Music piracy is the copying and distributing of recordings of a piece of music for which the rights owners (composer, recording artist, or copyright-holding record company) did not give consent. In the contemporary legal environment, it is a form of copyright infringement, which may be either a civil wrong or a crime depending on jurisdiction. The late 20th and early 21st centuries saw much controversy over the ethics of redistributing media content, how much production and distribution companies in the media were losing, and the very scope of what ought to be considered piracy – and cases involving the piracy of music were among the most frequently discussed in the debate.
In August 1906 The Copyright Law for Music Act 1906, known as the T.P. O'Connor Bill was passed by the British Parliament, following many of the popular music writers at the time dying in poverty due to extensive piracy by gangs during the piracy crisis of sheet music in the early 20th century. The gangs would often buy a copy of the music at full price, copy it, and resell it, often at half the price of the original. The film I'll Be Your Sweetheart (1945), commissioned by the British Ministry of Information, is based on the events of the day.
The invention of the Internet and digital media created music piracy in its modern form. With the invention of newer technology that allowed for the piracy process to become less complicated, it became much more common. Users of the web began adding media files to the internet, and prior potential risks and difficulties to pirating music, such as the physicality of the process, were eliminated. It was much easier for people with little to no knowledge of technology and old piracy methods to gather media files.
The first application that demonstrated the implications of music piracy was Napster. Napster enabled users to exchange music files over a common free server without any regard for copyright laws. Napster was quickly shut down after lawsuits filed by Metallica and Dr. Dre and a separate lawsuit in regards to the Digital Millennium Copyright Act. Other music sharing services such as Limewire continued to be a resource to those searching for free music files. These platforms were also removed after a few years of service due to copyright laws and the Digital Millennium Copyright Act. After finding some loopholes, piracy began to exist in more legal forms, an example being Pirate Bay. This technical legality was due to the format of the websites and their country of origin and administration. The websites were set up so that the site itself did not host any of the illegal files, but gave the user a map as to where they could access the files. Additionally, in Pirate Bay's case, the website was hosted under Swedish law, where this “map” was not illegal.
In face of the growing encroachment on potential sales from internet piracy, industry associations like the Recording Industry Association of America (RIAA) have lobbied for stricter laws and stricter punishment of those breaking copyright law. Record companies have also turned to technological barriers to copying, such as DRM, to some controversy. These organizations have tried to add more controls to the digital copy of the music to prevent consumers from copying the music. For the most part, the industry has come to a consensus that, if not DRM, then some similar measures are necessary for them to continue to make a profit.
Critics of the record companies' strategy have proposed that the attempts to maintain sales rates are impeding the rights of legitimate listeners to use and listen to the music as they wish. When the US Congress passed the Copyright Act of 1909, it deliberately gave less copyright control to music composers than that of novelists: "Its fear was the monopoly power of rights holders, and that that power would stifle follow-on creativity". According to the internationally established Organisation for Economic Co-operation and Development, "Existing laws and regulations may be too broad and general to deal adequately with the rapid technological developments that facilitate digital piracy, and policy makers may need to consider enacting some specific provisions to deal with these infringements. Such provisions should not unduly impede legitimate digital communications, nor unreasonably impact on the Internet as an effective communications platform, commercial channel and educational tool..."
There have been several means of free access to copyrighted music for the general public including Napster, Limewire, and Spotify. Napster was a free file sharing software created by college student Shawn Fanning to enable people to share and trade music files in mp3 format. Napster became hugely popular because it made it so easy to share and download music files. However, the heavy metal band Metallica sued the company for copyright infringement. This led to other artists following suit and shutting down Napster’s service. Likewise, Limewire was a free peer-to-peer file sharing software similar to that of Napster. The software enabled unlimited file sharing between computers and ended being one of the most popular sharing networks around. Like Napster, Limewire struggled through multiple legal battles and inevitably wound up being shut down. Spotify and other on-demand streaming services are offering a way for consumers to still get their music for free while also contributing to the musician in a small way instead of simply illegally downloading the music, but it also moves customers away from buying hard copies of music or even legally downloading songs which is severely reducing artists' income.
According to the Recording Industry Association of America (RIAA) since Shawn Fanning started the program file sharing program Napster in 1999 music revenue has gone down 53% from $14.6 billion to $7.0 billion in 2013. A study done in 2007 by the Institute of Policy Innovation states that music piracy resulted in a loss of 71,060 U.S. jobs, out of which 23,860 would have been in the recording industry and 44,200 jobs in other unrelated industries.
The RIAA, a powerful lobby for the recording industry, is responsible for carrying out most of the lawsuits against music piracy in the United States. Some claim that the enforcement against music piracy, which may cost copyright violators up to $150,000 per infringement, is unreasonable, and that it may even violate United States constitutional protections against cruel and unusual punishment. Some have accused the RIAA of outright bullying, as when one of their lawyers told the defendant in one lawsuit, “You don’t want to pay another visit to a dentist like me". In that same case, according to Lawrence Lessig, "the RIAA insisted it would not settle the case until it took every penny [the defendant] had saved".
Further attempts at progress towards controlling the privacy of public media content by targeting the elimination of piracy were made when the highly anticipated yet often debated bill known as the Stop Online Piracy Act (SOPA) was proposed in October 2011 by the United States House representative Lamar S. Smith. The general scope of the law was to fulfill the goal of putting a stop to online piracy by expanding upon existing criminal laws regarding copyright violations. The essential goal of the bill was to protect intellectual property of content creators by raising awareness of the severity of punishments for copyright infringement. Naturally, the bill was met with considerable opposition from various parties. One instance of this was an article comment by Edward J. Black, president and CEO of the Computer & Communications Industry Association, who questioned the potential effectiveness of the bill by reasoning that the major pirate websites that SOPA attempts to eliminate could just as easily respawn under a different name if taken down as early as a few hours later. Additionally, strong protest attempts were made across the internet when numerous high-profile online organizations including Tumblr, Facebook, Twitter, and participating in American Censorship Day on January 18, with some sites including Reddit and Wikipedia going as far as completely blacking out all of their pages, redirecting the user to SOPA protest messages. Ultimately, as a result of aggressive protests and lack of consenting opinions within the congress, SOPA was tabled on January 20 by its creator, House representative Lamar Smith.
