The Daily Stat: 1 in 4

Number of internet users who access unlicensed music
Source: IFPI Digital Music Report 2012

In their newly published Digital Music Report, the International Federation of the Phonographic Industry (IFPI) announced that 28% - roughly 1 in 4 - of active internet users globally use unauthorized services to access unlicensed music. According to the report, free music (unsurprisingly) continues to be an "irresistible magnet for consumers... undermining the incentive to obtain music using legitimate paid models". How can the industry continue to effectively market its products in the face of unfairly competing free products?

The recording industry for the past few years has been in a state of flux. As such it presents an interesting case study for marketers in industries that are facing disruptive change. In the past decade, the recording industry has relentlessly been waging war against piracy with little  success. It seems that for every Limewire and Megaupload that is shut down, even more unauthorized sites spring up in their place. To make things worse, even governments with the best intentions are often ill-equipped to pass truly effective legislation that addresses piracy in the context of the complexities of the internet-age.

So What?

Perhaps the recording industry should stop looking towards legislation for its salvation. The above statistic suggests that 1 in 4 internet users don't find any value in music that's worth paying for. Read differently, those people simply don't want to have to pay to be able to listen to a song they like. This should serve as a wake up call for recording companies to start rethinking their business models. To extend this thought, perhaps they should start rethinking the products they're selling.

The demands of music consumers today are expanding to more than simply 'listening to a song they like'. Consumers are now seeing value in obtaining richer musical experiences. Today things like being able to seamlessly access your entire music library wherever you go, instantaneously syncing your music library across all your devices, easily discovering new music, sharing your favorite music across your social networks, building playlists conveniently and getting access to exclusive content from your favorite artists are becoming more valuable to consumers. Valuable enough, perhaps, to be worth paying for.

This has driven companies like Google and Amazon to launch cloud-based music services in recent months. This is what has led to the success of iTunes and what continues to drive the growth of services like Spotify, Pandora and Slacker. The common thread? The use of technology to deliver richer musical experiences. Recording companies should realize that their products are, in fact, musical experiences and not just songs. Anyone can download mp3 files for free but I'll bet most people will be willing to pay for well-crafted musical experiences, as long as the price is right. To achieve this, the recording industry must learn to fully embrace technology (and not be intimidated by it) and leverage partnerships with service providers to deliver truly valuable music.