Net Users Finding P2P Music Alternatives

Napster’s popularity may have been reined in by lawsuits, but the number of users of file-swapping applications other than Napster grew almost 500 percent from March to August of 2001, according to Jupiter Media Metrix.

The number of unique, at-home users of non-Napster file-swapping applications in the United States increased from 1.2 million in March 2001, the first time any alternatives appeared in the Media Metrix audience ratings, to 6.9 million in August 2001. Meanwhile, unique users of the Napster application decreased 49 percent over the same period. Napster had 10.8 million unique users in March 2001 and 5.5 million in August 2001.

“The Media Metrix ratings indicate that a strong fan base still exists for file-swapping services,” said Charles Buchwalter, vice president, media research at Jupiter Media Metrix. “While Napster has been on the decline, users have been flocking to the new alternatives.”

Four file-sharing alternatives, all of which first appeared on the Media Metrix ratings reports in June 2001, have quickly been gaining ground. The top alternative is Morpheus, which had 2.3 million unique users in August 2001, an 186 percent increase from June 2001. Second and third were Kazaa Media Desktop and Winmx, with 1.3 million and 1.2 million users, respectively, in August 2001. They were up 157 and 91 percent from June. Fourth was Aimster with 927,000 users in August 2001, up 74 percent from June.

The new file-sharing programs appear to be embarking on a growth curve similar to the one Napster used in its rise to popularity. Over time, Napster had come close to resembling the overall online population. But the new file-sharing services skew toward a younger audience as well as males — the same audience that first began to use Napster. It should come as little surprise that this was the first demographic to search for alternatives when Napster was brought under control by the recording industry. Collectively, 31 percent of users of the file-sharing alternatives in August 2001 were between 12 and 17 years old; 43 percent were males 18 and over; and 26 percent were females 18 and over. Among the top four alternatives, Aimster had the highest composition of users between 12 and 17 years old (41 percent); Morpheus, with 47 percent, had the highest composition of males 18 and over; and Winmx, with 27 percent, had the highest composition of females 18 and over.

“Word-of-mouth is driving a new round of exponential growth for next-generation file-sharing services, despite fragmented audiences,” said Mark Mooradian, Jupiter vice president and senior analyst. “As the larger alternatives gain scale, the value of their networks will increase in the form of greater breadth and bandwidth of content.”

The Jupiter data shows that the former Napster audience is continuing to search for the ability to swap files in a peer-to-peer setting. But the future of digital music as seen by the major record labels involves two things the potential audience seems determined to avoid: 1) paying for music, and 2) a more centralized system.

According to research by Webnoize, the music subscription services being prepared by the major labels will reach profitability sooner if they take advantage of peer-to-peer distribution.

“P2P is controversial because most Internet media piracy is committed using peer networks. However, P2P may be used to reduce bandwidth costs for media distribution in a system just as secure as one using a centralized network server,” said Webnoize Senior Analyst Matthew Bailey.

A Webnoize report found that online music subscription services could reduce delivery costs by as much as 90 percent by using secure P2P delivery. Digital music providers could securely deliver 3 billion songs per month — Webnoize’s estimate for the number of songs accessed through free file-sharing networks — for $13 million per year. That’s 90 percent less than the $135 million annual cost of using a centralized system.

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