The economic cost of IPR infringement in the recorded music industry

The sector study on the economic cost of IPR infringement in the recorded music industry looks at direct and indirect revenue losses and job losses due to piracy in the recorded music industry, as well as the impact on public finance. The study refers only to production and does not consider distribution or retail. It analyses the effect of piracy on the recorded music industry, independent of the format of the infringing goods or services. This means that both types of IPR infringement are covered, i.e. physical piracy, where the infringing product involves the use of hard media such as CDs or DVDs, and digital piracy, where it does not.


Main findings:

  • 5.2% of revenue lost by the recorded music sector in 2014 due to piracy
  • Relative losses lower for physical formats (2.9%) than for digital formats (8.8%)
  • Direct sales lost by the sector due to piracy amounted to €170 million in 2014
  • Direct and indirect effect of lost sales due to piracy totalled €336 million
  • €63 million of government revenue lost (taxes and social contributions)


This is the first study to cover a sector that is a victim of both physical and digital piracy; some adaptations to the general methodology are therefore necessary. In contrast to previous reports, and although the methodology is the same, the estimates of lost music sales have not been based on Eurostat data. This is because of a lack of appropriate data in Eurostat. Instead, the analysis has been based on a richer and more detailed, publicly available dataset, purchased from the International Federation of the Phonographic Industry (IFPI).

 

Recorded music industry revenue is generated through a diverse portfolio of channels and formats of music consumption. The information available includes revenue detailed by format, including:

  • Physical music: broken down into seven categories: singles; albums (LPs); music cassettes (MCs); compact discs (CDs); MiniDiscs (MDs); Super Audio CDs (SACDs); and music videos. CD sales via the internet count as physical sales.
  • Digital music: includes permanent downloads, mobile personalisation, subscription stream income (both free and premium tiers) and ad-supported stream income (e.g. YouTube or Vevo).


Download the report here

Cover of Observatory newsletter, October edition

The economic cost of IPR infringement in the recorded music industry

In this report the Observatory focuses on the infringement of IP rights in the recorded music sector.


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