Spotify Competition Analysis and Recommendations

File sharing

File sharing is referred to an exchange of files between computers over the net.  It can also be the mean of disk sharing or server sharing amongst computers on a closed network.  File sharing is commonly used for sharing files with unlimited number of internet users worldwide to download music, movies or TV shows mostly.  File sharing is considered as the means of copyright infringement because most of the file shared usually music or movie are copyright protected.

The first website for file sharing used Peer-to-peer or P2P file sharing which enabled a user’s whole music library available to other user for download. Users were able to search and download music in large quantities in a short time.  Bit Torrent technology came right after the P2P file sharing which is an open source file sharing application which allowed users to separate the file they want on a shared network and download it in parts from several different users.  Bit Torrent software downloads a piece of the file from many users while P2P downloads file from a single user.

Music file sharing is the biggest concern for copyright owners. They call it a means of helping in copyright infringement.  Many lawsuits have been launched by copyright owners and their representatives aiming to shut down websites that use P2P and other file sharing software.

Copyright owners identified that easily downloadable free music demand is not going to disappear.  Therefore music industry representatives and copyright owners have created music download services or streaming services charging nominal fees or some sort of right protection system to avoid infringement.  Some of these services are proven to be popular. (wisegeek.com)

Research project outline

Aims and Objectives of the Research

The aim of this project is to conduct a research on file sharing growing industry which will allow Spotify to remain competitive.  The objectives of this project is to give recommendations to senior management and shareholders of Spotify to create strategies to beat their competition

Introduction

P2P usage is mostly against the law because sharing of copyrighted files without permission from the copyright owner is involved.  File sharing and copyright has flared controversy since 1999.  Digital Economy Act 2010 addresses media policy issues related to digital media which also includes copyright infringement.

Copyright infringement is using copyright protected work without permission.  Exclusive rights are granted to the holder of copyright such as right to reproduce, display, perform or distribute the protected material.  Work’s creators are the copyright owners or the publisher or other companies copyright is given.  Public opinion however supports the IP (intellectual property) rights.

Uploading music from the CD that is owned and allowing other people to download music from your website without express permission from the owners of the copyright are all violations of copyright law.  Downloading copyrighted music is illegal and morally wrong.  Today many people in UK use illegal downloading off the internet as an alternative to purchasing CDs or DVDs of movies.  There are consequences who practice the illegal downloads.  Liability for breaches could be tossed on the internet provider because it is difficult to identify the individual user.

IPs risk losing internet access or paying a heavy fine if there is any copyright infringement takes place from their service.  (acomp.stanford.edu)

According to the BBC News internet service providers like BT and Talk Talk argued the UK’s Digital Economy Act was conflicting with EU law.  The Act suggest that ISPs are responsible to send warning letters to illegal file downloading and cut users off.  Creative industry claims the cost of piracy is £400m a year in lost revenue.  BT and Talk Talk both have lost an appeal against the Act.  Talk Talk stated ‘Though we have lost this appeal, we will continue fighting to defend our customers’ rights against the ill-judged legislation’ (bbc.com)

Methodology for Collecting Data

Quantitative Research

Research that uses numerical analysis is called quantitative research. This research method decrease the data into numbers for example in percentage of people who thinks file sharing should be legal.

The researcher is aware of they are looking for and they design all study aspects before data collection. Quantitative research is done using scientific methods. Methods of data collection in Quantitative research are:

• Surveys or Questionnaires – uses closed ended questions
• Experiments – uses control group and experimental group (sociology.about.com)

Qualitative Research

Qualitative research is also known as field research which usually involves fieldwork.  Researcher observes and records events and behavior in their natural environment.  Researcher visit people to observe the subject as it naturally or normally behaves.

The researcher of qualitative research are concerned with process and practice instead of results.  They concentrate on participants, experiences and perception and what way things make sense in their lives. Methods of Data Collection are:

• Direct observation:  study of people in their natural setting.  Observing people interactions and behavior without participating.
• In-depth interviews:  participants are taken in-depth interviews one on one basis.  There are no specific set of questions.
• Participation:  Behaviors are observed through participating in the group and getting first-hand experience
• Focus group:  small group of participants are interviewed by a researcher.  Focus groups are more structured and includes 10-15 participants at one time.  (sociology.about.com)

Primary Research

The research involves gathering data though going out and collecting information yourself by surveys, interviews, ethnographic research.  (owl.english.purdue.edu)

Secondary Research

Secondary data collection is the process which involves collecting data from the journals, books, articles. Secondary research is the most common method used, it is basically accessing information which already been collected and published. (knowthis.com)

Research project selection

Businesses have to make one of the biggest decisions related to the research project they would take on. There are many factors that needed to be considered after the proposal has been received. The goals and needs of the organization need to be kept in mind to choose the most viable option.

Project selection is a process to evaluate each idea of the project and choose the highest priority project. At this stage projects are just suggestions, therefore its selection is based on project brief description.

Factors contribute to Research Project Selection

Research process cannot take place without a research problem which is considered as a heart of the research process.  To convey the problem, the variables must be important and be able to be identified easily and an each research problem must have a hypothesis.  Research hypothesis is determined through translating a clearly defined research problem.  Hypothesis must state the relationship between two or more variables into one or more populations.

Research problem will be explored first

Researcher explores the importance of research problem, sources of research problem, consideration and steps to follow when research problem is being formulated.  The variable identification will be discussed second through the three common variables and four obvious measurement scales.

Some factors need to be considered in the research process.  Research problem sources spin around the four P’s

• People
• Problems
• Phenomena
• Program

Research problem formulation is the process that includes these steps.

Variables are measurable factors that can presume more than one value. The three types of variables are characterised: dependent, extraneous and independent variables.

The different types of measurement scale are: interval scale, nominal scale, ordinal scale, ratio scale are used to classify variables.

