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Last Updated: Thursday, 4 March, 2004, 13:15 GMT
Online piracy 'devastates' music
By Peter Feuilherade
BBC Monitoring

Music CDs
RIAA says music sales have fallen by a third in three years
The impact of online piracy on the US music business has been "devastating", says the head of the Recording Industry Association of America, Cary Sherman.

He told a conference in London that a 31% decline in music sales between 1999 and 2002 was primarily due to piracy.

"More music is being consumed than at any time in history, it's just that less of it is being paid for," he said.

The industry is fighting back by licensing download services and taking legal action against music pirates.

The RIAA is also backing a large-scale "educational campaign" including public service adverts and targeting the university student market, a major area of piracy.

Mr Sherman was speaking at this week's Financial Times New Media and Broadcasting Conference in London.

Film file-sharing

Escalating online sales in the US suggest that lawsuits targeting pirates are having an impact on peer-to-peer file-sharing of copyrighted material.

Although legitimate online sales are up sharply, they still represent only a fraction of what is being exchanged via the net.

Rob Sisco, president of Nielsen Music, said lawsuits by the RIAA have rekindled sales, not by striking fear in music pirates but by educating users.

The US film industry is also threatened by rampant internet piracy.

This has been made worse by the increased availability of broadband and the imminent removal of technical barriers to moving and storing massive amounts of content, said Dara MacGreevy of the Motion Picture Association of America.

In 2003, Hollywood lost $3.5bn from hard goods piracy alone, while internet piracy losses are harder to quantify, he added.

But despite piracy fears, analysts believe the future of the music industry lies in online digital downloads.

Since the files can be easily transported and stored on a range of devices, they have transformed the way people consume music.

Chris Gorog, head of the Napster music download service, believes ventures like his will be highly profitable in the long-term.

He told the FT conference of his plans to expand from the US into Europe this year, with the UK as the first entry point.

By 2008, one-third of music sales in the US and nearly 20% in Europe will come in the form of downloads and streaming music over the internet, building a multi-billion dollar business, according to a recent study by consultancy Forrester Research.

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