Academic journal article International Journal of Electronic Commerce Studies

An Exploration of Essential Factors That Influence Music Streaming Adoption and the Intention to Engage in Digital Piracy

Academic journal article International Journal of Electronic Commerce Studies

An Exploration of Essential Factors That Influence Music Streaming Adoption and the Intention to Engage in Digital Piracy

Article excerpt

1.INTRODUCTION

The widespread availability of inexpensive and easy to use broadband computing technology, the emergence of numerous peer-to-peer file-sharing services, the increasing adoption of cloud computing storage, and the proliferation of private networks have made it possible to share massive amounts of digital information with large numbers of individuals. Efforts to shut down online directory services, such as the Pirate Bay, which facilitates the search for unauthorized content, have been repeatedly defeated. As recently as October 2016, notwithstanding sporadic disruptions in service, the Pirate Bay site managers have continued to find ways of keeping the site in operation 1.

Challenges posed by large-scale digital piracy have affected the markets for all types of products, including music, movies, games, software, and books. This has upended the long established business models for product rights owners (PROs). Quantifying the magnitude of digital piracy and its effects has always been difficult, and figures tend to vary widely, depending on the region and on the method of assessment. Nevertheless, we do have some estimates. Bender and Wang found that a one percent increase in the music piracy rate results in a 0.6 percent decrease in music sales 2 They also found that a one percent increase in the Internet penetration rate results in a greater than one percent decrease in music sales 2.

In one of the more recent detailed studies, the NetNames Piracy Analysis Group found that while declines in digital piracy have been noted in some countries, copyright infringement remains flat or continues to grow in many parts of the world in terms of the number of users involved, the amount of infringing content available online, and the amount of Internet bandwidth devoted to unauthorized content 3. In the three regions that make up the vast majority of Internet users and bandwidth consumed - North America, Europe, and the Asia-Pacific region - infringing bandwidth use between 2010 and 2012 increased by 159.3% and represented 23.8% of total bandwidth consumption 3. The NetNames Piracy Analysis Group also found that the number of Internet users explicitly seeking infringing content during 2013 in those three regions rose by 9.9% and represented a quarter of the total Internet population 3. Figures 1 and 2 illustrate the amount of file sharing in petabytes in the U.S. and around the globe. The rate of increase appears to be moderating, but the amount of content being shared remains quite large.

PROs have responded to digital piracy with various strategies over the years. Numerous attempts have been made to lock down digital content through the use of digital rights management (DRM) technologies. PROs have endeavored to educate the consumer on the appropriate use of digital content. They have presented ethical and legal arguments in the hopes of persuading consumers to pay for content and to respect the terms of use. PROs have lobbied for stricter copyright laws and better enforcement. They have enlisted the assistance of Internet service providers to identify copyright infringement, expose the identities of those involved, and issue takedown notices. Record companies in particular have aggressively and successfully sued or settled with over 30,000 individuals 5.

Strategic outcomes have been mixed, and no one approach has satisfactorily mitigated the persistent challenges of digital piracy. PROs have responded by developing new business models and value propositions that attempt to address evolving consumer tastes and preferences. Some early indications suggest that a few of these efforts may be paying off. As illustrated in Figures 3-5, consumers have increasingly embraced music streaming, which has become an important revenue source for companies.

The NPD Group, which is a marketing research firm, found that the volume of illegally downloaded music files from P2P file-sharing services, one form of digital piracy, declined by 26 percent between 2011 and 2012, which may have been the result of increasing availability and adoption of music streaming systems (MSSs) 7 One recent study suggested that the effect of paid streaming services on revenue is a net positive for the music industry 8. …

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