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Wednesday, August 28, 2002
Music biz blames pirates

The Recording Industry Assn. of America (RIAA ( news - web sites)) fired off a fresh round of statistics Monday in its campaign to prove that digital piracy is to blame for the huge slump in music sales over the past year. Biz reps say they may get even tougher on policing pirates, and won't rule out going after individuals who transfer or download illegally.

The major-label trade organization said unit shipments of music were down more than 10% in the first six months of 2002, compared to the same period a year earlier. The dollar value of those shipments slipped just under 7% to $5.5 billion.

At the same time, the RIAA released details of a study linking usage of online music-downloading networks like Kazaa and Morpheus with decreased record buying. RIAA-commissioned pollster Peter Hart Associates found that 41% of users whose file-swapping activity has increased over the past year said they are buying less music, compared to just 22% of those with decreased usage.

"The disinclination to buy would clearly seem to be greatest to those who have increased their downloading," said Peter Hart official Geoff Garin. "That casts a lot of doubts on any assertion that there is a positive correlation between downloading tracks and buying more music."

Garin conceded, however, that the study looked at only "wired" users -- those connected to the Internet with at least a dial-up connection. Data on the music-buying habits of non Web-users won't be compiled until the fall, he said.

Also on the plate at Monday's stat buffet were numbers cataloging a dramatic increase in siezures of counterfeit material by the RIAA. The group said pirate CD seizures were up more than 170% as of mid-year, while captured stashes of illicit recordable CD-Rs were up 66%.

The industry's barrage of piracy data seemed squarely aimed at discrediting competing studies, including one released earlier this summer by Jupiter Media Metrix, which indicated that heavy file-swapping users are actually more likely to buy more music as a result of their online activities.

But the RIAA may have another motive in mind as well, said P.J. McNealy, director or research for the tech consultancy GartnerG2.

"This announcement really sets up the second half of the year for the RIAA to ask Congress for more help fighting piracy," McNealy said.

He cited a bill recently introduced by California Congressman Howard Berman (D-Mission Hills), which would give the major labels a broad mandate to combat the peer-to-peer networks through technological means. The measure was hailed as a crucial step forward by the RIAA, but has raised the hackles of privacy advocates.

The RIAA may also be looking to build its case for another controversial anti-piracy measure - filing suit against the actual users of file-swapping networks. The group recently took Internet service provider Verizon to court to get names of high-traffic P2P users, and an RIAA spokesman said Monday that "nothing's off the table at this point" in the anti-piracy fight.

Leading the downturn in music shipment numbers by market segment were CD singles, which tumbled more than 80% to just 2.2 million units in the first half of 2002. Some music insiders have argued that singles are the first to suffer from digital piracy, since they are far easier to download than full albums.

Shipments of the industry's flagship product, full-length CD albums, fell 7.2% on a unit basis to 369 million. The dollar value of those shipments sank 5.1% to $5.2 billion. The shipment data differs from actual sales at retail; the numbers can change based on returned merchandise and other factors.

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