Hypothesis is an uncertain statement of the outcome of a research which points the relationship between two or more variables waiting to be verified.  Hypothesis allows the researcher to add the theory formulation if proved to be true.  The alternate hypothesis and the hypothesis of the researcher are the most important factors when doing or analysing research. (slideshare.net)

Key references for the research project

Critical Review on Digital Music

Many books, articles and journals have addressed the issues that music business industry face in the market space, especially the major music companies’ predicament.  The Big Four players such as Sony Music, Universal Music Group EMI and Warner Bros Records own 87% of the market share of recorded sale of music globally (Billboard, 2011).  The four players have formed the four cornerstones as a platform for music industry.

The introduction of the internet and the related digital music distribution formats has imposed a direct threat to channel of distribution which was controlled by the big four before.  This point serves as an inspiration for my anticipation research effort.  The International Federation of the Phonographic Industry (IFPI), Recording Industry Association of America (RIAA) and British Recording Industry (BPI) has identified the culprit which is the ‘illegal downloading of music files on P2P file-sharing sites’.  The four major music firms directly support these legislative bodies and claim to represent the copyright owner’s interest.  All of these firms have decided to combat illegal music downloads (or, piracy)

All of these firms are haling national and international courts to pass harder laws on copyright or appeal Internet Service Providers (ISP) to block those sites who allow illegal downloads.  According to the Annual Digital Music Report (DMR) ‘Governments are beginning to understand the scale of the challenge of trying to monetize content in an environment where around 95% of all music is downloaded without payment to artist or producers’ (IFPI 2010)

The aim of this review is to draw attention to the DMR and give some ideas on piracy-related data.  I hold the view that the present stress on digital piracy was built on many liable events that resulted in the decline of the industry.  I have discussed some of these important events, present a review on piracy and related concepts.

Koegel Buford, Yu et al. (2009) has defined File sharing or P2P sharing as ‘networks that enable users to directly share digital content (such as audio, video, and text files) as well as real-time data (such as telephony traffic) with other users without depending on a central server’.  The authors tried to make a point that even though P2P is connected to unauthorised online downloading it is still legally used to exchange large files in many areas which includes: medicine, telecommunications, academic, and social networking (Koegel Buford, Yu et al, 2009).

In order to use P2P network the installation of a file sharing software is required on a computer and the user then becomes a part of an online community which is willing and has agreed to share files like documents, movies, music, mp3 etc.  An individual can search for specific file through logging onto the network.  The search matches the criteria and the user initiates the transfer.  File sharing is the process of transferring a copy of the file and the original file is retained on the source of ‘host’ machine.  (Gil, 2010)

Before Napster in 1999 consumer were restricted to purchase an entire album that has their favorite song.  With digital technology, single track can be downloaded from a digital album.  For a consumer it means there is no more restriction to pay full price for an entire album if they only want one song.  I believe that this behavioral change has disentangled the fundamental attitude of the industry revenue structure.  Consumers have re directed their spending towards a lower price single track.  According to Recording Industry Association of America 2008 Report ‘If digital singles are converted into an album equivalent (divided by ten) and added to both CDs and digital albums there is still a decline of 14% in an overall album unit (RIAA 2008).  In 2007 83% of sales for the music recording industry came in the full length CD form.  US digital formats contain 52% of sales at the end of 2010 which is why industry profit margins and revenues are lower than previous levels.

IFPI and its correspondence have petitioned ISPs and also national and international governing bodies to pass tougher laws and bring legal action against file-sharing sites to secure intellectual property rights.  They have succeeded in closing many file-sharing sites such as Napster, eDonkey, LimeWire, Grokster.  However, the recent trends reveal the fact that consumer patterns of spending has shifted to digital systems from physical CD.

Digital Piracy

Tshmuck (2010) stated in his literature review of studies related issues of piracy and its impact on the sales of music industry ‘Some authors speak of ‘piracy’, where others use terms such as ‘file sharing’, downloading and unauthorised copying’ “free music consumption”, etc” (Tschmuck, 2010).  Tshmuck reasons that use of terms carelessly may explain some of the extreme differences in the various studies results.  He investigated that the lack of consent on the methods of research in exploring the industry problem.  For instance IFPI commissioned studies like Jupiter Research 2007, 2009 and Forrester Research 2009 are basically constructed on internet user’s surveys.  Other researcher investigated empirical data by differentiating actual downloads from file-sharing sites to chart activity of industry (Oberholzer-Gee and Strumpf 2007) have used data which was country specific or completely different database altogether to measure variables.  To my understanding Piracy is ‘the internet user’s percentage who are engaged in unauthorised download activity of copyrighted material without any willingness to pay’.

IFPI reports did not identify the connection between file-sharing activities and the degree of revenue decline in the music industry.  It concentrated on inferring lost purchase opportunity through identifying the illegal file sharers percentage and applying it to a pre-determined level of P2P activities and utilizing retail price download average and then calculating the impact on sales.

According to Blackburn (2004) file-sharing have two effects on sales: substitution effect where consumer choose the option of download over a cd purchase and the other effect is sampling effect where a consumer wishes to examine or sample the product before buying it.  Blackburn studies suggested that in the long run sampling effect may increase the sales of artist’s material.  It seems like an attempt to contrast between ‘pirates’ and consumers looking for sampling purposes. (Bounie, Bourreau et al. 2005)

British Recording Industry (BPI) has reported that total units that were downloaded were 1.2 billion in 2010, which cost the industry loss revenue of £984m (Frontier-Economics 2011).  In my point of view the figure assumes that every downloaded track is piracy and it disregards the sampling effect completely.  The revenue lost appears to be unrealistic.  I think some freeloaders may be converted to legal consumers in the P2P absence and the categories that are not willing to pay anyways are overlooked.  I think that those users who are not willing to pay for music will not become active music buyers.  The value of free is tempting and attractive that is why an incentive can be served for some to engage in file-sharing activity and gain some benefits that are given out in portions.  IFPI claims that 95% of all music downloads are illegal, a number equals to 40 billion units worldwide (IFPI2010).  My question is how this number determined was, there are no published report produced by IFPI, Jupiter or NPD Group which provided any detailed calculations to demonstrate how this estimate is determined.  All these doubts lead me to say that the data lack transparency.  Some journalists like have severely criticized the statistic.

