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Last Updated: Thursday, 4 September, 2003, 15:42 GMT 16:42 UK
EMI boss defends music industry
The state of the global music industry has sparked an impassioned debate in recent months, with many people criticising the industry itself for causing many of the problems.

Coldplay
Coldplay are one of EMI's biggest-selling bands
Here, the vice-chairman of EMI Music, David Munns, writes in response to BBC News Online users' views on the subject.

The music industry came in for quite a kicking from users in the BBC News Online article on UK record sales and prices.

The gap between the perception of how record companies like EMI work and the actual reality is now a chasm.

Investing in new artists and music is not a 100% science.

Thousands of new albums and singles are released every year in every conceivable genre. We use our best judgements on what we think people will like.

 Idlewild
Scottish rockers Idlewild are signed to EMI
Sometimes we're right, sometimes we're wrong, but no one can force anybody to like or dislike something, and that includes us.

Various accusations of "greed" were thrown at record companies in the piece.

EMI is a business which means that yes, we are trying to make profits, but what business isn't?

Our financial statements are all publicly available for anyone who wants to look at them, and no one could say they show excessive profitability.

David Munns
Is it okay to shoplift if you disagree with the prices a shop charges?
David Munns, EMI

When it comes to the internet, EMI has made the vast majority of its music available online, and we're working hard to add more all the time. We also now sell singles online as soon as they appear on the radio.

I sometimes wonder if it's because music is intangible that people forget that there are many more costs involved than merely manufacturing a piece of plastic.

There's a lot that goes into the retail price - VAT, retailer's cut, distribution costs, advertising and other marketing costs, producers' fees and studio time, not to mention the artists and songwriters who need to be paid.

Manufacturing a CD is only one very small part of the total cost yet that is the one that people focus on.

Blur
Blur are on EMI's Parlophone imprint
Who knows what it costs to manufacture perfume? Who cares?

And whatever any of us feel about the price of anything, that doesn't justify stealing.

Illegal file-sharing is theft under copyright law.

Is it okay to shoplift if you disagree with the prices a shop charges? Would you steal a Mercedes and justify it by saying it was because you couldn't afford one?

We love music too, but without some profits we won't be able to invest in more music in the future.

This debate is now closed. Please see below for a selection of your comments.

The following comments reflect the balance of views we have received:

I have a typical record deal with a major record company. They sell my album for 8.87 to the retailers, of which the band (the whole band) gets an 11% royalty. I have seen it in Virgin for 16.99. So it's both flattering and insulting when people copy our material, but look at the sums: it's not the artists who stand to lose the most from piracy.
DJ Oblong, England

Mr Munn compares internet downloading to stealing cars you cannot afford. This isn't the case at all. The music industry would like you to only download what they make available, and pay subscriptions even once you've paid for your track. The equivalent would be being told that you can only buy the car that the dealer wishes to sell you, and even once bought you must continue to pay fees for using it.

If that was the case, car crime would be as high as internet downloading and rightly so. Get a new argument Mr. Munn. Or better still, a new job, and let someone who's in touch with what the consumer wants take your job and actually make a difference.
G. Haman, UK

If CDs are not sold at inflated prices, then how come a couple of months after the release the price drops by anything up to a fiver?
Berwyn Davies, UK

As long as companies like EMI can afford to pay artists like Mariah Carey obscene sums of money to make records and then pay them again not to make them it's very hard to feel sorry for them.
Adam Gittins, England

The Merc comment is invalid - there are tons of cheaper cars to choose from if you can't afford a Merc. I am a music lover who rarely buys CDs. If they were cheaper (as in other countries) I would buy more. If you apply this train of thought to all the other similar-minded consumers out there more CDs would be sold and the manufacturing and distribution costs would fall, and artists would sell more music and be more profitable... as they used to be...
Daniel Stanley, UK

The other issue is the Retailers, HMV, Virgin and Tower are also to blame for inflating the price of CDs. If a CD becomes a cult classic, the price after the initial lauch can jump from say 15 to 20. Also you have a good few retailers who add on a small margin and look for volume business. Fopp, for example, in Scotland where cdss range from a fiver to 10-12 quid for a new release. The record companies need to set lower RRPs so the consumer is getting a fairer deal.
Bryan, Ireland

