P2P music sharing needs regulation to work

Government legislation and a reliable royalty system must be implemented for peer-to-peer music file sharing networks to work in Asia, say industry watchers.

Music retailers have been moving away from enforcing DRM (digital rights management) restrictions on music downloads, in hopes of giving the industry a shot in the arm.

Along with this, a number of P2P (peer-to-peer) players have recently been looking into offering DRM-free downloads--P2P giant, Napster, last week announced it would open its catalog of six million songs for download at US$0.99 per track; South Korea's Soribada last month obtained government approval to allow subscribers to share unlimited amounts of DRM-free music through its Orgel service.

Some industry watchers ZDNet Asia spoke with expressed hope in the viability of such DRM-free music download services in the region, but not without taking into account the higher levels of piracy in Asia which could possibly dampen such efforts.

John Brand, Hydrasight research director, said in an interview: "File sharing is different in Asia than in other parts of the world," and explained that the greater numbers of physical pirated CDs and DVDs in Asia means far less would see the need to go online to share music.

The paradox of the music industry, noted Brand, is that music publishers want the easy access to music files online to spark listener interest, but hope that that would translate to actual sales of records.

A spokesperson for BayTSP, a company which tracks trading on P2P networks, said: "BayTSP's position has always been that DRM doesn't work. It keeps honest people honest, but pirate groups usually figure out quickly how to strip it from music (or other digital files).

"That being said, online music stores that sell DRM-free music are the ones that we think have the most potential. You still need to do monitoring and enforcement, but at least people who want a legitimate way to purchase and download music now have a way to do it, and in a format that won't become outdated if the DRM provider goes out of business or otherwise decides not to support that format in the future," he said.

Brand believes users are not as concerned about how legal the files are, but rather whether it can be easily obtained and carried. "The key areas continue to be cost, ease of use and portability. Because there’s so much material out there, users want to access a large volume of works, but they literally just don’t have the capacity to pay for it all," said Brand.

A spokesperson for Soribada said the company is currently in talks with several Asian entertainment companies, in addition to global expansion plans.

He added that "proper laws" to regulate P2P sharing will help make the system sustainable in the region, citing the Korean government's strong stance against illegal downloads, which has in part contributed to Soribada's success in the country. Soribada has 15 million registered users--32 percent of South Korea's population, according to the company's Web site.

BayTSP has recently been in talks with companies in China and Japan which are interested in securing their works, according to its spokesperson. "This interest has definitely picked up over the past six to nine months," he added.

Hydrasight's Brand said the downloading industry still has some way to go in establishing a regulated system to return royalties to content owners. "There have been many attempts at enforcing this but a workable global scheme is yet to emerge," he said.