-2006. Ackerman, D. and Yigit, K. 2006). One of important aspect is the perception of the people who uses pirated internet resources over 60% of the population believes that using pirated resources from internet is not a serious offence rather it is their rights to use common property resources. Comparative Attitude towards intellectual Property [pic] Source: Digital Life America, Solution Research Group. The majority of the common property theory concepts directly coincide with the people’s perception towards the internet pirated resources.
There should be some social arrangement which produce responsibility for example, consider bank robbery, the person who steals money as he considering the bank as a commons. How can we prevent such illegal action? It is not possible by just changing his behavior by any verbal appeal to his sense of responsibility rather there should be definite social arrangement to prevent the bank becoming a common (Hardin. G (1968) P: 1243). The lack of well crafted policies and institutions to control peer to peer system developers and service providers are making this internet resource in to commons.
As the internet is keep on growing many more issues regarding access rights, access control and human rights issues about to come. “The rise of the internet creates fascinating grounds for a revitalization of the theory of commons. This is because of the object of the study – Internet Commons – is expanding at an unprecedented pace” (Hofmokl. J (2010) P: 247) Methodology To understand the impact of internet piracy on the CD sales in US and in particular to Warner Brothers it is essential to have a primary study to analyze the various factors that contributing the piracy.
As there aren’t many studies in this regard it always prefers to have an exploratory study to understand basic issues. Based on the exploratory study constructive research method is adapted to comprehend the problems and fix the priorities and draft the suitable framework for the study. Detailed questionnaire survey will be conducted among the students of Indiana University to analyze the level of downloading and people’s perception towards usage of pirated resources from the internet. The samples will be selected in random basis with simple random sampling technique.
It is difficult to fix certain percentage for the sampling scale because of the huge number of internet resource users among students. 300 questionnaires will be drafted with an expectation of 50% response. As part of inclusion and exclusion criteria the students under the age of 26 is selected for the survey as majority of the internet users mainly for entertainment purpose are belongs to this group. Focus group discussions with the officials of Warner Brothers Music Company to analyze the piracy impact rate and control measures of the company.
The primary and secondary data collected for the study will be analyzed using Statistical Package for Social Sciences (SPSS) to find the Analysis of Variance (Sharpio, S. and Wilk, M. P:591) for the testing of various hypothesis. In the standard version of hypothesized distribution the linear plot indicates that the hypothesis is true. The secondary data will be analyzed to find growth of internet users and to quantify the loss the CD industry due the internet piracy.
The review of literature is based on the library resources to analyze the common property theory and online journals for wider range of readings. As the study is based on US music industry extensive use of emails and phone calls to us has to be made. It is scheduled to conduct among the students of Indiana University in the month of December 2010. Time scale for research Gantt chart (Week Commencing 22nd October 2010) |Activity |Oct 10 |Nov 10 |Dec 10 | Jan 11 | Feb 11 | Mar 11 |
W/k commencing |22 |29 |5 |12 |19 |26 |2 |9 |16 |23 |30 |5 |12 |19 |26 |5 |12 |19 |26 |2 |9 |16 |23 |30 | | Literature review |X |X | | | | | | | | | | | | | | | | | | | | | | | |Drafting objectives |X |X | | | | | | | | | | | | | | | | | | | | | | | |Fixing the methodology |X |X | | | | | | | | | | | | | | | | | | | | | | | |Finalizing Proposal |X |X | | | | | | | | | | | | | | | | | | | | | | | |Crafting research strategy and method |X |X | | | | | | | | | | | | | | | | | | | | | | | |Contacting concern Authorities | | |X |X |X |X | | | | | | | | | | | | | | | | | | |Feedback on proposal | | | | | | |X | | | | | | | | | | | | | | | | | | |Develop schedule of question for interviews | | | | |X |X |X | | | | | | | | | | | | | | | | | | |Making arrangements for the travel to US | | | | | |X |X | | | | | | | | | | | | | | | | | | |In-depth interview with University students | | | | | | | |X |X |X |X |X |X |X |X | | | | | | | | | | |Focus group discussion With Warner Brothers officials | | | | | | | | | | | | |x |x | | | | | | | | | | | |Key informant discussions | | | | | | | | | |X |X |X |X |X |X | | | | | | | | | | |Gather data | | | | | | | |X |X |X |X |X |X |X |X | | | | | | | | | | |Analyzing the Data | | | | | | | | |X |X |X |X |X |X |X | | | | | | | | | | |Draft findings to chapters | | | | | | | | | | | | | |X |X |X |X |X | | | | | | | |Updating literature review | | | | | | | | | | | | | | | |X |X | | | | | | | | |Preparation of final draft Of chapters | | | | | | | | | | | | | | | | | |X |X | | | | | | |Draft to Supervisor for correction | | | | | | | | | | | | | | | | | | |X | | | | | | |Revise draft | | | | | | | | | | | | | | | | | | | |X |X | | | | |Print, bind | | | | | | | | | | | | | | | | | | | | | |X |X | | |Submission | | | | | | | | | | | | | | | | | | | | | | | |X | | Source: Henry Laurence Gantt. References 1. Ackerman. D and Yigit. K (2006). Digital Life America, Solutions Research Group. 2. Boorstin. E. S (2004) Music sales in the age of file sharing. A.
B degree thesis submitted to Department of Economics, Princeton University. pp. 13 3. Driscoll. M, (2007) Vol. 6 Pp: 550. Will You Tube Sail in to the DMCA’s Safe Harbor or Sink for Internet Piracy? J. Marshal Rev. Intell. Prop. 4. Hardin, G. (1968) The Tragedy of Commons. Vol. 162. Pp: 1243-1248. Science, New Series. 5. Hofmokl, J. (2010) The Internet Commons: towards an eclectic theoretical framework. Vol. 4. International Journal of the Commons. 6. Liebowitz. J (2006). File sharing creative destruction or just plain destruction. Journal of Law and Economics 7. Lysonski. S and Durvasula. S (2008). Journal of consumer marketing. Emerald group of publishing limited. 8. Moor, D. 2009) Avoiding Tragedies: a Flemish common and its commoners under the pressure of social and economic change during the eighteenth centaury. Vol. 62. Pp: 1-12. Economic History Review. 9. Moores, T. (2003). The Effect of National Culture and Economic Wealth on Global Software Piracy Rates Vol. 46. Pp: 207. Communication of the ACM. 10. Peitz, M. and Waelbroeck, P (2004). The Effect of Internet Piracy on CD Sales: Cross-Section Evidence. CESIFO Working Paper No. 1122. 11. Penz. E (2007) Paradoxical effects of the internet from a consumer perceptive. Emerald group of Publishing Limited Vol. 3 pp. 364-380 12. Sharpio, S. and Wilk. B (1965) An Analysis of Variance Test for Normality (Complete Samples). Vol. 52. Pp: 591-611. Biometrika. 13. Smith, D. nd Telang, R. (2008) Competing with Free: The Impact of Movie Broadcasts on DVD Sales and Internet Piracy. H. John Heinz III School of Public policy and management, Carnegie Mellon University Pittsburgh. 14. Smith, R. (1997) Internet Piracy. Vol. 65. Australian Institute of Criminology, Trends and Issues in Crime and Criminal Justice. 15. Wantrup. C and Bishop. R (1975). Common property as a concept in natural resource policy. Natural resource journal. No. 15 pp 713-727 ———————– [1] It is one of the network arrangements connecting a number of computers with out using a server, Napster was the first software to provide this facility.