Conclusion

I share Tshumuck’s (2010) view that IFPI may be point in the wrong direction in stressing on assigning lot of the industry decline on file sharing rather than society which is embedded in a digitization age at the global level, and consumer’s discovery of music and pattern of spending.  Consumers are constantly looking for other kinds of entertainment.  Advancement in DVD and game technology has enabled this area to give improved cooperative experience (Arthur 2009).  Live performances are also on

The rise and artists are actively reaching other ways of revenues to cover declining recording income.

Millions of pounds in settlement and pounds are filling the music label reserves.  My question is how do labels decide which artist accounts are credited when they receive settlement?  Do non-label and independent acts receive their fair share?

Music is an artistic expression, and serves a divine purpose.  It is a picture of human emotion, a universal language and a friend on social warzones, it is a cultural good and when retaining such a good, priorities are determined by economic drivers and focus on short-term profits; the results are going to be disappointing.  Digital technology has revealed the weakness of music industry business structure.  By broadcasting questionable statistics through Digital Music Report is an unsuccessful effort to maintain this model.

Research project specification

Research Objective

The objective of the research is to search for an answer to specific questions by the applying scientific procedures. This research was undertaken to answer the specific research question

Should people be allowed to download movies and music from the Internet or are they violating copyright law?

The objective of this research is to determine the attitude towards music piracy. The objectives are:

• Evaluate the literature on the recent debate on music piracy
• Review the problem of music piracy and analyse its impact on the industry
• Investigate who is doing music piracy and what methods they use
• Collect the qualitative understanding into the music piracy ethics.
• Explore industry responses.

Research Rationale

The rationale for carrying out this research project lies in the well documented findings in the literature that people should be allowed to download music or film without breaking any copyright laws.

The theoretical demanding nature of the subject increasing the number of unauthorised downloads through P2P file sharing every day.

According to Ofcom almost a third of UK internet users have stream or downloaded music, TV and movies illegally.  The report stated 18% of users had illegally accessed content.  It also stated that online piracy with the increase in internet user who access online contents is from 57% to 60% (nme.com)

Hypothesis Statement

Hypothesis is a statement that suggests a likely explanation to an event or trend.  It is a testable statement which may include a prediction. (accessexcellence.org).

The hypothesis for this research is:

Legal digital services may increase revenues for music industry

Scope of the Research

The scope of the research refers to the area covered in the research.  The scope of this research is to cover the facts about illegal downloads.  The research also covers what consequences are there for illegal downloads.  Evaluate the findings of the research.  Recommend Spotify on how to remain competitive and to improve their services to encourage people to choose legal means of downloading instead of illegal.

Literature Review

According to the Musicmetric’s in-depth study United Kingdom is the second worst country in the world for illegal music downloads and United States is the first in the world.  Manchester is the worst city for downloading music illegally.  The study shows that in the UK more than twice as many albums are illegally downloaded as well as legal music downloads such as iTunes.  In the first six months of the year more than 33 million albums and 10 million singles were illegally downloaded from the popular file sharing network BitTorrent.  The loss in retail sales has equals to more than 500 million pounds, which is the reason for music companies concerns about damaging effect file sharing have on long term sales.  Andy Heath, the director of British record company Beggars Group stated “Clearly the biggest problem with illegally downloaded music is that there is a generation who feel it is natural that music and all creative contents are free” (Bowie-Sell, 2012, Telegraph).

Firms that operate in the music industry supply the unique product to the market that is purely symbolic good (Scott, 1999).  The aim of record companies is to earn a return on investment in less profitable ventures through increasing the return on an astonishing successful release. (Bettig,1996).  Big four record labels of Universal Music Group, EMI, Sony music entertainment and Warner Music Group has categorised the market.

P2P network such as Napster, where individual could download files directly from each other’s computer and making the essential uncommon good of recorded music substantially replicable (Baym, 2010).  Consequently digital media has converted the cultural object and has empowered the consumer comparative to music industry (Poster, 2010).  The technology of streaming is the latest creation in the music distribution.  The technology does not use downloading an MP3 to the computer, it uses buffered play so that consumer are able to listen to music, but unable to retain possession.  (Fox, 2005).  Cloud based music services are digital lockers that save content for users to access from other devices.

Illegal file sharing is considered as the cause of decline in the revenue of music industry.  Many studies have attacked this phenomenon.  One of the earliest econometric studies was conducted by Hui and Png (2003) which examined the sale data over the 1994-1998 that showed that piracy has decreased the demand of CDs, their study made a contribution to understand the trade-off between negative effects of piracy and positive demand-side externalities, however the study did not address digital piracy therefore is of limited use today.

Lesig (2004 has contributed to assess different parts of P2P network users.  Lesig suggest that file sharing is used by minority as an easy way to exchange legal content.  The network gives sense to obtain copyrighted material that would not been bought otherwise and would not have received recognition.  Lessig also outlined a group of consumer that samples music before buying it.

File sharing can increase the quantity of music purchase.  Peitz and Waelbroeck (2006) have argued in favor of sampling through matching buyer’s preference with products, they suggested that P2P networks result in purchased which compensate the negative impact of copyright infringement.  On the other hand

Blackburn (2004) said that file sharing decreases the sales for popular artists compared to unknown artists.  From the largest label perspective sampling is a weak argument in favor of P2P networks because of the pure quantity and scope of copyright infringement executed.

