[Air-l] Internet file sharing boosts music sales

[Randy Kluver]

Here is an interesting report from Reuters which undercuts many of the
intellectual property arguments related to online file sharing...
Internet File-sharing Boosts Music Sales, Report Says 

May 03, 2002 16:20:35 (ET)

WASHINGTON, May 3 (Reuters) - Internet users who download songs for free
from unauthorized "peer to peer" services are more likely to increase their
music purchases than regular Internet users, according to a report released
on Friday. 
While file-sharing services like Kazaa and Morpheus enable anyone with an
Internet connection to access a huge library of music for free, experienced
file sharers are more likely to actually increase the amount of money they
spend on CDs, the report by research firm Jupiter Media Metrix said. 
Thirty four percent of all peer-to-peer users said they spent more money on
music than before they used such services, the report said, while 15 percent
said they spent less. One-half said the amount of money they spent remained
the same. 
Online music fans who did not use file-sharing services were less likely to
report increased spending. Nineteen percent said they spent more money on
music, while 10 percent said they spent less and 71 percent said they spent
the same amount. 
Other technologies, such as recordable CD drives and high-speed Internet
connections, had no impact on consumer spending, the report said. 
Music companies say Internet piracy is partially responsible for a 5 percent
drop in sales last year, and the industry has aggressively pursued
file-sharing companies in court. Napster, the first such service, has been
offline since last July as it struggles with a court order to keep
copyrighted music off its system. 
But the survey suggests that file sharing could provide a boost to the
industry, said report author Aram Sinnreich. 
"The Internet is the greatest thing that ever happened to the music
industry, and they're just missing out on cashing in on it," Sinnreich told
Reuters. 
Peer-to-peer users tend to be avid music fans who already spend more money
than average on music. Rather than shutting down peer-to-peer services,
music companies should cultivate these fans, Sinnreich said. 
The five major recording companies -- Sony Music ((6758.T)), Warner Music
(AOL </cgi-bin/gx.cgi/AppLogic+ResearchStock?cmenu=DetQ&prod=AOL:US:EQ>
,Trade </cgi-bin/gx.cgi/AppLogic+OrderForm?Symbol=AOL> ), EMI Group Plc
((EMI.L)), Vivendi Universal ((EAUG.PA)), and BMG ((BTGGga.D)) - have
introduced file sharing services of their own that, for a fee, allow users
limited access to portions of their catalogs. So far, the services have met
with limited success. 
Some companies have turned to copy-protected CDs, which cannot be played on
computers and some other devices. Universal is currently considering whether
to release best-selling rap artist Eminem's new release in copy-protected
form. 
The report was based on a June 2001 survey of 1,911 online music fans, 305
of whom were experienced peer-to-peer users. 
(c) Copyright 2001 Reuters. Click Here for Limitations and Restrictions on
Use. <JavaScript:etWin('/e/t/applogic/Attribution?gxml=ReutersDisc.html',
'Attribution','','','','','','','','','')>  


Randy Kluver
Information and Communication Management
FASS 3, #04-16
National University of Singapore
Singapore, 117570
(65) 874-8755, fax (65) 779-4911

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