I own a CD and travel to England. I then download the contents of that CD off KaZaa in England. Am I guilty of stealing? Absolutely not, I OWN the CD and hence ACCESS to the contents of the CD regardless of space or time. Why then am I branded a pirate? Please Mr. Munns, you have your biases and I have mine but lets not regulate the technology like my.mp3.com to keep your old vested interests. The new will supplant the old, and I warn you to adapt or perish.
Pravin, US

Mr Munn's raises a couple of interesting points which are worth looking at:

First he asks: "Who knows what it costs to manufacture perfume? Who cares?"

An interesting parallel here. High-priced perfumes are boutique items, specifically priced high to retain an element of cache and exclusivity. Is this really the parallel he wants to draw with artists' music? If so I think this illustrates the problem.

He goes on to ask: "Is it okay to shoplift if you disagree with the prices a shop charges?"

No. But the record industry is taking it as axiomatic that its falling sales are being caused by piracy, whereas in fact falling sales probably being caused by disatisfaction with price and quality of the offering.

I wonder how much file-swapping is actually caused by people sharing tracks that have been deleted from the record companies' catalogues and which are not available through conventional means.
Chris, UK

Some good issues briught up here. But music is to be heard not sold. As a form of art "If you don't want it to be heard don't make it". Music is free and always will be. It's just some people have found a way to sell it.
Joenebula, UK

Quote: "There's a lot that goes into the retail price - VAT, retailer's cut, distribution costs, advertising and other marketing costs, producers' fees and studio time, not to mention the artists and songwriters who need to be paid."

While we would all agree that this is true, the actual record company takes a huge slice of the pie and this is what people are complaining about. You should take a smaller slice of the pie and you could also reduce your advertising costs and the production cost of the promotional videos - manyy people don't watch the video even if they do listen to MTV or VH1 - I know I don't.

So, reduce your costs and bring the prices down - maybe then you'll get more people buying your product. Over 10 for a CD, even a double CD isn't worth the plastic the music is on.
David B, UK

David Munns argues his case very well except for one glaring ommission. Why are albums sold in the UK considerably more expensive than those sold in the U.S. This question is even more valid today as Universal have announced they are cutting the price of their albums sold in the U.S. by 30%!
Kevin K, Scotland

David has made some valid points on the value of music and the business itself, but the music industry's reaction to file-sharing has hardly done them any favours. Making faulty copy-protected CDs is a daft idea which has annoyed many consumers. The music industry's business model is changing in this digital era and they don't seem to be able to cope.
S khan, UK

I was working for Sony for a few months and this was the argument put forward by them too. It's clear that as Mr Munns said, it's very easy to focus on one aspect of any one invidual business, in this case CD production, but the public will do this when they see what they perceive as a weakness and something to exploit for lower prices. Lower prices maybe great for the consumer but the pressure to reduce pricres means reduced costs which in turn inevitably leads to reduced quality.

I only ever buy what I really want and always buy original. If you have to follow fashion it will be expensive, but also in 5 years you'll wonder why the hell you bought what you did!
Steve, Spain

Mr Munns views are understandable and typical of a man in his position, he is trying to justify the stance corporate record companies take. His argument that not all bands are successful and that money is spent nurturing these bands is valid, but he fails to address issues such as albums and compilations that are 20plus years old which have no associated production costs that still cost a fortune.
Robert , Scotland

This argument starts with the assumption that anyone deserves to be incredibly rich for singing a few songs. This is a very recent (50-60 years) state of affairs, pop stars really being a related off-shoot of the Hollywood star system. The internet and other personal comunication systems will return us to where we were before the birth of the star, real musicians playing and selling their music to those who can appreciate it.
Darren Barratt, UK

