The Pirate Bay ‘Spectrial’ Day #8 – Record Exec Takes the Stand

John Kennedy, Chairman and CEO of IFPI, says the BitTorrent tracker site has caused “significant damage to the music industry as a whole,” rebutting arguments that file-sharing actually benefits the music industry.

After a day of rest the trial against The Pirate Bay resumed today with John Kennedy, Chairman and CEO of the International Federation of the Phonographic Industry (IFPI) taking the stand.

Kennedy said The Pirate Bay had eroded legitimate music sales, harmed the environment for legitimate services, damaged the marketing plans of music companies and disrupted the flow of investment into new music. He said the BitTorrent tracker site harms music copyright holders in a number of distinct ways.

“It deters people from buying music online, as well as new ventures and retailers wanting to enter the digital music market,” he said. “There are also the wasted costs of marketing and of developing new artists, and a range of other costs, such as engineering and production.”

However, when Kennedy tried to explain how how record companies divide their earnings between artist development and market research members of the viewing gallery began giggling and snickering. It’s no doubt due to the fact that everybody knows the music industry is ripping off artists left and right.

He tried to counter studies like the Canadian govt’s “The Impact of Music Downloads and P2P File-Sharing on the Purchase of Music: A Study For Industry Canada” which found that “…P2P file-sharing tends to increase rather than decrease music purchasing.”

“That’s an old-fashioned view that no one holds these days. A study from 2003 or 2004 supported it. Since then five more studies have contradicted it. In any case, recording artists have the right to decide how their music is used,” said Kennedy.

Kennedy made a clear distinction between the functions of The Pirate Bay and general search engines such as Google.

“If you type ‘Coldplay’ into Google, there will be 40 million results, made up of press stories, links to legal download stores, concert reviews and a multitude of different links,” he said. “If you go to The Pirate Bay you will get less than 100 results, all of which will give you access to illegal music, illegal movies and artwork.”

He said that Google, unlike The Pirate Bay, has been working cooperatively with the music industry on a daily basis, helping curb the supply of copyright infringing content.

Kennedy said The Pirate Bay had grown to become the number one source of illegal music, following successful court actions against two previous high profile unauthorized services, Grokster and Kazaa. He said the migration of the legitimate music business from the physical to the digital environment had created “wonderful opportunities but also great threats.”

“More music is now being consumed than ever before, but less is being paid for,” he said. “The simple proposition is that it is very difficulty for new business models to thrive if they are competing with unauthorized free music.”

After a continued barrage of statements lamenting “opportunities” and “threats,” lawyers for the defense raised their objections.

“This is a political speech!” exclaimed Per E. Samuelson, prompting the chief judge to remind Kennedy that the trial concerned compensation and The Pirate Bay.

Asked about the compensation claims of the music companies against The Pirate Bay defendants – totaling €2.1 million in respect of a sample of 23 titles – Kennedy said they were “justified and maybe even conservative because the damage is immense.”

Yet, oddly enough, nobody’s able to satisfactorily deduce what music industry losses, if any, The Pirate Bay is responsible for.

Ludvig Werner, head of the IFPI’s Swedish chapter, later testified that it’s impossible to calculate lost sales on a per album basis and thus one must instead rely on music industry sales as a whole.

“And they’ve fallen by 50 percent,” he said.

Missing from this argument is the transition from physical to digital music and the record industry’s long reluctance to embrace this change and build a new business model around it.

Stay tuned.

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