File-swapping to cause music industry 'major crisis' - report

Posted on 29 Nov 2005 at 11:32

The music industry may face a major crisis unless it can persuade the current generation of 15 to 24 year olds to stop swapping music and start buying it.

This is the conclusion of a report issued by Jupiter Research which found that file sharers outnumber paid-for downloaders by three-to-one and that a third of all 15 to 24 year olds admit to sharing music files.

'The digital youth of today are being brought up on a near limitless diet of free and disposable music from file-sharing networks,' said Jupiter's Mark Mulligan.

'Unless the music industry can transition these consumers whilst they are young away from free consumption to paid music formats, be they digital or CDs, they may never develop music purchasing behaviour and the recording industry could suffer long-term harm.'

The UK record industry's main trade body, the BPI, has tried a two-pronged approach to tackling sharing, combining lawsuits against alleged large-scale uploaders with a programme of education and PR that aims to persuade sharers or potential sharers of the detrimental effect that it will have on the industry and its ability to invest in new artists.

'The unauthorised distribution of music over the Internet is against the law. It infringes the legal rights of artists and record companies. And it's bad for music,' said BPI chairman Peter Jamieson. 'The British record industry which is responsible for the lion's share of the UK's investment in new artists - easily in the tens of millions of pounds per year - cannot possibly hope to continue investing in new music if nobody pays for it.'

The BPI, as well as similar organisations such as the IFPI and RIAA, insists that file sharing has a detrimental effect on CD sales, pointing to the fact that in recent years sales growth has stagnated and points to several reports that present compelling evidence.

Cambridge PhD student (and digital rights campaigner) Rufus Pollock has looked at several studies and reached a similar conclusion.

'An explosion in research (mainly dependent on access to proprietary data) as a result of public interest in these issues means that we are now in a position to provide answers with some degree of certainty,' he writes. 'The basic result is that online illegal file-sharing does have a negative impact on traditional sales.'

However he says that the effect is uneven. According to a study Harvard University in the US, only the top-selling 25 per cent of artists suffer sales shortfalls as a result of sharing. The other 75 per cent benefit. The upshot is that both Madonna and Artic Monkeys can have number one records.

According to Jupiter's Mulligan, it is time for the record industry to embrace this.

'It involves treating the internet like the radio. You give away free music on the understanding it will increase music sales,' he said.

The BPI was unavailable to comment.

Author: Simon Aughton