Well done Mr Munns. His points against the theft of music are what I also raise with those who think music theft is okay. The justifications people use for stealing music are astounding. However, I still have issues with music sales. High street retailers are still making things worse by selling at high prices compared to supermarkets/online retailers. And file sharing is not all evil - I use it to sample music, then buy accordingly. Finally, if EMI does sell the "vast majority" of its music online, where is it? It's not very well marketed, I wouldn't know where to go. I still believe habits have to change from all parties: the record companies, retailers and consumers.
Tony, UK

Mr Munn fails to mention the massive difference in pricing between the USA and UK. Am I to believe this "slipped his mind" or is it a simple case of not being able to come up with even a lame excuse to explain it all away for us. Get real Mr Munn - the downloaders are taking away the excess you have charged since the beginning of your industry and you don't like it. My heart bleeds.
Jamie, UK

Mr Munn speaks as a businessman. Has he heard of the sell 'em cheap, stack' em high philosophy. I would gladly pay 7 for a CD but not 14. More people would buy if they were cheaper. I take no pleasure in downloading but at the prices the industry wants I would be a mug not to download.
Mark Thomas, Northern Ireland

He misses the point. The point of the whole argument was that people are fed up with how the price of CDs has never came down since they were launched. Therefore, we know we are being ripped off when a CD off the shelf still costs upwards of 12.

Ridiculous when you know the cost of burning a CD in such a mass scale comes down to less than 1 a copy. Piracy, inevitably, will carry on.
Johny, UK

Dave is missing the point, they should be using the internet to generate interest in their unknown bands. The record labels need to move away from a few high cost artists generating the profits to a high volume business where people can try lots and lots of different stuff without paying the earth.
Anon, UK

By comparing these 'infringers' with thieves/shoplifters/burglers we're missing the point by some distance I believe. These 'infringers' are mostly people with otherwise normal lifestyles - they are journalists and judges, lawyers and accountants. Their motivation is not always financial and there are a LOT of them - far too many to hunt down and prosecute individually.

So, I believe the music industry needs to recognise this isn't a simple case of "smash and grab" and adopt itself to working with its customers to better serve them.

The tactic of suing your own customers has no precedent in successful business to my knowledge.
John Peat, England

Bottled water is successful even though most people (in the first world) get it nearly free. Obviously there are markets running on a free vs. fee model and they work for everyone involved.
Ewan, UK

Mr Munn makes some good points, but piracy is not killing music. Most people I know download a song which they have heard and then go out and buy the album. There's no substitute for owning a CD. Whipping out the latest Travis album on mp3 doesn't have the same kudos as having the latest shiny spangly CD.
Steven Logan, Glasgow, UK

Music is over priced and it is evident in the over inflated payments to the stars. Consumers are not comfotable paying high prices for CD's when the money goes to pay for multi million pound contracts for the likes of Robbie Williams. He does not need $80m and we do not need to pay so much for CDs.
Jon Harris, England

One aspect of the file-sharing argument that is often overlooked is would the person that downloaded the file for free have gone out and bought it away? What with the loss in sound quality, the poor mixing when the file is compressed, what you get off the internet is second rate compared to the real thing. The real focus shouldn't be on internet downloads for personal use but on the professional pirates that distribute illegal CDs and DVD at car boot sales and markets the UK (and no doubt the world) over, as they are making a direct profit from an illegal activity.
Anthony Walmsley, UK

I myself run an independent record label and do sympathise with EMI. I say blame the middlemen. We only see back 4.90 for each full length album sold in the stores. Our albums are typically retailing at about 12 each. From that 4.90 we have to pay our staff, the government, the recording costs, the producers fees, the marketing and the distribution costs. We for one are suffering dearly because of Internet piracy and as we see our sales falling we may not be able to survive much longer. Everyone thinks it's affecting the majors. Keep in mind the majority of labels are small indies. There is no way to defend stealing.
Miles Chapman, London, UK

Mr Munn's comments are somewhat undermined by today's news that Universal Music are cutting the price of CDs by 30%.
Neil, UK

While I applaud EMI efforts to make more of its catalogue avaiable to download, they still have a long way to go to make the consumer happy. The consumer wants flexibility and to be able to listen to an MP3 on more than one device without having to pay for it more than once, after all we only buy a CD once.
Niki, UK