Negative effects on Music Industry

Music industry is still dependent on album sales; however tours and live performances are increasingly becoming source of revenue for artists and labels.  According to Elberse (2010).  In the music market large number of consumer prefer to own one or two tracks instead of the whole album which is the cause of damage.  Amberg and Schroder (2007) has conducted a review which states that 69.4% of interviewed individuals prefer to buy a single track over the whole album which has turned many consumers towards piracy to have an access those single tracks.  The growing threat of internet piracy and the quickly declining prices of record media have made the revenue decrease from 13% in 2003, 4% in 2009 due to the significant international competition in the UK.  (Pass Port GMID, 2010).

The KeyNote Research (2010) indicates that 79.5% of adults listen to music everyday in the UK and 69.4% listens to the radio and 23.3% buy music CDs from a shop.  The research also said that according to Nielsen Media Research (NMR) market review of music industry has shown that record industry had to cut its budget for conservative advertising and promotion.  BPI has stated that revenues from advertising have decreased to £100 m a year from £131.6 m.  This shows how piracy has broken the budget of the advertising.

Music Industry sees rise in revenue in 2013 for first time

The International Federation of the Phonographic Industry (IFPI) reported that music revenue is up 0.3 % over 2011, moving to £10.9 billion.  IFPI also stated that legal digital music services are available in over 100 countries and revenues from legal digital services continue to rise quickly.  According to NPD Group “illegal music file declined significantly in 2012” and “illegal downloaded music files from P2P services also declined 26%”.  It was long suspected that reasonably priced and easy to use legal alternatives will make people not to use unauthorised sites and services.  (Farivar, 2013)

Legal Download Sites

According to IFPI’s digital report (2012) the most complete and updated directory of 500 legal music services in 78 countries.  The most popular service is iTunes.  Consumers have also accessed download stores, music streaming services, and Internet radio websites.  Music streaming services have attracted a large amount of attention.  Spotify have allowed two of the largest record labels to generate tremendous amount of revenue in Sweden. (Lindvall, 2011).In 2011 digital music revenues of record companies increases by 8% worldwide.

More industry friendly services like Spotify have arrived in recent years.  Spotify was launched in 2008 and it is music streaming service which offers minimum potential access to a 8 million music track library, it is operated through combining peer-to-peer protocols and client-serve access (Kreitz, 2010).  Spotify offer two versions of the service.  Free one is the most popular version, where users can listen to music without any charge but they have to listen to ads and promotions between every few songs.  The second version is Spotify premium where users pays a subscription fee per month of £9.99 and no advertisements, users may also make playlist of their favorite songs to listen offline.

Steven Bertoni (2012) a Forbes magazine writer have stated that Daniel EK, a Swedish born and also a creator of Spotify, has created a free of cost face-enables platform that may save the music industry from piracy.  Bertoni has also said that music industry was waiting for a long time for someone to create something more attractive to consumer than piracy which would also give a better model of revenue.  As mentioned earlier that IFPI digital music report 2012 stated that service subscription has captured extraordinary market especially in Scandinavia.  84% of subscription was accounted of digital revenues in 2011 first ten months through Spotify.  The service have now launched in 12 countries including the US and Germany, a continue trend of success is expected in the future so far. (Bertoni, 2012)

Methodology

This research will concentrate on people’s attitude to music piracy.  The Secondary research was presented in the above sections by using books, articles, journals etc.  The second type of research is Primary research which was built on secondary research findings.  The researcher will now outline the methodology of the primary research to be conducted and what approaches to use.  The methods will be evaluated of why they were suitable and what are their drawbacks.

Secondary Research

The reusing of existing data gained from previous research studies is called secondary research and it can be used to examine or investigate new or more research questions or to verify previous research findings (Heaton, 2008).  Secondary data can be fragmented in internal or external groups.  Internal data is good for businesses because this data is collected by the organisations previously and is available to help the other organisation.  External data is good for individual’s academic needs because this the information collected from outside sources such as public libraries, universities databases, government (Malhotra et al, 2003).

In this research many secondary sources were used for the reason that a combination of documentary and survey was used.  Most of the secondary data was used from academic journals, articles available online.  The effort was made by the researcher to get a hold of most updated data on music industry statistics and online piracy.  Survey data was used for example Keynote, Nielsen which is privately owned market research companies who release market data to participating institutions and subscribed customers.  IFPI website and their 2012 digital music report were used for majority of industry statistics.

Primary Research

Primary research is the data gathered and created for the question for research.  Primary data can be both quantitative and qualitative.  The quantitative characteristics are targeted at numbering larger samples to carry out some kind of statistical analysis to approve or disapprove hypothesis.  The qualitative aspect on the other hand is aimed at small samples to give more direct outcomes for instance to search the problem’s understanding.  Both these methods are helpful for research (Kumar, 2010).  The choice of research method is determined by the nature of the study.  The research objective is important to determine methodology for the primary research.

• Evaluate the literature on the recent debate on music piracy
• Review the problem of music piracy and analyse its impact on the industry
• Investigate who is doing music piracy and what do they use
• Collect the qualitative understanding into the music piracy ethics
• Explore industry responses

Qualitative and Quantitative Approaches

Qualitative or Interpretive approach is the concept that reality is not external or objective but is an individual meanings perceptions and translation which creates understandings (Creswell, 2003).  Interpretivist includes qualitative assessment that explains different experiences people have instead of looking for external forces to understand their behavior (Easterby- Smith, 2002).  According to Saunders (1997) small samples of subjects is very appropriate methodology for this aspect.

