Could Pay-for-Play Replace Peer-to-Peer?

The battle between the music industry and online file-swappers may not be resolved any time soon as an Ipsos-Reid study reveals that 27 percent of current downloaders would begrudgingly pay for the music if free options such as peer-to-peer and Internet radio are not available.

Of the 27 percent that would agree to pay for music, 19 percent preferred a pay-per-download system and 8 percent prefer a subscription service. Ipsos-Reid’s report, based on data from 690 U.S. music downloaders aged 12 and over in the summer of 2002, found that when the peer-to-peer option is removed from the scenario, 38 percent would choose pay-per-download and 14 percent would choose the subscription model.

“This clearly demonstrates that while fee-based online music services (and pay-per-download models in particular) can certainly lure some downloaders into paying in the current market context, these services could truly flourish if the presence of peer-to-peer websites were eliminated or greatly diminished in the market,” said Matt Kleinschmit, senior research manager for Ipsos-Reid and the TEMPO research program. “And a low-cost pay-per-download service that offers a robust music catalog and file ownership will be well positioned for this market scenario.”

With projections from Jupiter Research (a unit of this site’s corporate parent) that nearly one-third of total music sales will occur online by 2007, the pay-per-download model could represent huge profits for the recording industry. Jupiter expects that after initial beta testing, digital subscription services will become increasingly robust in late 2003 and will successfully attract and retain paying subscribers.

A survey of 952 U.S. participants aged 12 and over in May 2002 by Edison Media Research examined some of the issues surrounding downloading and the file-swappers’ resistance to paying. More than half (52 percent) said they had no moral issues about downloading music for free from the Internet, however 51 percent said music download sites should be allowed to operate only if record labels are compensated.

Strong appeals from popular recording artists are underway, hoping to divert downloaders away from free music sites over to paid sites. Music Unitedthe organization that is spearheading the movement, cites the illegalities to downloading and uses popular singers such as Madonna, Britney Spears, Eminem, Missy Elliot, and Stevie Wonder to make the case against free music. The site also includes instructions on how to disable file-sharing from personal computers.

Other findings from Edison on the free vs.pay issue include:

  • 53 percent of the surveyed teens said they burned someone else’s copy of the CD instead of buying, while only 18 percent of 35 to 44 year olds reportedly burned rather than bought.
  • 62 percent said they bought an artist’s CD after sampling a free track from the Internet, with teens just as likely as older respondents to do so.
  • Only 4 out of 942 respondents said they downloaded music from label-endorsed services, such as MusicNet and Pressplay, with 316 respondents using KaZaA and non-endorsed sites.

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