The IFPI has put out its latest report on the state of the music business (sent in first by Nastybutler77). There aren't too many surprises. Some of the data in the report (such as the growth in the UK and elsewhere) were already covered a few weeks ago in a presentation by Will Page, the chief economist for PRS in the UK. But there were some interesting points in the report that suggest the industry is still in quite a bit of denial. Thirteen markets saw "a return to growth" in music sales -- though, amusingly, the IFPI chooses to highlight two of them -- South Korea and Sweden -- both of which passed ridiculously draconian anti-piracy laws, mostly due to pressure from folks like the IFPI.

Not surprisingly, the IFPI credits the "improving legal environments" in those countries for the increasing sales. Similarly, it notes that sales declines happened in Spain and Canada -- two of the countries most regularly singled out by the entertainment industry for having consumer friendly copyright laws. Of course, that's not how the industry describes it. They talk about how those countries' laws are "out of touch" or not in line with "international standards."

Of course, what the IFPI totally ignores (not surprisingly, since they only represent record labels) is that while the sales of music directly may have declined in some markets, the overall market for music grew tremendously. In other words, the decline in sales of recorded music has not done harm to the music industry, but just to a few record labels. This new report is really just an attempt to pretend (yet again) that the "music industry" is really "the recording industry." And, of course, what this report doesn't come close to acknowledging, is that in putting in place these "legal environments" in places like Sweden and South Korea, it has cut off many more efficient and effective ways for musicians to create, promote and distribute their works.

That's what this report really shows. It shows that the IFPI wants to be the gatekeeper to make sure that more of the money going through the music ecosystem goes to its labels, rather than to others. It doesn't care if the overall market for music is smaller, just as long as more of the money goes to its members.

One of the major concerns about various "three strikes" laws that kick people off the internet based on three accusations (not convictions) of copyright infringement, is that beyond being a stunningly disproportionate punishment to the action, it also potentially punishes many others: for example, a teenager can be accused three times of file sharing and his parents and siblings all lose their internet access because of it, that does not seem reasonable nor fair. And yet, in a rather odd statement, an IFPI representative, Shira Perlmutter, seems to be claiming some sort of magical ability to just block the single user from accessing the internet, saying to conference attendees that three strikes would only require cutting off "one account." Perhaps the folks at the IFPI don't quite understand how the internet works (or perhaps that's a given) but generally speaking, when you have internet access at your house, you don't set up separate access accounts for every family member... And if others in the family have access, what's to stop the "cut off" one from using the other's access?

We already spent a bunch of time debunking many of the claims in the IFPI's new "Piracy Bad!!!!" report. But the folks over at TorrentFreak have dug up a bit more info. Apparently the research for the report was put together by Forrester, and the underlying research showed that when it comes to the growth in digital music sales, those who partake of unauthorized file sharing are also the best customers of authorized digital music. No, this is not saying that file sharing automatically leads people to buy, or that all file sharers buy. Obviously, that's not the case. But it does suggest that demonizing those people might not be the smartest thing.

But the IFPI report doesn't mention any of that. Instead, it claims that people file share for one reason and one reason alone: because it's free. If that were the case, though, then why would any of those who partake also buy? And why would they be the industry's best customers for digital sales? It seems like the IFPI should be embracing them to see how it can get them to choose to buy more -- but instead, it totally ignores what its own researchers found, insists that it's just because content is free, and then spends most of the report demonizing its best customers and asking governments of the world to kick those people offline.

It's that time of the year when the IFPI comes out with its annual fear-mongering report, and this year's has really gone overboard into the ridiculous. The basics are pretty much what you'd expect ("piracy bad! industry dying! governments must break everything to protect us!"). However, the details are just downright laughable. The entire report seems premised on the idea that direct music sales is the only thing that really matters (a blatant confusion about the difference between the recording industry (which the IFPI represents) and the music industry (which the IFPI pretends to represent). You can read the entire report below, but we'll go through some of the lowlights: In the intro, after bemoaning the losses in sales (but totally ignoring the massive increases in every other aspect of the music business), it claims that the tide is turning on the public's perception of unauthorized access to content. Proof? Rupert Murdoch's attack on Google and Microsoft's ridiculous decision to kick people off Xbox live if they made use of a glitch.