Quantitative or Positivist approach believes the idea that world should be viewed objectively as it exist externally.  The philosopher Auguste Comte argued that society acts in accordance to their laws by believing that only real knowledge exist which is based on observed facts which means that researcher are able to assume theory hypothesis to try to explain relationships between factors that are liable to change by using quantitative method.  (Easterby- Smith et at. 2002)

Approach used in this research

There are three types of primary research: Interview, questionnaires and observation.  Observation method is watching and listening to subject in their natural environment.  However, observation is an unrealistic way of gathering data for piracy (Kumar, 2010) the researcher has used interpretivist approach which contains small sample of respondents to collect more understanding and insight.  The interview will take semi-structured form.  The anonymity is assured for the interview method to work.  The researcher has personally promised to keep their private information a secret.

Ethical Consideration of the Research

The researcher has conducted the research according to the principles of ethical conduct.  The researcher has followed the ethical conduct discussed below:

• Researcher have been extra careful in ensuring that participants in this research study are not involved in any situation in which they would’ve been harmed. The research was not harmful to participants in any way
• Researcher has sworn on guaranteeing privacy of the participants. The researcher has not revealed any identifying information about the participants in written or any other means of communication
• Researcher has treated all the information provided by the participants in a confidential manner
• Researcher have personally informed the participants the nature of the research and got their consent before conducting the research
• Researcher tried really hard to choose participants who are not researcher’s friend and have provide an environment that is trustworthy to participants  (sagepub.com)

Plan and Timescale for the Research

Task	Start Date	Duration	End Date
Meeting Planning	28/10/16	1	06/11/16
Develop Questions for interview	07/11/16	11	18/11/16
Appointments for Interview	19/11/2016	12	01/12/16
Receive responses	02/12/16	16	18/12/16
Data Entry	19/12/16	9	28/12/16
Data Analysis	29/12/16	4	02/01/16
Write Report	02/01/16	1	3/01/16
Distribute Draft Report	4/01/16	1	5/01/16
Solicit comments	5/01/16	2	07/901/16
Finalise report	08/01/16	2	10/01/16
Distribute to Board	11/01/16	1	12/01/16
Board meeting	13/01/16	1	13/01/16

2.1 Match resources efficiently to the research question or hypothesis

Geoff Taylor, the British Recorded Music Industry (BPI) stated that ‘illegal downloading was becoming a “parasite”.  According to BPI research on internet users habits reports that “more than three quarters of music downloaded in the UK is illegally attained without any payment to the song writers, music companies and musicians who produce it.  On the positive note BPI also reported early this year that legal downloads had seen rise in sales by £154 million which is more than 50% compared to 2008 which was £101.5 million. (bbc.co.uk)

Lane (2013) have stated that illegal downloading in the UK have increased despite the blocking popular file sharing sites by ISPs.  However more people are paying for online music, movies and TV shows.  Lane explained that 48% of users obtain media files illegally because it is free, 39% do it because it is convenient, and 36% attempt illegal downloads because it is quick (Lane, 2013).

Courts have compelled UK’s main broadband providers to block popular file-sharing sites.  BPI, MPA and other copyright owners have aimed UK’s largest ISPS such as BT (Plus net included), Virgin Media, Sky (O2 and be included) and Talk Talk to block Pirate Bay, Kickass Torrents, Newzbin2, Download4All, Movie2k and EZTV. (recombu.com)

Copyright protection is very highly important to the music industry.  It is necessary to understand the copyright concept to know the impact of illegal downloading on the record label and consumer’s intellectual property rights expansion.  Copyright allows the record label to produce and artist’s work and sell if for profit.  However the P2P networks popularity means that the occurrence of copyright infringement is on a massive scale by unauthorised copying and distributing media files. (Yar, 2005).  Music industry model face a serious challenge from digital piracy because the industry depends on a pricing per unit and enforcement of copyright law.  (Leyshon, Webb, French, Thrift, & Crewe, 2005)

Research investigation

According to Barriball (1994) semi structured interviews are appropriate to explore the opinions and perception of respondents.  This method allowed the researcher to review information which cannot be done on a questionnaire.  Interviews enable the researcher to come into personal contact with the respondents that makes the researcher able to improve data contradictions.

Sample of the Interview

Interviews were conducted on 16 undergraduate students as target population.  The reason for researching on students is because IFPI (2005) reported that young people specifically college students most likely to get their music from illegal downloading sites.  Students need for social networks and studies has made high speed internet a necessity for students.  Internet plays a huge role in a student’s life.  Majority of digital song downloading takes place in the university environments that is why university is the suitable setting for this research (Healy, 2003)

Interview Design

Researcher has personally approached to talk about the conducting the interview possibility.  The participants asked questions about the process and time arrangements convenient to both researcher and participant.  26 students were asked to participate in the interview but 16 agreed to do it.  Participating students were informed about the nature and purpose of the interview before carrying out the interview.  The interview was between 25 to 55 minutes.

Validity

Validity was tested by conducting two pilot interviews prior to the main interviews by asking the respondents how they thought the interview was, interview framework set out by Lazarsfeld (1954).

Interview Strategy

Primary research strategy was to prepare a semi-structured interview before.  A basic list of open ended questions was made in order to follow the interpretivist approach.  The interviews were recorded on a tape recorder.  Some participants were concerned about the interview being recorded due to the threat to anonymity; therefore, the researcher promised personally that none of the information would be disclosed like their name and address.

The interview was created into seven units.  The first unit asked about demographic information to build rapport with the respondents to make them feel comfortable and their music downloading behavior.  This unit will build basic respondents profile like age, occupation.  The second unit asked about sampling method of downloading.  Sampling method is the main argument in favor of illegal downloading.  The questions were regarding illegal downloaded music for the purpose of trying out and buying it later.

The third unit asked about social norms.  The first two questions tried to assess the comparison between their own behavior and friends and family.

The fourth unit targets to disclose any neutralisation’s used by respondents to justify their actions.

The fifth and sixth unit enquires legal threats and legal alternatives to piracy.

The seventh unit is designed to get participants views towards music industry.

The interview design allowed the researcher to build rapport with the participants.  The interview to examine further the relationship between researcher and respondents had developed.

