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Music Downloading Demand Dramatically Declines

  |  January 5, 2004   |  Comments

The number of file-swappers dropped by half during 2003, indicating that the music industry's threats to sue carried some muscle.

A study says online music file-swapping has dropped by half over the last six months of 2003, indicating the music industry's legal battle to pursue the identity of file-swappers and sue them appears to be paying off.

The nationwide survey by the Pew Internet & American Life Project shows the percentage of music file downloaders fell to 14 percent (about 18 million users) from 29 percent (about 35 million) when Pew last reported on downloading from a survey conducted during March 12-19 2003 and April 29-May 20 2003. The Pew survey was based on a phone survey of 1,358 Internet users.

Who's Downloading?
March-
May 2003
November-
December 2003
Men 29% 14%
Women 26% 11%
Whites 28% 13%
Blacks 37% 25%
Hispanics 35% 20%
18-29 52% 28%
30-49 27% 13%
50+ 12% 6%
Under $30k/year 38% 22%
Over $75k/year 26% 16%
Broadband users 41% 23%
Source: Pew Internet & American Life Project

The data, complied by comScore Media Metrix, show significant declines in the number of people with peer-to-peer (P2P) file sharing applications running on their computers. For the one-year period from Nov. 2002 to Nov. 2003, Grokster took the biggest hit with a 59 percent decline in people running its P2P software, followed by WinMX (25 percent), KaZaa (15 percent) and BearShare (9 percent).

The results come after the music industry was handed a setback when a federal court ruled it could not force Verizon to reveal the name of a DSL customer that the RIAA suspected of downloading copyrighted songs from peer-to-peer trading sites.

According to the Washington, D.C.-based Pew, steep drops in downloading were recorded by students, broadband users, young adults (18-29 years old) and "Internet veterans." Groups showing the greatest drops on downloading were those with some college education (61 percent), women and parents with children living at home (58 percent each).

"The RIAA has gotten everyone's attention. We have never seen any Internet activity drop like this," Lee Rainie, director of the Pew Internet & American Life Project, told internetnews.com. "But, we don't think this is the end of it. It's still an arms race, the legal situation is still unresolved, the legislative situation is never fully resolved and the market is responding with legal downloading sites."

While Grokster and KaZaa are taking big hits in use, the comScore numbers conversely show a growing number of consumers turning to the new generation of paid online services. In November 2003, 3.2 million Americans visited Napster.com, the former bad boy P2P site that re-launched as a paid online music service in late October. Apple's iTunes, which expanded to serve Windows-based PC users in mid-October, drew 2.7 million such visitors in November.

"Even as the RIAA was suing individuals, a half dozen music services have launched at price points that never used to be," Rainie said.

A year ago, the RIAA won a lawsuit against Verizon, forcing the company's Internet service provider (ISP) division to comply with the RIAA's subpoena request to reveal the identities of customers who allegedly infringed copyrights using P2P file-sharing networks.

The subpoena was issued though a provision of the 1998 Digital Millennium Copyright Act (DMCA) that allows copyright holders to issue subpoenas that have not been reviewed by a judge and requires no notice to, or opportunity to be heard by, the alleged infringer. Unlike a usual subpoena, which requires some underlying claim of a crime, under the DMCA a subpoena can be issued by a court clerk who only checks to make sure the subpoena form is properly filled out.

On the basis of that ruling, the RIAA has issued more than 3,000 subpoena requests to ISPs and filed almost 400 copyright infringement actions. On Dec. 19, 2003, the U.S. Court of Appeals for the District of Columbia struck down the lower court ruling on the issue.

The music industry can still sue copyright infringers, but it must take a more conventional route by filing a "John Doe" subpoena reviewed and signed by a judge with an ISP, which then informs the alleged downloader of the subpoena. The subject of the subpoena has the right to appeal the subpoena without his or her name being revealed.

"Legal copyright holders just have more legal hoops to jump through now," Rainie said.

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