On-line file-sharers down 23% - legal threats to blame?

The biggest threat to the industry has come from file sharing services such as KaZaA, which offer consumers the chance to download copyrighted music for free. The RIAA has attempted to close down these services, with some degree of success, but over the course of the last few months the RIAA has taken its fight to reduce music piracy directly to the pirates themselves.

The change in strategy began in April when the RIAA publicised its legal victory over ISP Verizon, in which the ISP was forced to reveal the identities of file sharers using its network. Since then the association has sent out over 1,075 subpoenas, looking to identify particular pirates, and is expected to file the first court actions in September.

The NPD Group, using a system where digital information is collected continuously from the PCs of 40,000 NPD on-line panellists, balanced to represent the on-line population of PC users, has identified a major drop in the number of households acquiring music files since April.

The analysts say that their projection of the number of households acquiring music files reached a high of 14.5 million in April of 2003, but in May that number fell to 12.7 million households and declined again in June to 10.4 million households.

Russ Crupnick, VP of The NPD Group said:

"While we can't say categorically that the RIAA's legal efforts are the sole cause for the reduction in file acquisition, it appears to be more than just a natural seasonal decline. This decrease is sharper than the declines we're seeing in the off-line retail world. In addition, because the initial drop followed well-publicised legal efforts, there's evidence to show that the RIAA's tactics may be having their desired impact on reducing file sharing among consumers."

The Group's NPD Music division also reports that total music files acquired per month dropped from a high of 852 million files in April to 655 million files in June. Conversely, among those consumers who continue to download files, the average number of music files acquired actually increased from 59 in April to 63 in June.

According to Crupnick, "Our data suggests that the RIAA's legal tactics have more of an effect on the attitudes and actions of lighter downloaders."

Crupnick concluded,

"A near-term decline in file acquisition should hearten music industry executives, because the bulk of this activity can be ascribed to illegal P2P sites; however, it will be interesting to see in the future if these numbers turn upward again, as new paid on-line music services begin to break through."