Data

Respondents (R)	Gender	Age	Income (£)	Status	Amount of downloaded songs illegally	Applications used
R1	Male	21	3375	Student	1500	IsohuntBitTorrent
R2	Male	21	3375	Student	500	TorlockBitTorrent
R3	Male	22	3375	student	700	TorlockBitTorrent
R4	Male	19	3375	Student	200	IsohuntBitTorrent
R5	Female	22	4000	Student	3000	FlixFluxBitTorrent
R6	Female	23	4000	Student	4000	KickasstorrentsBitTorrent
R7	Male	22	3375	Student	350	IsohuntBitTorrent
R8	Male	22	3375	Student	1000	TorrentcafeBitTorrent
R9	Male	20	5200	Student	2000	KickasstorrentsBitTorrents
R10	Female	22	3375	Student	5000	PiratebayBitTorrent
R11	Female	21	3375	Student	4000	KickasstorrentsBitTorrents
R12	Male	21	3375	Student	8000	PiratebayBitTorrent
R13	Female	22	4200	Student	400	PiratebayBitTorrent
R14	Male	22	3375	Student	800-1000	DemonoidBitTorrent
R15	Male	21	3375	Student	10,000	PiratebayBitTorrent
R16	Male	23	3375	Student	300	KickasstorrentsBitTorrents

Each respondent was given a code. The letter R stands for respondents for interview and number represents the order they were interviewed.  The objective of the research which was who is doing music piracy and what do they use is satisfied by this unit.  All participants were students between the ages of 19-23.  The research may limit the effectiveness if results from the interview due to the fact that general population was not represented.  According to Gopal et al (2009) stated that digital music piracy behavioral model shows that older people above 29 years of age will engage less in illegal downloading.  This gives the chance that the information on respondents between the age of 24 and 29 would improve the results.  The student whose income was £3375 shows that individuals with lower incomes are more likely to turn to piracy instead of buying and sample new music.  100% students download music from P2P services from the Bit Torrent sites.  Pirate bay and Kickasstorrents were the most common sites amongst the sample

Advantages of interpretive description Research

I have used this qualitative methodology, to generate knowledge relevant for the clinical context of illegal downloads, looking at certain age group of student based on their income and the kind of software they would use for downloading. To date there has been little discussion in the literature of the particular merits and limitations of this methodological framework. In this article I draw on my experience of using interpretive description as methodology for an inquiry into the moral experience of illegal music downloading. 

Strengths and challenges

Strengths identified include a coherent logic and structure, an orientation toward the generation of practice-relevant findings, and attention to disciplinary biases and commitments. Challenges include limited resources for situating the methodology, challenges in employing a lesser-known methodology, and uncertainty regarding the degree of interpretation to seek.

The other advantage of using this research method, it has enabled me to see how social reality is constructed through meanings and negotiations.

Disadvantages

The disadvantage I have found when using interpretive description research was that,individuals understand the motivations behind their own actions.

Symbolic Interpretivism ignores the impact of structural elements on individuals.

Advantages of Qualitative Research

I analysed that, issues and subjects covered can be evaluated in depth and in detail and interviews were not limited to particular questions and can be redirected or guided by researchers in real time.

The direction and framework of research was revised quickly as soon as fresh information and findings emerge.

The data in qualitative research depends on human experience and this is more compelling and powerful than data gathered through quantitative research.

Complexities and subtleties about the subjects of the research or the topic covered is usually missed by many positivistic inquiries.

I was also able to gather data from few individuals or cases therefore findings and outcomes cannot be spread to larger populations. However, findings can be transferred to another setting.

With this type of research, I had a clear vision on what to expect and I was able to collect data in a genuine effort of plugging data to bigger picture.

Disadvantages of Qualitative Research

Qualitative research displays its own strengths however, this is also associated with some disadvantages and these include the following:

I discovered that, quality of research was heavily dependent on the skills of the researcher and was easily influenced by personal idiosyncrasies and biases of researchers.

Rigidity was more difficult to assess, demonstrate and maintain.

The quantity of data makes interpretation and analysis time-consuming.

Qualitative research is sometimes not accepted and understood especially within scientific communities.

The presence of researcher in the process of data gathering is unavoidable and can therefore affect or influence the responses of subjects.

The issues on confidentiality and anonymity can pose problems during presentation of findings.

Findings can be time consuming and difficult to present in visual ways.

Have you downloaded music as a sample method?

The results showed that only three of the 16 participants (R3, R6, R10) had used sampling method to buy music:  A quote from 16 stated:

“I do download a track from my favorite singer when the songs are released just to see if I like them.  I do buy tracks right away sometimes without downloading, if I love the singer and the track I always buy it”

According to respondent R11 he buys the previously downloaded track if he’s unable to find a good or full download of the song on any Bit Torrent sites.

Among all the participants the most common response received was they would not buy a track if they already got it for free.

How you know someone else who illegally downloads

The answer ranged from friends to parents. R7 responded that it is a norm in his group of friends, they text each other to download a good song before going out at nights.

Do you evaluate the rightness or wrongness of your action before every song or album you download illegally? Do you evaluate what good or bad will result from your actions?

Only one student admitted that he does evaluate the wrongness of his action (R1) and he does realise that some bad might come out of his actions. All the other 15 did not feel that illegal download is an ethical dilemma for them.

Do you think the moral values of illegal downloader’s are same to those who legally download their music?

The researcher received mixed results. Only 6 students responded that the moral values are not the same because people who buy music want to support the artist.  The other 10 students said that they are same because either way they want to enjoy music it’s just a matter of choice.

Which statement do you agree the most?

Student   Statements

R   1

R2

R3

R4

R5

R6

R7

R8

R9

R   10

R   11

R   12

R   13

R   14

R   15

R   16

A

√

√

√

√

√

√

B

√

√

√

C

√

√

√

D

√

E

√

√

√

F

The table demonstrates the results of which statements students agreed most.