You hear it around the world: this is no longer just a problem for music, it is a problem for the creative industries: affecting film, TV, books and games. In this arena, the music industry is the pathfinder of the creative industries, pioneering with new offerings for the consumer. In 2009, Rupert Murdoch said that the content kleptomaniacs should not triumph and Microsoft spoke out against piracy, ready to ban players from Xbox live if they had modified their consoles to play pirated discs -- no three strikes procedure needed!

Of course, both are incredibly poor example choices. Murdoch wasn't actually complaining about "thieves." He was complaining about Google sending him traffic without paying. That's hardly the sort of issue the recording industry faces. And Microsoft was banning people not just for modifying their legally purchased hardware, but for using glitches made by software programmers. Again, an exceptionally different situation. You would think that IFPI could come up with something more compelling.

Then, amusingly, the IFPI mentions the Lily Allen saga with an amazing rewrite of history:

It was, until recently, rare for artists to engage in a public debate about piracy or admit it damages them. In September 2009, the mood changed. Lily Allen spoke out about the impact of illegal file-sharing on young artists' careers. When she was attacked by an abusive online mob, others came to her support.

First, that's not even close to true. Artists have spoken out about those issues for years (Lars Ulrich, anyone?). And Allen wasn't "attacked by an abusive online mob." Lots of people who actually understand these issues pointed out that while she was complaining about file sharing, she and her label (EMI) were distributing dozens of songs on her website in a totally unauthorized manner.

Throughout the report, the IFPI makes the false claim that it's representing "the music industry" and falsely describes "the music industry's revenue" as being limited to sales of music. As an example:

In 2009, for the first time ever, more than a quarter of the recorded music industry's global revenues (27%) came from digital channels -- a market worth an estimated US$4.2 billion in trade value, up 12 per cent on 2008.

But, of course, that's wrong. It is not the music industry's revenue. It's the recording industry. Similarly, the report only focuses on new ways to sell music when it discusses "new business models" and only briefly mentions efforts to connect with fans, suggesting (laughably) that Warner Music has been the leader here, rather than a distant follower. As such, it should be no surprise that the report continually ignores the fact that the music industry has actually been growing (and that's based on a study from the music industry itself). This report is like the makers of horse carriages insisting that the transportation market is dying, because they're selling fewer horse carraiges as automobile sales ramp up.

The report particularly singles out Spain -- which is no surprise, given that the Spanish courts have recognized that personal copying isn't a crime and taking away broadband access for copyright infringement makes no sense. The report moans and complains about how the Spanish music market is dying -- but again, only focuses on albums sales (as an aside, amusingly enough, I purchased a bunch of albums from Spain this year).

From there, the report goes on and on at length about how file sharing is killing music (despite the evidence to the contrary) and how the only solution is for governments to force ISPs to play copyright cop. It conveniently brushes off all the evidence to the contrary, and ignores the statistics showing a massive increase in new music hitting the market.

The report also tries to rope in other industries to show the "harm" caused by unauthorized file sharing:

Case studies around blockbuster movies show how top films now suffer from the same digital piracy problems as popular albums. Pre-release copies of Wolverine were downloaded 100,000 times in 24 hours after a leak in April 2009. In 2008, seven million copies of Batman: Dark Knight were downloaded on BitTorrent. This has a ripple effect across the industry, on investment and jobs. In the US alone, the film and television industries are estimated to employ 2.5 million people, according to MPA.

Unfortunately, neither "case study" supports the claim by the IFPI of "harm". Dark Knight was the highest earning movie of 2008 despite widespread file sharing, and a study comparing the box office results of Wolverine with other similar movies suggests that the pre-release downloads may have actually helped it at the box office. The only other "proof" is a quote from a filmmaker insisting that file sharing is taking away revenue. Bold claims in a year when Hollywood had its biggest box office take ever.

