Music Execs: Downloads, Lawsuits to Propel Recovery
Thu Jan 22, 6:20 AM ET
By Bernhard Warner, European Internet Correspondent
LONDON (Reuters) - A music industry trade organization said on Thursday new online download services are winning over customers, and warned a globe-spanning legal crackdown on file-sharers is imminent.
On Thursday, the International Federation of the Phonographic Industry (IFPI) released a progress report on its year-old campaign to develop and promote online music stores and spread its message that online song-swapping is illegal.
In a rare upbeat statement, the IFPI said its initiative is building a vibrant, albeit small, market for selling music downloads that appears to be stealing momentum from peer-to-peer networks such as Kazaa and WinMX where all varieties of music are available for free.
"We believe that the music industry's Internet strategy is now turning the corner, and that in 2004 there will be, for the first time, a substantial migration of consumers from unauthorized free services to legitimate alternatives," said Jay Berman, IFPI's CEO.
"The start of 2004 brings a new sense of optimism along with evidence of real change," Berman said in a statement.
The IFPI, which represents a host of independent and major music labels including EMI, Warner Music, Bertelsmann's BMG, Sony Music and Universal Music, also said it would get tough with prolific song-swappers this year.
"It is likely that there will be lawsuits against major Internet distributors internationally in 2004, similar to those filed in the U.S.," the IFPI said in its report.
FOLLOWING THE U.S. EXAMPLE
European music industry executives have been warning for weeks they will follow in the controversial footsteps of the United States where a legal clampdown on file-sharers has resulted in hundreds of lawsuits.
The crackdown could intensify in Canada and Asia too, industry officials said.
The industry blames file-sharing networks for contributing mightily to a three-year decline in music sales. Citing a variety of independent and industry-backed studies, it says the lawsuits do serve as an effective deterrent to file-sharing.
The IFPI said its own probe of file-sharing networks revealed the availability of unauthorized music files on the services dropped from one billion in April 2003 to 800 million this month.
Industry reports offer contradicting evidence that the file-sharing phenomenon is tailing off, however.
It is believed music executives will invest more money in the development of online music stores before they round up the lawyers. In Europe alone, some 50 new industry-backed download stores are expected to launch this year, bringing the continental total to over 80.
Berman said he expects that the most popular online music store, Apple Computer's iTunes, along with Roxio's and Real Network's Rhapsody will make their European debut in the first half of the year.
Industry officials told Reuters recently that in 2003 American music fans purchased 30 million downloads while Europeans bought three million from industry-sanctioned sites.
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