The letters relate to the statements below that students agreed the most:

1. Illegal download is the only choice I have because I don’t have enough money to buy the whole album.
2. I don’t believe downloading one song for free affects the whole industry therefore my actions are not significant
3. Prices are so high that piracy is the good option so it’s the labels fault
4. If industry was fair with me I wouldn’t have downloaded illegally
5. My actions may be wrong to some extent, but I did for family and friends
6. I don’t agree with any statement.

Statement A was the one that most students’s agreed the most.  B and C were respectively followed and no one agreed with F which indicates that all sixteen students were aware of their wrong behavior.  This technique is neutralization technique. Majority of students justified their behavior by denying their responsibility.  Money plays a big part in illegal downloading.

Are you aware of legal downloading platforms? Do you identify the current attempt of music industry to combat piracy and what are your views on legal downloading methods?

All sixteen students knew about legal downloading platforms, with most common is iTunes.  9 of the participants have actually purchased songs of iTunes.

R14 stated that he just downloads music from Demonoid and drag it to iTunes to put it straight on to iPod.

9 of sixteen didn’t know any subscription services. After investigating more it turned out that 14 of sixteen have heard of Spotify, one of the most popular subscription services in UK.  Students lack knowledge of the services provided by subscription services and how it can benefit industry.

How do you feel about the legal threat which illegal download pose on individual in the form of lawsuit? 

The responses indicated that students believe a threat of getting caught and penalized is very insignificant.  R9 stated that it must have been one in a million if they even fined so he’s not worried at all.

I’ve downloaded around 10,000 songs and they haven’t caught me yet I don’t they can ever.  (R15)

Would you stop downloading illegally if the chances of being prosecuted are higher?

!3 out of 16 admitted that they would probably stop illegal downloading if the chances of getting prosecuted were higher.  R7 and R10 it wouldn’t completely stop them.

How would you feel if specific Bit Torrent site got shut down?

14 responded that they would switch to another site. Three said they would be annoyed but they would try something else.  The response indicated that illegal downloading is more influential than the programmers.

Legal actions taken by the music industry on people so far are unable to serve as discouragement.

How do you think your actions are affecting the industry?

Majority of students have perceived the industry as greedy because the prices of music are too high.  All students believe music industry is highly rich and everyone belong to it are well paid.  R17 said that “Album prices are ridiculously high. Tickets and merchandise price is ridiculously high and expensive.  They all have luxurious lives”.

The responses demonstrate the distrust towards the industry.

What negative affects if any do you think can piracy have on the industry?

The answer to this question was that all students agreed that record label and artists would gain less money off album sales.  One of the students R9 said that Zaavi and Virgin Megastores went out of business because high street retailers are affected

The only negative affect that students view is loss of jobs.

Research evaluation techniques

Evaluation Method

Researchers have used semi-structured interviews on one on one basis. The richer data was collected by participants. The validity and success of an interview rests on the whether the respondent opinion is true.  According to Jones (1985, cited on Punch 2001) “In order to understand other persons’ constructions of reality, we would do well to ask them…and to ask them in such a way that they can tell us in depth which addresses the rich context that is the substance of the meanings”.  Validity threat to interview is the use of leading questions or the preconceived ideas researcher’s which influence what worth discussing.  The live nature of face-to-face interviewing and language difficulty is not easy to avoid.  On the other hand the complexity gave rich and deep data.  The researcher has use participatory approach in which the interview data are evaluated and increases internal validity.

Patton (2002) mentioned that comparability is decrease because responses are different in each interview.  Interviews develop their own coherence which analysed itself.  Researcher had pulled evidence from the data which when understood sounds credible, reliable and convincing.

The researcher used both recording the interview on the tape and writing summary of the answers.  I have used the tape recorder with a counter, and set it at zero at the beginning of each tape and wrote down counter number every few minutes.  The tapes are later transcribed and compared with the answers summary to ensure validity and reliability.

Research Findings

Male 20×1	£5,200	2000
Male 21×3	£10,125	10000
Male 22×4	£13,500	3050
Female  21×1	£3,375	4000
Female  22×3	£11,575	8400
Female 23×1	£4,000	4000

Ref: The table above and charts represents raw data gathered for research in relation to criteria 2.2 of the assignment.

In order to Interpret and analyse the results in terms of the original research specification, I simply had to breakdown the essentials in 3 categories to be able to process raw data into line graph, bar graph and stacked columns.

Because there was so much information gathered from raw data of my research, it was not easy to put this into diagrams, so I had to summaries the number of both male and female students combined in age group, totaling the amount earned from different ages of both gender and measuring it against the amount of downloads.

The blue line on the graph represents male students, whilst the red line represent female students.

Male students had more income in all different ages in comparison to female students therefore having more or less downloads depending on their high or lowest income in comparison to their female compatriots accordingly.

The diagram shows that, older students with high income downloaded more compare to young students on low income.

This outcome is also reflected on the charts below.

Student’s responses in this research were similar but the downloading patterns were different.  Gender did not play any role in the illegal downloads female download just as much as males do.

Students use decentralised P2P Bit Torrent site, and Pirate Bay and Kickass torrents were the most popular ones.  The research showed that sampling method applies on small minority of music pirates.  I found that increasingly piracy social acceptance leads to no ethical dilemma for the user.  Students justified their behavior through denying their responsibility of using unauthorised downloading.

The study found all students were aware of legal downloading sites. However researcher found it very interesting that some of the students were actually using legal alternatives to help transfer illegal music files.  Students have lack of knowledge about subscription services; industry should encourage promotions of the legal sites to handle illegal methods.

