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

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

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We told you 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 London-based 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.

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By Robert Andrews