Music industry download report sparks debate

The unit's comments come after IFPI's report said the number of infringing music files on the Internet had dropped relatively slightly -- from 900 million in January 2004 to 870 million in January 2005 -- despite a sharp rise in individuals' access to broadband Internet services. It also said there had been a steep rise in the availability of "legitimate" online music download services.

Music Industry Piracy Investigations (MIPI) boss, Michael Speck -- whose organisation is undertaking a raft of legal actions against parties allegedly involved in music piracy -- said the report "confirms the strength of the legitimate on-line music markets and reinforces why it is important to tackle on-line pirate operations."

"Looking at this report leaves no doubt about what is wrong with operations like Kazaa," Speck said.

The IFPI report said the number of infringing music files distributed solely via peer-to-peer networks worldwide had declined from 800 million in January 2004 to 760 million in 2005 -- a sharp downturn compared to April 2003's peak of one billion music files.

The number of users of Kazaa and related services has also decreased by 900,000 worldwide, from 3.2 million in January 2004 to 2.3 million in January 2005. The report said that the use of P2P services other than Kazaa is increasing, although not necessarily to swap music files.

For instance, the report said that the proportion of files on the eDonkey service that were music files was estimated at 25 percent, compared to an estimated 75 percent on Kazaa.

Consumer awareness regarding music file copyright infringement is high in Europe, the IFPI claimed, with 7 out of 10 users becoming aware that file-sharing without permission from copyright holders is illegal. More people are also buying music online legitimately and more people have expressed their intention to buy legal music online. The report said 31 percent of music downloaders say they are likely to download from a legal service and 55 percent said they will download from a legal source.

However, Australian music analyst Phil Tripp expressed another theory about the drop in illegal music sharing. "The people who have stopped downloading infringing music files might have already finished downloading the songs they want," Tripp said.

He believes that although legal online music downloads will take off in 2005, Australia will still have a rocky time adjusting to it.

"The problem in Australia is that there is less population compared to other countries. Broadband access is not that high and people are still not used to [downloading music online]. It is a very expensive and long process to code songs and put them up for sale online," Tripp said.

He said despite the music industry's wishes, the problem of copyright infringing behaviour was not going to go away anytime soon.

"We all wish that would be the case but the problem is that as long as people can get [music files] for free so easily and, as time goes on, the process is less likely to be detected, it is not going to go down. The more there is enforcement of the law the more hackers are finding ways to circumvent them."

However, Tripp said the fact that people can buy music files securely online that was of high quality at a cheaper price "does encourage people to download legally". "To a great degree the problem of P2P is that you don't know if you are getting the right song or if it's a spoof file, a spyware, a virus or whatever. That's discouraging the illegal downloaders more than the campaigns the music industry is conducting," Tripp said.

However, awareness of legal online music services for downloaders aged 16 to 19 year old had also risen to 49 percent in December 2004, up from 38 percent in December 2003, according to the IFPI report.

The report also said that legal music sites have quadrupled to over 230 in 2004 with over 150 services available in 20 countries in Europe -- over 30 services in the UK, more than 20 in Germany and 10 in France.

The available repertoire has also doubled over 12 months to one million tracks from January 2004 to January 2005. The digital music market, which was worth US$330 million in 2004, is expected to double in 2005. This represents about 1.5 percent of record company revenues.

P2P software provider Sharman Networks declined to comment on the report.

Tripp referred to a report made by a former general counsel for Australian Recording Industry Association (ARIA), Alex Malik, which said that Australian consumers are looking to alternative sources for their music because they are finding that CD stores are offering fewer choices than ever before.

"Australian record companies have reduced the number of their CD, DVD, vinyl and cassette new releases by 43 percent over the past 4 years. While there has been an increase in music DVD releases by record companies since 2001, this increase has not been large enough to make up for the reduction in new release CD albums and singles," Malik said.

He added that the trend of reduced record company releases has been apparent since "well before the introduction of paid digital downloads".

In his report, Malik said consumers have to increasingly turn to other sources for their music. The Australian market has seen a growth in "alternative" sources of music such as the "so-called 'authorised' CD imports, which are available from some larger retailers in Australia on 'indent', CDs purchased on the Internet from CD e-tailers or eBay, and downloads obtained from paid and unauthorised Web sites, located in Australia and overseas".

"While I make no attempt to defend downloads obtained from unauthorised sources, this study does serve to demonstrate that it many circumstances, fans of particular genres of music may well have had no choice but to obtain music through P2P services such as Kazaa and eDonkey, because their musical demands were simply not being met by Australian record companies and retailers," Malik said.

Malik added that there was no reduction of sales in 2003 and there was in fact a substantial increase in sales for the Australian music market. However, Malik said there was an evident reduction of the variety of musical choices with record companies "shoving their priorities down consumers' throats".

"If there is a reduction in CD sales in Australia in the future, ARIA and the record companies will probably continue to blame P2P technology and Internet piracy, rather than their own diminishing new release selections. Record companies fail to understand that while these artists have their fans, not all consumers want to be pushed into purchasing the latest CDs by Casey Donovan and Anthony Callea. For them, there has to be more to life than idol worship," Malik said.