p2pnet.net News Feature:- The extent to which an expertly prepared, and entirely accurate, survey can give a distorted view of reality is demonstrated by a new Ipsos-Insight study.

“On the eve of the Grammy Awards and amid strong holiday season sales of portable MP3 players, heightened advertising of fee-based music services, and the recent launch of a new generation of portable digital music subscription payment methods, American consumers continue to experiment with fee-based online digital music services and download stores in record numbers, according to new research from global marketing research firm Ipsos-Insight,” says the intro to the company’s latest Tempo report.

This glowing lead is enough to make anyone believe not only is there a thriving online music business, but that it’s growing in leaps and bounds. And you can bet your bottom dollar that’s exactly the way the mainstream media will read it.

However, there is no corporate online music business and the vast majority of online music lovers of all ages are staying away from the corporate sites in droves, and the phrases “online digital music services and download stores” and “new generation of portable digital music subscription payment methods” are cues to how thoughts to the contrary might arise.

The record label cartel’s IFPI (International Federation of Phonographic Industries) recently issued a similarly enthusiastic report of its own and in it, said ‘legal’ music sites quadrupled to over 230 in 2004; paid-for downloads were up more than ten-fold to over 200 million; and, consumer attitudes “more favourable” to buying music online.

However, the IFPI notwithstanding, there’s only one online store, to all intents and purposes.

And that’s Apple’s iTunes.

A fart in a thunderstorm
On, “paid-for downloads were up … to over 200 million”. Apple again. And it’s boasting that it’s sales are up to 250, not 200 million.

A “new generation of portable digital music subscription payment methods”? First and One and Only would be more accurate and the quote probably refers to Napster II’s new, and much vaunted, mp3 rental service which will have about as much impact on the corporate music business and online and the music-buying public as a fart in a thunderstorm.

“New findings from TEMPO, the Ipsos-Insight quarterly study of digital music behaviors, reveal that, in December of 2004, nearly half (47%) of American downloaders aged 12 and older had paid a fee to download music or MP3 files off of the Internet.”

That’s a grandly sweeping statement. But it’s doubtful that, “nearly half (47%) of American downloaders” responded to Ipsos-Insight’s questions.

Data for this study were collected between December 9 and 12, 2004, “via a nationally representative US sample of 1,112 respondents aged 12 and over,” says the company, “With a total sample size of 1,112, one can say with 95% certainty that the results are accurate to within +/- 2.94%.”

Can one?

And, “This most recent figure translates into roughly 24 million people within the current U.S. population.”

Interesting trick, that, making 1,112 equal 24,000,000.

It’s estimated that somewhere between 40 million and 61 million people regularly download music in the US, and indisputably, by far the vast majority do so from the p2p networks - not from iTunes.

How do data from 1,112 people stack against 40 million others who’ve given their views unequivocally by avoiding the corporate sites like the plague?

And in case 250 million downloads at $1 a time seems like a lot of money, bear in mind the lion’s share of that $250 mil goes to the members of the Big Four record label cartel; and, that in the meanwhile, every month some one and a quarter billion mp3s are moving around and among computers the world over via the p2pnetworks.

By thieves, you say?

No.

These files are shared for free, not sold. And the people who share them would willingly pay a fair price for their downloads. They just don’t think a dollar for a highly compressed low-fidelity mp3 file worth ten cents, perhaps, amounts to a fair price.

So they do the other thing.

They share.

‘Fiercely competitive’
“Over the past year, the online music market has proved that it is growing into a formidable music distribution channel marked by rapid growth and increasingly dynamic usage levels,” says Matt Kleinschmit, author of the TEMPO study.

Formidable isn’t quite the right word, however. Insignificant might be better.

“While fiercely competitive online music services and download stores undertake high-profile efforts to attract consumers to their respective sites and business models, it is clear from these data that consumers are increasingly experimenting with legitimate online methods of music acquisition,” he goes on.

“Fiercely competitive”: translates into efforts by RealNetworks and Napster II, principally, to snatch a piece of the Apple pie – even a tiny piece. Apple, on the other hand, has already seen the returns for its early investments in Big Music’s mp3s, and that’s because iTunes has always been a loss-leading means to another end – iPod sales, although that’s changing.

And the only reason the efforts are “high-profile” is because the mainstream media regurgitate every utterance from the BigMusic cartel as if it comes from a credible source.

Why do they do that? Significant numbers of the members of the press don’t have much choice. Regular advertising payments to their bosses amount to millions of dollars annually. Say no more.

“The study also found that for the first time an equal proportion of the U.S. population engaged in fee-based downloading and file-sharing (11% of general U.S. population aged 12 and older),” says Ipsos-Insight. “This was driven both by the increase in fee-based downloading (as noted above) and by gradual declines in file-sharing among the U.S. population over the past 24 months (13% in December 2003 and 19% in December 2002; self-reported).”

However, in spite of the music industry’s sue ‘em into buying marketing campaign, file sharing is rising, not declining, as a number of reputable academic studies have shown. And the number of people downloading from the p2p networks isn’t even vaguely proportional to those using the corporate sites.

The ‘evolution of digital music’
America’s Pew Internet & American Life Project recently said the number of people who share music through the p2p networks had increased from an estimated 18 million to 23 million since a November-December, 2003, survey.

And p2p research firm Big Champagne says the average number of US users simultaneously online at any given moment had increased to 5,445,275 in November, 2004, from 3,239,298 in November, 2003.

Globally, for the same period, the numbers were 5,602,384 in 2003 and 7,452,184 in 2004.

“This marks a potential turning point in the evolution of digital music, as the proportion of Americans using file-sharing services and fee-based services has intersected for the first time,” says Kleinschmit, talking about his report findings, which resemble a Big Music PR piece more than an impartial study.

“This is significant both functionally and symbolically, as operators of fee-based digital music websites are finally seeing American downloaders embrace their services, and the broader industry can now see empirical evidence that fee-based online content can survive and even flourish while non-licensed content remains available.”

“This was thought to be impossible only a few years ago - before convenient, flexible and content-laden consumer-focused online music services, a growing population of portable device owners, and continuing enforcement efforts nurtured this nascent marketplace.”

However, the Ipsos-Insight notwithstanding, compared to the millions upon millions of people who use the various p2p applications to get their music fixes, only a tiny number have ‘embraced’ the corporate service(s).

In reality, Big Music and its adherents are a very long way indeed from seeing fee-based services flourishing, and the picture will stay that way until the record label cartel reduces its prices to the extent that iTunes and others of its ilk can offer the Big Music ‘product’ at fair and reasonable, instead of totally rip-off, prices.

But by then, the indies will have gained a share of the market and the labels will be in a position they’ve been dreading for decades: they’ll have to compete in an open market place.

Never happen! - you say?

Tell that to Firefox which has taken on another monopolistic behemoth and is making a distinct impression.

But for now, as Cherry Lane Digital ceo Jim Griffin sums it up, “Only the sound recording companies cling to their pursuit of this notion of control, calling those who do not comply thieves.

“And in doing so they leave billions on the table that should be divided fairly amongst creators and rights holders.”

Jon Newton

Something you think we should know? tips[at]p2pnet.net

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See:-
enthusiastic report - The Digital Music Revolution, p2pnet, January 19, 2005
choice - Don’t ‘piss off’ the labels, p2pnet, June 24, 2003
sue their customers - Silenced by Big Music, p2pnet, February 6, 2005
increased - Scamming the media, p2pnet, August 23, 2004.

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