Impact Of Internet Music File Sharing & CD Burning

Internet file-sharing and CD burning have now been confirmed as having a negative impact on the Australian sales of recorded music, according to a ground-breaking study released today by the Australian Record Industry Association (ARIA).

While the industry acknowledges that other legitimate forms of competition (such as DVDs and computer games) are having an impact, the Quantum Market Research study confirms anecdotal evidence of a sharp rise in illegal copying and distribution of music and its impact on the purchasing behaviour of consumers.

File sharing and CD burning results in a loss to the artist who performed the music, the songwriter who originally penned the work, the music company which invested both time and money in bringing the product to market and, of course, the retailer.

"Ultimately the consumer is the loser. With copying rampant there is diminishing motive to invest in music production or risk supporting new talent. File-sharing and CD burning contributes to the slow but steady weakening of the local and international music industry," said ARIA Chief Executive, Stephen Peach.

Quantum Market Research focussed on these two common practices. It found:

  • Around 3.6 million Australians illegally burnt a music CD in the 6 month period prior to the research.
  • Around 3.4 million Australians illegally downloaded music files via file sharing services (1.8 million of these have used file sharing services in the one month period prior to the research).
  • File-sharing and CD burning is sharply higher in the age groups under 25:
    • CD burning: 22% over last six months (general population) vs. 40% (under 25's)
    • File sharing: 11% in last month (general population) vs. 26% (under 25's)
  • Illegitimate channels account for 10.7% of all music acquired by the general population:
    • 31% of all music acquired by those 17 and under; 21% for 18-24's
  • 40% of the general population have at some stage received a burnt CD (69% in the 18-24 age group).
  • Specifically in relation to file sharing:
    • Among file sharers, the average volume downloaded in the last month was 19.6 files (32.4 files in the 18-24 age group)
    • 21% are using a broadband connection (ie. significantly over-represented relative to the general population)
    • Over 50% of file sharers then burn their music files to CD or transfer to MP3 player

More than 80 % of people who received burnt CDs say that they would 'rarely' or 'never' buy a copy of a burnt CD they had received. More than 50 % of file sharers tend not to buy music they have downloaded (ie. 'rarely' or 'never' buy).

Among file sharers, there is a net decrease of 12% in CD purchasing which they identify as being as a direct result of file sharing.

In terms of consumer awareness, two- thirds of the sample group were aware that CD burning/file sharing is illegal, but only 49% of those aged 10-24.

The study showed that 57% of the general population agree that "burning music without paying for it is like stealing" (only 35% of under 25s) while 49% agreed that "downloading music from the internet without permission is like stealing a CD from a record store" (only 33% of under 25s).

"The study confirms that people are increasingly comfortable with accessing music in an online environment. The challenge for the music industry is that a significant amount of music is being accessed through illegitimate channels," said Stephen Peach.

"Levels of CD burning and Internet file sharing are significant in Australia , and having a real impact on sales of legitimate music. The Australian data is consistent with overseas information. However, the very substantial sales decreases being reported in key North American and European markets over recent times provide an indication of how much worse this problem, and its consequences, can become", concluded Mr Peach.

The music industry recognises that its top priority is to reverse the identified trend and to continue to respond positively to the online environment.

While this is an evolving process, key initiatives being pursued internationally and in Australia include:

  • Support and development of legitimate online business models that represent an appealing alternative to consumers (e.g. Apple iTunes).
  • Education of consumers (particularly young consumers) about the risks, wrongs and consequences of file sharing and CD burning. It is encouraging to note that amongst those members of the community over 25, the acquisition of music through illegal channels is not very common and that there is also a much higher awareness of the fact that such behaviour is illegal.
  • Technological strategies and solutions, such as CD copy control technology.
  • Litigation and effective legislation and enforcement activities.

To see the research findings click here (PDF)

16 July 2003

 
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