Piracy's real effect on music sales is difficult to accurately assess. In neoclassical economics prices are determined by the combination of the forces of supply and demand, but the participators in the digital market do not always follow the usual motives and behaviors of the supply and demand system. First, the cost of digital distribution has decreased significantly from the costs of distribution by former methods. Furthermore, the majority of the filesharing community will distribute copies of music for a zero price in monetary terms, and there are some consumers who are willing to pay a certain price for legitimate copies even when they could just as easily obtain pirated copies, such as with pay what you want vendors.
Another issue is that because many people in the world illegally download music because they cannot afford to purchase legitimate copies, not every illegal download necessarily equates to a lost sale. This has some effect on music sales, but as Lawrence Lessig points out, there is wide asymmetry between the estimated volume of illegal downloading and the projected loss of sales:
In 2002, the RIAA reported that CD sales had fallen by 8.9 percent, from 882 million to 803 million units; revenues fell 6.7 percent. This confirms a trend over the past few years. The RIAA blames Internet piracy for the trend, though there are many other causes that could account for this drop. SoundScan, for example, reports a more than 20 percent drop in the number of CDs released since 1999. That no doubt accounts for some of the decrease in sales... But let’s assume the RIAA is right, and all of the decline in CD sales is because of Internet sharing. Here’s the rub: In the same period that the RIAA estimates that 803 million CDs were sold, the RIAA estimates that 2.1 billion CDs were downloaded for free. Thus, although 2.6 times the total number of CDs sold were downloaded for free, sales revenue fell by just 6.7 percent... [So] there is a huge difference between downloading a song and stealing a CD.
According to Woolley's introduction each year It is estimated that 12.5 billion dollars are lost due to file sharing and music piracy, and 5 billion of that is profits lost from the music industry directly. Due to this dramatic loss in profits the music industry has been forced to cut down their staffing. Music piracy has become such an issue that the industry is encouraged to adapt to this new era and change.
The article, "The Music Industry On (The) Line? Surviving Music Piracy In A Digital Era" By Jelle Janssens, Stijn Vandaele, and Tom Vander Beken presents an analysis of the prevalence of piracy in music trade, which has affected the global sales of CDs. This article points out that technological development such as file sharing, MP3 players, and CDRs have increased music piracy. The most common forms of music piracy are Internet Piracy and compact disc piracy. It also discusses the association between music piracy and organized crime, which is defined as profit-driven illegal activities. The fact that digital products are virtual instead of physical affects the economic mechanisms behind the production and distribution of content, and how piracy works for digital as opposed to physical products: "the main consequence of the non-physical form of digital products is their virtually negligible marginal cost of reproduction and their ability to be digitally delivered." The cost of burning a CD drastically lowered the overhead for record companies, as well as for music pirates, and with the growing tendency toward online distribution among legitimate and illicit distributors alike, the expense of distributing shrunk further from the costs of printing and transporting CDs to merely the costs of maintaining a website. By sheer volume of file transfers, though, distributing music through traditional web servers and FTP servers were not as popular as peer to peer (P2P) now, because the traditional direct download method is slower.
The 2008 British Music Rights survey showed that 80% of people in Britain wanted a legal P2P service. This was consistent with the results of earlier research conducted in the United States, upon which the Open Music Model was based. In addition, the majority of filesharers in the survey preferred to get their music from "local sources" such as LAN connections, email, flash drives, sharing with other people they know personally. The other most common method of filesharing was with P2P technologies. By 2007, P2P networks' popularity had grown so much that they used as much as 39% of the total volume of information exchanged over the internet.
Alongside the RIAA and BPI's industry anti-piracy service sit a number of other independent companies offering anti-piracy solutions. These companies tend to have a better reach and success rate than the slower industry bodies and provide an alternative solution. Notable market leaders include AudioLock, Web Sheriff, Topple Track, Detecnet, Muso and Attributor.
There are ways to minimise music piracy on using the latest Google court decisions on the right to be forgotten as well as using some proven techniques relating to adding a watermark to the tracks and uploading the files yourself with promotional intent.
A paper called the Music Anti-Piracy Best Practise Guidelines  has been published by music anti-piracy specialists AudioLock and endorsed by the Association of Independent Music, the Association For Electronic Music (AFEM), music distributors Believe Digital and Judge Jules (DJ and Lawyer). These guidelines give advice on how to minimise exposure to music-piracy and how best to utilise the solutions that are available.
Statistics have shown that since the early 2010s, there has been a decline in music piracy. According to a NPD survey, in 2012, approximately one in ten Internet users in the United States downloaded music through a file sharing service similar to BitTorrent or LimeWire. This number is significantly less than 2005, the peak of the piracy phenomenon, when one in five users used peer-to-peer networks to gather music files. The emergence of free streaming services has decreased the number of users who pirate music on the internet. Services such as Spotify and Pandora have easy-to-use interfaces and decrease the risk for computer viruses and spyware. In comparison to the illegal software used by older music piracy networks such as Napster or Limewire, current music streaming services such as Spotify and Rdio offer cheap yet legal access to copyrighted music by paying the rights holders through money made off of payments made by premium users and through advertisements.