Of course, it goes on to say that Hollywood is losing jobs due to this, even though Hollywood's own studies show that job growth is expected over the next decade, as alternative models come into play.

The section on kicking people offline after accusations (not convictions) of file sharing is particularly amusing. Of course, the IFPI tries to redefine it as "graduated response." It cites numerous surveys that say people would stop file sharing under such a program, but reality seems to trump what people say they would do. And, nowhere has anyone explained why the threat of kicking people offline will actually cause anyone to buy. We already know it won't -- because today's threat of millions of dollars in fines hasn't slowed down file sharing in the slightest, despite being a much more significant punishment than losing your internet connection.

From there, it talks about the various successes the industry has had in ramming through legislation to kick people off the internet, ignoring the questions about the constitutionality of those programs in places like France where the law has been delayed over concerns it violates EU data privacy rules, or the massive protests against such backroom deals in places like New Zealand. Instead, the report falsely suggests there's widespread support for these programs. The report also falsely claims that ISPs in the US have agreed to private deals to kick people offline. While there was a brief claim yesterday that Verizon had made such a deal, the company quickly denied that and admitted that it had not kicked anyone offline. Oh, and not surprisingly, the report fails to note that the French agency put in place to administer its law, Hadopi, was caught infringing on copyrights in its own logo -- showing just how ridiculous a blanket policy is for dealing with these issues.

The report then has a whole section on the "success" story of South Korea, which is a joke. South Korea had a thriving music industry entirely without these kinds of laws, because smart music industry execs, like JY Park, have embraced new business models and basically admitted that selling CDs or downloads was a dead-end business. And while new laws in South Korea may have temporarily boosted music sales, the IFPI totally ignores the massive downsides to the laws that have resulted in various service providers blocking any music uploads or video uploads, seriously damaging the ability to create useful online services for users.

In the end, the report is really more of the same. It's the buggy makers pretending they represent the transportation business and demanding laws that block the development of automobiles in order to keep selling more buggies. But, of course, progress can only be blocked for so long, and it's about time that the IFPI entered the 21st century.

When challenged on what they're doing, organizations like the RIAA and the IFPI will often claim that they're just trying to help musicians. That's obviously untrue, as they represent the record labels -- who have a long history of an antagonistic relationship with the musicians they work with. We're seeing more and more cases where this conflict is being made quite clear as the RIAA and IFPI attacks fan actions that the musicians in question would prefer be left alone. Reader Xavier sends in this example of a music blogger who received a cease and desist from the IFPI that not only contained numerous mistakes, but was disputed by the musician himself.

When the blogger received the cease-and-desist (which named the wrong song, but pointed to a specific URL on his blog), he sent the band a note via their MySpace page, to which the lead singer of the group responded:

"You definitely have my blessing as one of the 4 holders of the copyrights to that specific recording. I actually think this is bogus. Anyways thanks for posting that on your site. It was lovely to see it out there doing the rounds. We didnt take it to radio so your helping with the pollenation of the nation."

Of course, the blogger was (rightfully) worried that the IFPI might have his hosting company take down the site and/or charge him with a lawsuit, so he took down the song anyway. Nice to see the IFPI looking out for the best interests of the musicians, huh?

There's been a huge lobbying campaign going on throughout much of the world to get local governments to put pressure on ISPs to require them to kick those accused of file sharing off of the internet. It had been worrisome that these efforts actually seemed to be getting some traction in both France and the UK despite vehement opposition from many people. It appears that the opposition has started to get its point of view across. The EU Parliament has now rejected a plan to criminalize file sharing and to implement a "three strikes and you're off the internet" policy. The vote itself isn't binding, but suggests how the EU Parliament feels. While France has already put in place such a law, there was some feeling that France would push to make similar laws enforced European-wide. This vote should put a damper on those plans.