Students were not concerned about potential legal action, because the number of penalised cases is very small.  Student’s majority are willing to stop downloading if the chances of being prosecuted are higher.  Students’ perception about music industry is very negative, they believe piracy is not

Affecting music industry but they are aware of the negative effects on the loss of jobs for common people.  The effort of music industry to educate people about the affect of illegal downloading is working as figures by IFPI reported that there has been rise in revenues through legal digital downloading sites.

The study was exploratory and there was a lack of quantitative findings, but the research does provide a multidimensional explanatory understanding into what is useful to measure people’s attitudes toward downloading.

Recommendations and further consideration

Limitation to the Research

The first limitation of the research was that the respondents were mostly males than females which could have affected the validity of the sample and making females seems that they download as much as males unreliable.  The study should’ve been done by equal genders.

The second limitation was that sample was targeted on students because student population uses illegal downloading and music piracy more than any other sample.  A mix of demographics could be implied on further research.

Recommendations

• The research has found that there are more P2P users that are why more research should conducted into P2P rise.
• Spotify should focus on educating people on the benefits of subscription services such as Spotify.
• Industries should create package to stop illegal digital content.
• Spotify should come up with packages particularly for student which is cost effective and will encourage them to turn to Spotify and not towards illegal networks.
• Money is the main issue for illegal downloads, Spotify should introduce a package that fits for student’s needs which price is reasonable and attractive enough to pursue students towards Spotify since student population is the largest user of the music piracy.
• Spotify can improve its “like based” radio stations, it can partners with other distribution channels, balance the effects of networks and open services.
• Spotify should also continue with its strategy of bundling and decreasing switching costs from competitors
• Spotify have to improve its algorithms to better quality than Pandora.
• Spotify could partner with the car companies because large amount of music is listened to in the car, Spotify can develop a Sirius radio type service that streams user’s personaised music library in their car.

Conclusion

Research has found that majority of consumer does not find music downloading unethical because it has grown within the social norms of society’s youth.  Neutralisation was used to predict the pattern of illegal downloading behavior.  Primary research and secondary research (literature) was used for a better understanding of piracy.  It could be useful for industry to make efforts to understand piracy more especially in universities where illegal downloading is used by dense student population.

Proportion of young people do not notice the industry’s efforts even though they know the situation and they are not threatened by the legal action which organisations has taken such as RIAA.  It is clear from the research that subscription services such as Spotify must be focused by industry.  The study has shown that there is a huge lack of knowledge about the advantages of subscription services to consumers.

Spotify should be made a mainstream as much as Bit Torrent.

Final thought on conclusion is that music piracy is here to stay. People will get better opportunities of downloading contents illegally then music piracy will increase.  The primary research suggests that people are not going to stop unless there is a higher chance of prosecution.

Critical Reflection

I conducted this research to examine the people’s behavior towards illegally downloading music files.  Illegal downloading has become an immensely extensive practice which poses a huge challenge to political and economic actors in the cultural industry.  Many studies have focused on illegal downloading; I have notices that none of the studies have addressed questions like how do common people reach to the point of undertaking illegal practice on every day basis as a normal activity? And what type of strategies is used to neutralise the tensions created by illegal practices?

I believe common downloading behaviors should be analysed further because to my surprise not even one student was concerned with legal actions or felt any tension of doing illegal practices.  In the research I used neutralization theory and wrote 6 statements for students to agree with the most.  My aim was to understand the processes by which students reduce feelings of guilt.  During the research I came to realise that moral norms are accepted by groups with which the respondent interacts such as family and friends.  I used neutralization technique to see how the participants can justify their action to themselves, which needed to be much more specified.  Many researchers found that morality level is negatively connected with illegal music downloading.  It was really hard for me to get people respond to questions about such sensitive issues like unauthorised digital music downloading therefore I looked at whether people downloaded illegally and asking about their preferred sources of digital music.  I learned that users are happy with their choice of sources of digital music downloading because it provides overall utility in a free product than the one with a price.  People seems excited and don’t seem to bother much if they switch to legal channels of downloading with an incentive.  As mentioned above people lack the knowledge of subscription services and what good they can do for the industry and for consumers.  There is a desperate need for educating them and promoting services like Spotify for people to stop music piracy

D2 Take Responsibility for Managing and Organising Activities

D3 Demonstrate Convergent/Lateral/ Creative Thinking

File sharing technology has enabled consumers to copy music, books, videos and games.  Copyright holders and multinational music industries make and sell the material are not happy with this development.  Their revenues are threatened by file sharing so they take drastic measures to sue for huge amounts of money people who are engage in file sharing.  Millions of people in majority are the youth but not all are engaged in file sharing.

I believe prosecuting users for file sharing will not do any good for society.  To the consumer just because file sharing is illegal does not make it immoral.  Young people are questioning the laws merit that restricts them from sharing material.  They break copyright laws because they to them laws are not fair

Since young people are most likely to use file sharing sites due to the fact that youth and students have limited or nonexistent funds therefore, they approach free media with one in a million chances of being caught is too good to waste.

Even though BPI claims that illegal music downloading cost the industry £219 million is unrealistic especially when BPI have produced a document that showed online music sales topped £160 million in 2010 a rise of £10 million over last year.  BPI blames the loss of revenue to illegal downloading but they did not mention anything about how much are artists losing from illegal music downloads.  To my understanding the artists have never been that well paid by the record label.

Geoff Taylor tried to present an argument to increase government’s help by saying “The creative industries employ two million people in the UK and are the fastest growing sector of the economy. Urgent action is needed to protect those jobs and allow Britain to achieve its potential in the global digital market”.  I was thinking that record labels want government’s help instead of doing something to help millions of UK workers.  We all know record labels are multi-billion pound industries that reported sales growth and still asking government’s help that has just gone through most sever public sector cuts in the lifetime for help.  I wouldn’t expect anything soon if I was Mr. Taylor.

I would think if record labels would reduce prices, increase loyalty and not be so greedy then BPI can see the growth it wants. (Latif, 2010)

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