Internet Piracy: The Facts

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The scope of the problem and the effects on the music industry

Internet file-sharing involves 760 million unauthorised music files at any one time (870 million on the internet overall) (source: IFPI Digital Music Report 2005).
US research shows about 75% of all the illegal files are coming from 15% of the people (source: NPD Music, May 2003).
Illegal file-sharing is a major factor in the fall in CD sales, down 22% over five years.
15% of industry sales on average go into developing new artists - higher R&D costs than most industry sectors and on a par with pharmaceuticals.
53% of Internet users believe that firms that own & operate file-sharing networks should be deemed responsible for the pirating of music & movie files. (US internet research project Pew, March 2005).
The value of audio sales is down in the last five years: in Germany 50%, Denmark 43%, Netherlands 35%, Italy 24%, Austria by 30%, Finland by 18% (all local currency).
The value of audio sales in France is down 30% in two years. The UK market has been relatively stable during the past few years with several key factors holding up sales. But the UK is not immune to internet piracy. 18% of the 12-74 year olds; 8 million people downloaded music in 2003. These consumers spent 33% less than non-downloaders.

Third-party research on the impact of file-sharing

Potential losses to the industry from file-sharing was $2.1 billion in 2004 (Informa Media Group, September 2004)
All major surveys say that illegal file-sharing makes people buy less - the latest is Forrester showing 36% of downloaders buy less music as a result (August 2004)
Stan J. Leibowitz - a long-time and respected commentator on digital matters - in his paper File-sharing: Creative Destruction or Just Plain Destruction (November 2004) states: "…the evidence seems compelling that the recent decline in sales can be properly attributed to file-sharing". The paper concludes: "There is strong evidence that the impact of file-sharing has been to bring significant harm to the record industry".

The industry response and its impact on illegal file-sharing

With today's announcement of 963 new actions launched in 11 countries, the total number of cases launched against file-sharing outside the US has reached 1,652. In addition 9,900 cases have been brought to date in the US. This brings the total number of lawsuits to have been launched internationally to 11,552.
Infringing music files on the Internet overall (peer-to-peer and other) are down over 20% between June 2003 and January 2005 (1.1 billion to 870 million)
There has been a drop in 28% of users on the most popular peer-to-peer service (FastTrack, which includes KaZaA) since January 2004, i.e. since before the start of international legal action (3.2 million to 2.3 million concurrent users)
There has been a drop of 45% of users on the most popular peer-to-peer service (KaZaA) since April 2003, i.e. since before all US and international legal action (4.2 million to 2.3 million concurrent users)
KaZaA users are migrating to more niche networks such as eDonkey/eMule, Gnutella (Bearshare), WinMx, OpenNap, BitTorrent and DirectConnect.

Awareness and attitudes towards file-sharing (IFPI data, 2004)

On average 7 out of 10 people in Europe are aware that unauthorised file-swapping is illegal. This is even higher than the corresponding levels of awareness in the US (64%) in December 2003, after three waves of US lawsuits against individuals.
Over 12 million instant messages have been sent outside the US.
More than half the people surveyed in four European countries support the industry's legal actions against major internet infringers.
Litigation has played a critical role internationally in improving the public's awareness that file-swapping is illegal. Awareness of illegality of file-swapping is higher among people who have heard that the industry has taken legal actions against file-swapping services and users (59%). In the US awareness rose from 37% to 64% in one year (from April 2003 to April 2004).
Half of all respondents in four European countries (53%) think that the prospect of legal action by music copyright holders would make illegal file-swappers stop or reduce their activities.