Piracy 'brings £200m to music industry'

Monday, November 2 2009,

Illegal file-sharing brings £200m in additional revenue to the music industry every year, according to research by leading think tank Demos.

Business secretary Lord Mandelson confirmed last week that the net services of persistent illegal file-sharers will be blocked from summer 2011.

The "three strikes" approach will involve staggered warning letters being issued to offenders followed by the suspension of their connection if they continue to engage in illegal file-sharing.

However, a poll conducted by Ipsos MediaCT for Demos found that use of peer-to-peer file-sharing sites does not necessarily diminish the popularity of legal download services.

In the survey of 1,008 online adults aged 16 to 50, 83% of people who admitted to regularly downloading music illegally said that they purchased the same amount or more material from legal sites.

A further 42% of respondents said that they used illegal download sites in a "try before you buy" capacity, which suggests that the popularity of file-sharing could be harnessed to improve legal sales.

On average, regular illegal file-sharers spent £77 per month downloading music tracks from legal sites, which is around £30 more than the people who claimed never to use illegal sites.

Demos therefore estimated that illegal downloaders provide the digital music industry with £200m in extra revenue per year.

The organisation further found that two thirds of users would stop accessing pirated material if viable and affordable legal alternatives were available to them.

Around half the survey sample called on the government to focus on fostering the growth of legal websites for accessing music. If providers were to reduce the average price of downloading a legal track to 45p, Demos believes that sales would double as a result.

When asked about punishments for illegal file-sharing, 61% of users would stop accessing illicit sites if they were faced with a fine, and 23% would cease the activity following the disapproval of friends and family.

Among the people who claimed not to use illegal music download services, only a third backed the government's plan to cut off persistent offenders.

"This research demonstrates that cutting file sharers off may not be the best solution for the government if they are intent on helping the music industry," said Demos digital rights and consumer trends researcher Peter Bradwell.

"Politicians and music companies need to wake up to the changing nature of music consumption and embrace the demand for new business models that offer lower prices and easier access to music."