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Music Biz Pushes Piracy Blame To ISPs; Digital Sales Up 40 Percent

By Robert Andrews - Thu 24 Jan 2008 05:10 AM PST

We said in December the music industry would this year start to shift blame for piracy on to ISPs. As of today - and buoyed by recent similar French moves - the business is going after access providers in a big way. ”Copyright theft has been allowed to run rampant on their networks under the guise of technological advancement,” writes John Kennedy, chair of the IFPI global record label umbrella in its 2008 Digital Music report, out today.

“Some estimates say no less than 80 per cent of all internet traffic comprises copyright-infringing files on P2P networks. ISPs have largely stood by, allowing a massive devaluation of copyrighted music. This ... has prompted a crisis in recorded music. There is only one acceptable moment for ISPs to start taking responsibility for protecting content – and that moment is now.”

Kennedy is hoping to piggyback a new French policy that will force ISPs to monitor customers for illegal file sharing - and disconnect them after three strikes. It’s a policy drawn up by the chair of entertainment retailer Fnac (so it’s not without its vested interests). But Kennedy says the “overwhelming principle sets an exciting example internationally”. He called on the European Commission (currently drawing up legislation to create a single European market for digital content) to implement France’s template across the continent.

He’ll find comfort, too, in the court case Belgium’s copyright agency won forcing Tiscali to filter and boot law-breaking users. Belgium and France may have gone this way, but Europe and other individual nations may take a more pro-consumer stance. The other carrot on IFPI’s stick is net neutrality - it’s trying to tell ISPs that P2P “chokes (their) bandwidth”, warning of a collapsing infrastructure.

Stats from the IFPI’s report…

- Piracy: A 20-to-1 ratio of illegal-to-legal downloads is “the biggest challenge for the music business today “. The report cites research suggesting piracy means a loss of $3.7 billion to US labels, that P2P users buy fewer CDs, that over a third of Spanish and Dutch net users now get music illegally via P2P

- Tracks: Legal global track downloads grew 53 percent in 2007 to 1.7 billion (top seller was Avril Lavigne’s Girlfriend with 7.3 million downloads). Individual singles make up 30 percent of the digital music market.
- Albums: Digital album sales grew by over 40 percent, making up 15 percent of the market. In the US, they make up 15 percent of all album sales; in the UK, five percent.
- Income: Record labels made an estimated $2.9 billion from digital sales in 2007, 40 percent increase ($2.1 billion in 2006, $1.1 billion in 2005, $380 million in 2004).
- Proportion: Digital now represents 15 percent of the total music market - up from just two percent in 2004. In the US, it’s 30 percent; in South Korea, 60 percent. Global “digital” sales are split 50/50 between online and mobile.

- Mobile: Full-track downloads’ share of the digital music pie doubled to 13 percent in H1 07, but adoption is slower than online sales thanks to “limited marketing, prohibitive data charges and a lack of consumer-friendly offerings, low penetration of advanced handsets and 3G and slowing growth in the mastertone sector in some markets”. In Japan, however, mobile music is 90 percent of all digital sales.
- Offerings: There are now over six million tracks licensed for digital and the number of retailers has exploded from less than 50 in 2003 to over 500 now.
- Channels: Online sales make up 48 percent of the digital market, mobile 47 percent and subscriptions five percent. The report notes the rise of ad-supported, social network and direct-to-fan sales channels.

Posted in: Entertainment, Music, Information, Metrics, Legal, Technologies/Formats, P2P

Related Research from Alacrastore.com

6 Responses:
  • From klecu Thu 24 Jan 2008 08:07 AM

    This is hilarious. They complain about losing money, when their earnings are up. Now they want ISP’s to take the blame? Oh, this is just too perfect for the MAFIAA. They get the cash, and everyone else does the work. What I find troubling is that ISP’s are going along with this. Who on earth would want that kind of responsibility? When computer gurus find a way around whatever they implement, the ISP’s will take the heat. The only winner here is the MAFIAA.

  • From Tony LaRocca Thu 24 Jan 2008 09:56 AM

    Well of COURSE they’re losing money!  The recording industry desperately wants to cling to the antiquated model of people buying 12 song CDs for $17, rather than individually buying only the songs they want for $1.  As frightening as France’s ruling is, it’s nice to see that there are other countries besides the U.S. whose leaders are in the lobbyist’s pockets.

  • From klecu Thu 24 Jan 2008 10:17 AM

    Yeah, centralized government for the lose.

  • From Oryan Nash Thu 24 Jan 2008 02:00 PM

    ...The problem I have with all this is that for years the music industry was begged for years to do what is right by people. I remember in the 80’s when an album cost about 8 US dollars. Then the price kept creeping up. Until they were close to 12 US dollars. Then Congress started to ask questions about the the rise in price but no difference in product. Then all of a sudden compact disks popped up. Instead of 10 tracks on an album you got any were from 12 to sixteen per disk and the price of music shot up to any were from 12 US dollars to 18 and beyond. The problem with this is.... Yes you got more songs (… to me more didn’t mean better) but the price to produce the CD was dirt cheap to the music industry. Do you think they passed the cost back to the consumer??? No, Why??? Because they had a monopoly. There were no more then five major companies along with there lobbyist in congress making all the rules while we the consumer had no choice but to sit back and watch it all happen. I remember when the customer had a little comfort by the way of going to places that let you trade in your old CD’s for credit towards the price of a new one. There you could buy old and new CD’s alike. As soon a the music industry got wind of it they threaten the store with.... if you (music stores) didn’t stop the practice they (music industry) would stop selling the store new CD’s. That crushed that thought. So if you ask me it been a long time comming for the customer to have a say so in the way they listen and buy music. And don’t give me that crap that we’re hurting the artist when music is cheap or people are sharing it on line. That might be true to a point but it broke my heart to watch TLC go down in the Guinness book of world record as the biggest hip hop group, at that time, of all times just to hear them get up on MTV and said they bearly made a dime off there CD sales. Funny who was crying about hurting the artist then???

  • From Can D Sat 26 Jan 2008 07:00 AM

    A major part of the music industry has become irellevant yet instead of adapting they are going the way of the dinosaurs.

    Famous musicians (Madonna, Avril), who by the way make the main portion of label proceeds, no longer need the labels and they can cut out the middle man and go direct to consumers.  Those that remain are the ones that sell in the range of tens of thousand and are not viable for the labels to live on alone.

    With the wide penetration of the Internet the main choke point labels controlled, namely promotion and distribution are no longer theirs to control.  Whats left is the scouting, management and recording.  With desktop software and private studios even recording is going away.  They need to realize this and act accordingly.

    Attempts at ‘legally’ or otherwise resisting such fundamental changes in the environment will not only add them to the endangered species list but totally wipe them out…

  • From Boyd Martin Sat 09 Feb 2008 01:41 PM

    The key phrase here is “devaluation of copyrighted music.” The sea change in digital downloads is a market correction due to new technology--we’re seeing the true price now.  All the energy spent on whining and sour grape litigation would be so much better spent getting creative and taking advantage of the EXTREME opportunities available now to make LOTS of money. It’s a great case of Not Realizing Where You Are--complaining they can’t fly during a hurricane.

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