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Jon Horton

Monday, December 19, 2005

Mainstream Media Think

jackson hole blog

by j.r. horton

august 2005

let’s take a look at an industry, music, that is trying to come to terms with the new media world. this is how some corporate folks are trying to identify and come to terms with a world that is simple beyond their comprehension. this report followed the napster/gnutella lawsuits of 2003 but it will give you some idea of the incompetent analysis and response to the new paradigm:

And this guy is in charge of strategy for the mainstream music publishing business

Jay Berman, Chairman & CEO, IFPI

The Music Industry’s Internet Strategy Is Turning The Corner


For everyone working towards the creation of a successful legitimate online music business, the start of 2004 brings a new sense of optimism along with evidence of real change.

Legal online services are spreading quickly across the United States, and are now beginning to take hold firmly in the rest of the world. A picture of healthy competition is emerging in Europe as legitimate services such as iTunes, Napster and Rhapsody, as well as scores of retailers, Internet Service Providers (ISPs) and hundreds of record companies, vie to break into a new online market in the first half of 2004. Availability of legally licensed music online from a multitude of websites in Europe is increasing sharply - growing during the last three months of 2005 alone, from a total catalogue of about 800,000 tracks to nearly 1,500,000 across the various legitimate services.

Public awareness of the legal issues around online music distribution, a crucial part of our industry’s online strategy, is much higher internationally than it was a year ago. Nearly 70% of surveyed respondents in four major European markets are aware that unauthorised file-swapping is illegal. Robust anti-piracy enforcement - including lawsuits against large-scale file-swappers - is increasingly accepted as the right and the obligation of record companies and other copyright holders. Market evidence appears to show that this strategy is working, with the total number of simultaneous illegal music files available on peer-to-peer services falling from an estimated one billion in April 2003 to 800 million in January 2004.

It is already abundantly clear that the music industry’s internet strategy, following the explosion of iPod on the music scene, is now turning the corner, and that in 2005 there will be, for the first time, a substantial migration of consumers from unauthorised free services to the legitimate alternatives that our industry is providing internationally. The purpose of this first such publication produced by IFPI is to raise awareness of the developments in the online music market, and in doing so, help accelerate them. This report focuses on the events that took place in 2003 as well as the prospects for 2005 - but it must not be forgotten that these are only the culmination of the work that the music industry and its partners have been doing since the mid-1990s to prepare a thriving legitimate online music business.

The rapid development during the course of 2003 of a critical mass of legitimate online services, reaching around half a million consumers in Europe by the end of 2003 - a figure that is set to increase sharply in 2004 and go exponential in 2005-6. Yet the results of our survey, released for the first time in this report, indicate a very low level of awareness of the existence of these legitimate services among consumers.

A high level of awareness among consumers internationally that distributing copyrighted music on the internet without permission is illegal. Our survey shows that in a selected number of countries in Europe, 66% of all people were aware of this.

The impact of the industry’s internet anti- piracy awareness strategies. Two factors explain the progress made in this area: the public information campaigns conducted around the world in 2003 and lawsuits against individual large-scale uploaders.

The increasing public acceptance of the industry’s use of litigation as an important option of last resort to fight online piracy. Our survey figures show that 54% of respondents support the strategy of legal action, with 19% yet to make up their minds.

The industry will use litigation internationally where necessary, as it has done in the US.Making copyrighted music available on the internet without permission is illegal in virtually every country of the world. This is not a grey area and people who are breaking the law may have to face the consequences.

The different processes our industry is developing in order to create business modelsfor the online environment. These are often underestimated and misunderstood outside the music industry.

Evidence that illegal file-swapping hurts sales of music. A survey of five major markets shows that 27% of people downloading illegally distributed music bought less music as a result...


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