Illegal File-Sharing is damaging the music industry

4th April 2006

The large bulk of third party research shows that illegal files-sharing is having a significant negative impact on legitimate music sales

IFPI/Jupiter European Survey (November 2005)

• More than one-third of illegal file-sharers (35%) are buying fewer CDs as a result of their downloading, while only 25 per cent of legitimate online music buyers are also cutting back on physical purchases.
  
  
• Just one-in-five online music buyers (22%) are also illegal file-sharers, proving that most file-sharers are not simply "trying before buying" as is sometimes claimed.

IFPI's survey conducted by Jupiter/IPSOS from a sample of 3,929 randomly selected adult internet users in five European countries: Germany, UK, Spain, France, and Sweden. The survey consisted of face-to-face interviews (telephone interviews in Sweden) in November 2005.

TNS World Panel/BPI (March 2006)

• This annual study quantifies the losses to the British music industry from illegal downloading at over £1 billion in three years: 2003 = £289m 2004 = £376m (+30%) 2005 = £414m (+10%)
  
  
• Illegal downloaders reduced album spending by 14 per cent in 2005 - more than twice as much as legal downloaders.

TNS annually investigates the music consumption habits of its 10,000 strong World panel which is a representative sample of the British population on behalf of the BPI.

Forrester (August 2004)

• Just 10 per cent of European consumers who are downloading music on the Internet are paying for this type of content.
  
  
• About half of music downloaders say that this activity has not altered their CD-buying habits, but 36 per cent say they buy fewer CDs and only 10 per cent claim downloading encourages them to buy more music.
  
  
• More than two-thirds of downloaders believe they should be allowed to obtain music for free. Conversely online consumers who do not download are much more concerned about copying CDs and recording artists not being paid for their work.

Forrester interviewed a representative sample of European consumers in August 2004.

Case Study: Mexico - Ipsos/Bisma (October 2005)

• Four million people in Mexico downloaded recorded music via the Internet during 2005. Of these people 2.5 million did not purchase any physical music product.
  
  
• These consumers downloaded more than 615 million songs in 2005. More than nine-in ten (92.3%) were downloaded illegally via p2p networks.
  
  
• The volume of songs downloaded through these file-sharing networks is the equivalent of 85 per cent of the discs sold by all record companies throughout the year.

IPSOS-Bisma undertook research into the Mexican market in October 2005

Academic Research (April 2006)

• Stan Liebowitz of the University of Texas in Dallas (UTD) believes that growth in file-sharing correlates closely to the decline in CD sales, which cannot be accounted for by other factors. Alejandro Zentner concludes that countries with broadband usage have suffered larger drops in music sales. Rob and Waldfogel, from the University of Pennsylvania surveyed college students and found that every four tracks "downloaded [from unauthorized sources] reduced music expenditure by about 10 per cent but possibly much more".

The theses above form part of a forthcoming (April 2006) symposium on file-sharing organised by the academic title the Journal of Law & Economics.