zyvex used our newssubmit to tell us that the music industry's attempts to replace Napster and other 'pirate' services with legitimate music downloads have failed, according to a new report.
At the same time, some eight billion tracks were exchanged by users of pirate sites offering free music downloads - and up to 2.7m people at any one time are logged on to them.
The report is based on interviews with more than 50 US and UK record company executives, online retailers and digital service providers.
The music "majors" - the five companies who dominate much of the industry - have invested heavily in two online services, MusicNet and Pressplay, to head off the threat from free services, of which Napster was the best known.
Napster was effectively shut down by legal action in 2001, and MusicNet and Pressplay have since launched limited services. But the report says that a host of sophisticated peer-to-peer file swapping services, such as Gnutella, Morpheus and Aimster, have emerged to take Napster's place.
Impact
The report claims the impact of these file-swapping services has already been felt in conventional music sales.
The report estimates that 5% of CD sales were lost to digital piracy in 2001 - a figure which could rise to 10% in 2002. The effect is also seen in the rapid, international exchange of pre-release copies of new singles. The report estimates more than 200,000 copies of Britney Spears' single I'm A Slave For You were downloaded before the record's official release in October 2001.
The OC&C report concludes: "Labels will have to accept lower priced and lower margin models for digital sales in order to compete effectively with pirate services."
Wow what a surprise Read the full story here.
Source: BBC News
