Why the Era of Online Piracy Is Over (Correct)

Editor’s note: The chief executive of the Recording Industry Association of America was referred to by the wrong gender in an earlier version of this article. Cary H. Sherman is male. It has been fixed in the third paragraph.

NEW YORK (MainStreet) — While much of the Internet was still celebrating the success of the thousands of websites and protesters who rose up to successfully squash the Stop Online Piracy Act (SOPA) and the Protect Intellectual Property Act (PIPA) – two pieces of anti-piracy legislation that critics argued would wrongly censor the Internet – the chief executive of the powerful Recording Industry Association of America penned an op-ed in the New York Times to lament the demise of the bills and call for something similar to replace them.

“Perhaps this is naïve, but I’d like to believe that the companies that opposed SOPA and PIPA will now feel some responsibility to help come up with constructive alternatives,” Cary H. Sherman, the RIAA's chief executive, wrote in the paper. “Virtually every opponent acknowledged that the problem of counterfeiting and piracy is real and damaging. It is no longer acceptable just to say no.”

Sherman is certainly not the first to argue about the threat online piracy poses to content creators, and he certainly won’t be the last. What’s different now are the lengths the entertainment industry is willing to go to put a stop to piracy – and the outcry against those measures. Not only is the industry urging politicians to come up with alternative legislation to police illegal downloading, but there are ongoing efforts to finalize international trade agreements that target copyright violations, including the Trans-Pacific Partnership and the Anti-Counterfeiting Trade Agreement, the latter of which has already sparked protests throughout Europe.

Given how aggressively legislators and the entertainment industry are pushing for greater enforcement against online piracy even in the face of the tremendous public backlash, one might assume that online piracy is becoming more widespread. The truth, however, isn’t quite so clear cut.

The recording industry typically notes the decline in music sales and the billions of songs downloaded since Napster launched in 1999 as proof that online piracy is rampant, but several independent studies suggest that illegal downloading is becoming less and less common. The number of Internet users who resorted to peer-to-peer file-sharing services to download music dropped from 14% in the third quarter of 2007 to 9% in the third quarter of 2011, according to survey data provided to MainStreet by the NPD Group, a research firm. Moreover, a report from the Computer & Communications Industry Association found that box office revenues increased 25% between 2006-2010 and the value of the global entertainment industry increased by nearly $300 billion between 1998 and 2010.

That’s not to say online piracy has gone the way of the cassette tape, but according to tech experts we spoke with, it has become increasingly marginalized and will only become less popular going forward.

“There are always going to be those who look for bootlegs and songs you can’t find on sites like Spotify and Rdio, and there will always be people who see illegal downloading as a sort of game, but I think that number will just get smaller and smaller as other options become more convenient with all your devices,” says Russ Crupnick, senior entertainment industry analyst for NPD.

The reason for this, as Crupnick and others note, isn’t because of potential legislation that mirrors SOPA so much as the growing number of cheap, legal alternatives to illegal downloading combined with the decline of many well-known file-sharing sites.

Once popular peer-to-peer services like Napster, Kazaa and Morpheus are all long gone. Limewire, the last of these big name services to stay in business, was shut down by the courts in late 2010. Other options gradually replaced these, including torrent websites, which let users download entire catalogues rather than single files, online storage lockers and even hard drive swapping. Several of these services have been shut down or prosecuted as well, yet according to Crupnick they were comparatively niche to begin with since they require one to be more tech-savvy to use.

The music industry in particular admits they have seen some improvement in part because of these shutdowns.

“When LimeWire closed in October 2010, the industry began to see an uptick in sales starting in November 2010. This uptick continued into 2011 and, by many accounts, helped fuel last year’s positive year-end sales,” says Liz Kennedy, the director of communications for the RIAA.