We've seen over the past few months that the IFPI has started a world-wide strategy of suing ISPs for not stopping file sharing. This is silly, of course. An ISP should not be responsible for what people do on its network, and forcing them to cut off a lot of perfectly legal activities just to protect an obsolete business model is especially troublesome. Unfortunately, the IFPI's early successes have only emboldened the group, leading to more pressure and more lawsuits. Luckily, at least some ISPs are standing up to the pressure. TorrentFreak notes that Swedish ISP TeliaSonera is aggressively pushing back against legal threats from the IFPI, noting that it has no legal responsibility to cut off file sharer, and the IFPI is really pushing its luck trying to claim otherwise. Somehow, we doubt that the IFPI is going to give up so easily -- and it certainly would be nice to have an ISP win one of these battles in court, so stay tuned...

For a group that claims it's focused on "educating" people, the recording industry seems amazingly thickheaded in learning lessons itself. Just last week the IFPI succeeded in having an Israeli court demand that Israeli ISPs block bittorrent search site HttpShare. As we noted in that post, this would likely act as tremendous advertising for HttpShare -- and, indeed, that's exactly what has happened. The site claims that traffic has jumped, even requiring the site owners to upgrade the hardware hosting the site -- all thanks to a little "IFPI Advertising."

What's most stunning, however, is that the IFPI didn't realize this would happen. After all, it's happened again and again and again. In fact, just a month ago, a similar action in Denmark over the Pirate Bay greatly increased traffic to the site. Hell, the Pirate Bay first came to international attention (beyond a much smaller niche group of users) after the IFPI pressured gov't officials to take the site down. Of course, rather than recognize this, the IFPI and the RIAA (and the MPAA at times as well) always claim that each of these "shut downs" is a "significant blow" against piracy. Apparently, they never consider what happens next. Makes you think that the execs and lawyers at the recording industry probably aren't very good chess players.

Earlier this year, the IFPI was successful in convincing a court to force a Danish ISP to block access to the Pirate Bay. Rather than recognizing that this only helped drive more traffic to the Pirate Bay, the folks at the IFPI seem to have gotten it into their heads that the best course of action is to start suing ISPs for not stopping file sharing. Its first target is the large Irish ISP Eircom. Eircom points out all the obvious things: it has no idea what its users are doing on the network, it's just providing the network -- and no one had made it aware of any specific infringing activity. Rather than deal with those very reasonable questions, the record labels responded with the ridiculous "but you know it's happening!" response which we've heard all too often these days. Of course, knowing that unauthorized file sharing is happening on your network and being either liable or able to stop it are two very different things. Basically, the record labels seem to be admitting that they are unable to stop file sharing, so it must be someone else's job. Even worse, they seem to be saying that it's a legal responsibility of someone else to try to prop up their own failed business model. Talk about grasping at straws. I'm not sure if Ireland has laws like the US's safe harbor provisions protecting service providers from liability for the actions of users, but hopefully the Irish courts quickly realize how ridiculous it is to pin liability on an ISP and throw this case out. What's also partly disturbing is the fact that the "but you know it's happening!" comment comes from an EMI exec, just after we thought EMI was moving away from ridiculous IFPI lawsuits. Apparently not.

Over the last few months, there have been some indications that major label EMI was sick of the RIAA and IFPI's war on music fans -- and even had threatened to leave the groups. While a huge step, it wasn't a huge surprise, given the new management in charge at EMI, who did not come from a music industry background. It became clear quite quickly that the firm wasn't going to rest on its laurels, but wanted to learn to adapt and to adopt the new business models that involved treating fans right, not suing them. It appears that EMI has now worked out a deal with the IFPI, where it will stay a member of the organization but will contribute significantly less money towards IFPI's "anti-piracy" activities. At the very least, this makes it quite clear that EMI recognizes those activities are counterproductive. For years, the record labels have been insisting that they need to step up such activities, even as every time they did so, things got worse. Of course, the IFPI is still suing and trying to take down sites, so it's not as if the industry has fully realized how counterproductive these activities are. Eventually, though, perhaps they'll realize.