Bought It for a Song / Online Music Earns, But Can’t Beat P2P Staff Report

Legal online music services are gaining a larger share of the music market, but are having only a minimal impact on illicit peer-to-peer file sharing.

According to Mac News World, since 2004, legal music downloads brought in over $1 billion yearly to over 300 different music download services.

The week between this past Christmas and New Year’s saw record sales from legal music sites, due largely to the popularity of MP3 players as stocking stuffers.

A recent E-Commerce Times article cites the music-retail tracking company Nielsen SoundScan reporting 20 million tracks downloaded during the last week of 2005.

This figure more than doubled the 9.5 million-song pinnacle reached the previous week and helped push total downloads for the year to 352 million, a 147 percent increase from 2004.

The article also notes that while digital downloads soared, compact disc sales dropped 7.2 percent from last year, to 620 million sold.

But the increase in digital music sales is still a far cry from the estimated 250 million music tracks traded on peer-to-peer networks each week.

Putting an end to illegal downloads remains a priority for the music industry, which was heartened by its Supreme Court victory against the Grokster file-sharing service last year.

According to the NPD Group, a consumer data tracking company, illegal downloading declined 11 percent after the decision (PDF) was handed down.

Music fans tempted by file-sharing are also still under pressure from the Recording Industry Association of America, which last month announced copyright infringement lawsuits against 751 “music thieves” who distributed content through networks like Kazaa and LimeWire.

A Sony BMG attempt to curb piracy failed spectacularly after it was revealed that the music conglomerate was embedding software in its compact discs that secretly installed digital rights-management programs on the computers of CD buyers.

The company was swamped by lawsuits, and has since ceased the practice.

Despite this, NPD music industry analyst Russ Crupnick told the E-Commerce Times that the strength of the Grokster decision could drive additional victories against music piracy in 2006.

In the same article, however, Mark Mulligan, a research director at the industry analysis firm Jupiter Media, predicted that music pirates will only be pushed further into the Web underground.

In France, legislators are considering an entirely different way of managing copyrights of digital materials.

One proposed option would legalize unlimited downloads, and offset the losses through a consumer tax that would create a fund for compensating copyright holders whose work has been downloaded.

Currently, the French government is advancing a digital copyright bill that would “notably enshrine the right of consumers to make private copies of music and film disks,” but that metes out fines and possible jail time for illegally sharing files for profit.

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Keyphrase search: file sharing
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Keyphrase search: peer to peer
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Keyword search: RIAA
Google News, Yahoo News

“Will Music Subscriptions Replace Per-Song Sales?”
Mac News World, January 12, 2006

“Music Downloads Post Record Week”
E-Commerce Times, January 9, 2006

“Illegal Peer-to-Peer Music File Declines After Supreme Court Grokster Decision / Eleven percent fewer U.S. households downloaded music illegally from P2P services between June and October 2005”
NPD Group, December 14, 2005

“Sony rootkit victims in every state, researcher says”
CNET, January 17, 2006

“U.S. court agrees Sony DRM settlement”
PC Pro, January 13, 2006

“RIAA brings new round of lawsuits against 751 online music thieves”
Recording Industry Association of America, December 15, 2005

“In France, a movement to legalize Web piracy of films and music”
International Herald Tribune, December 23, 2005

“France mulls looser digital copyright laws”
Sydney Morning Herald, January 16, 2006

Research and writing by Jed Herrington and staff.


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