The Mercedes anaology just doesn't work - if the dealers went round offering people test drives in their cars 24 hours a day, on a rotating basis with the other car manufacturers it would be more accurate - after all, that's what the record companies do when their singles are played on the radio day in, day out. The volume of free music on radio has devalued music companies' product, and until they realise this and cut their product pricing accordingly, sales will continue to fall. Filesharing is a phantom meance.
Bob Apples, UK

Very interesting quote: "There's a lot that goes into the retail price - VAT, retailer's cut, distribution costs, advertising and other marketing costs, producers' fees and studio time, not to mention the artists and songwriters who need to be paid" - so apart from the non-negotiable VAT, Mr Munn fully accepts that the record industry's current business model is unsustainable, with (I am left to assume)inflated fees and profit margins. And, of course, he would like the consumer to subsidise this clearly flawed business structure.
Ant K, GB

The simple answer is to lower the price of CDs to something approaching what ordinary people can afford and enough profit will be made on the exponentially increased sales volume. The onus is on the music industry to restore sanity to its ludicrous pricing policy.
Jonathan Ewer, uk

I completely agree with what David Munns has to say, however, justifying the cost of a CD by talking about distribution and marketing costs (two of the largest costs involved in producing a CD) simply reinforces the file sharing argument. By sharing files on the web there are no distribution costs and there is no need to invest in paying marketeers to tell us what is "cool" and what isn't. Distribution and marketing add nothing to the end product, they are simply a way for record companies to increase market share. Dump these costs, stick it online at a decent price and surely everyone will be happy?
James Hirst, UK

Who are the majority of people downloading music? Teenagers who can't afford to buy new music that often. These are the people who are likely to buy their own albums when older and in jobs. As a youngster I copied tapes from friends or off the radio because I couldn't afford to buy any. Now I buy my music. Give the kids a break.
Steve, UK

I could perhaps have more sympathy for the position of executives such as Mr Munn if he and companies like his had not been engaged in extracting monopolistic profits from consumers for so long. The retail price of CDs contrasts very unfavourably with the actual price of production, not to mention the fact that CDs in this country cost so much more than in many other markets. We were warned in the '80s that "Home Taping Is Killing Music", yet we have a more vibrant market for music than ever before. Hasn't the industry recently reported the highest number of units ever sold? File-sharing can act as both a marketing tool for the music companies, and as a valuable preview tool for the consumer. To use Mr Munn's example, I don't think that many people would buy a Mercedes without taking it for a test drive first!
Alan Matthews, United Kingdom

If record labels want to stamp out file-sharing then they must band together to create a global solution (Apple's is US only) for offering music online at a reasonable price. The law may be on Mr Munn's side, and I may agree with his view of morality. But that doesn't mean that the music industry will have any success until they make a full-blown effort to provide a comprehensive download service that is available for all countries and formats for a reasonable fee.
Ben, UK

There is one particular point I must take exception to. Illegal file sharing is noh "theft" under copyright law. It is copyright "infringement". Theft deprives the owner of the goods. Copyright infringement potentially deprives the owner of revenue. That is all. Even worse is using the term 'piracy'. How can you compare piracy on the high seas (with its associated murder and pillage) with copright infringement? The record industry wishes us to think in these terms and you, the BBC, regularly assist in this Orwellian redefinition.
Dave, England

Why are tapes which cost more to make cheaper to buy than CDs?
Martin Imber, England

"..there are many more costs involved than merely manufacturing a piece of plastic. " Is he referring to Britney Spears?
Ollie Woodall, UK

I never download music from the internet. I buy 4 or 5 CDs a week on average, usually sale items or old back catalogue stuff for about 5. This is reasonable. What is not reasonable is having to pay 15 for new releases or even more sometimes for old stuff (eg Beatles, Pink Floyd). This is a joke, over 15 for a forty year old album. No wonder people "steal".
Michael Lancaster, England

I agree with him, as long as the music is available. I have shared, on Kazaa, some records that were issued in the mid 1970s, by a company that ceased trading within a year. I would not have done so if the tracks had been made available by some "legal" means.
Roger, UK




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