p2p news / p2pnet: After years of wrongly blaming file sharers instead of bad business practices for downturns in record sales, the corporate music industry is finally admitting the existence of "tougher competition from other categories of consumer goods," says the Associated Press.

"Twenty years ago there were no mobile phones, no DVDs, no computer games to speak of," EMI boss Eric Nicoli said at the MidemNet Music & Technology conference in Cannes, France. "In categories that did exist, like magazines, cosmetics and designer clothes, we’ve seen a massive explosion of choice and accessibility to consumers.

"So no surprise, then, that music sales have come under pressure."

Apple also got it in the neck for insisting on keeping the cost of its downloads, infected with DRM and playable only on Apple gear, at $1 and up, depending on sales location, for each track, says AP.

The members of the Big Four record label cartel, EMI, Vivendi Universal, Sony BMG and Warner Music, wholesale each identical, low quality digital music files from very limited catalogues to the same customers for between 65 and 80 cents, forcing the likes of Apple’s iTunes to in turn charge $1 cents on average.

They now want variable pricing with around $1.50 at the top end. But Apple, for whom iTunes has never been more than a self-funding promotional and sales vehicle for iPod, wants to keep the price at $1 per.

"Apple’s iTunes accounts for about 70 percent of U.S. and British online music sales and has significant shares of its 19 other markets," says AP. "Its popularity is widely credited with halting the growth of piracy, but record companies complain that this has come at the price of a loss of control over their own pricing and marketing."

‘Halting the growth of piracy’
For "piracy" read p2p file sharing, which would be more correctly interpreted as widespread consumer resistance to consistently low product quality and extreme over-pricing on the part of the corporate music industry.

Nor is Apple in any way a factor in "halting the growth of piracy". To the contrary, the practice of file sharing is going up.

In America in December, 2005, on average, 6,978,715 people were simultaneously logged onto the p2p networks at any given time, says p2p research firm BigChampagne, which produces statistics centering on the file sharing phenomenon.

In 2004, the number was 5,500,314 and in 2003, 3,239,298, says the firm, which compiled statistics for the Organization for Economic Co-operation and Development Information Technology Outlook report for 2004.

Globally, in December, 2003, 5,602,384 people were logged onto the p2p nets at the same time at any point around the clock, in 2004 the number had swelled to 7,582,248 and in December, 2005, it was 9,554,298.

Moreover, prices charged by iTunes and the handful of other corporate music services, which are struggling, and failing, to compete with independent services and musician sites, are among the primary reasons for the existence of file sharing in the first place.

"Some analysts see other reasons for the industry’s current woes," the story says, quoting a US market research analyst as saying, "Executives have focused so much of their attention on piracy that they’ve diverted their efforts from developing new talent."

‘A robust 6 percent’
Also speaking at Cannes was IFPI boss John Kennedy, who says file sharing is either being contained, or going down, despite reports which say the opposite, including a recent study from the cartel-friendly Hong Kong Intellectual Property Department (HHIPD) whose 2005 survey admits the number of local file-sharers has almost doubled from 3.5% in 2004 to 6.8%.

Kennedy said he didn’t expect a turnaround in sales this year, "in part because of the effect of billions of songs traded freely each month over unlicensed file-sharing networks on the Internet," says the Herald Tribune. "But he insisted that online transactions, which accounted for a robust 6 percent of the recording industry’s sales in 2005, up from virtually nothing two years ago, would lead to a ‘bigger pie’ by 2007.”

In its latest report, the IFPI (International Federation of the Phonographic Industries) boasts, "Music fans downloaded 420 million single tracks from the internet last year". And, "legitimate digital music business is steadily pushing back on digital piracy," declares Kennedy, contradicting his other statements that "Illegal activity on peer-to-peer networks has stayed static in the last year".

"Even Kennedy conceded that the digital market still needs coddling, with only about 15 percent of Internet users ever having bought music online – even though there are now at least 10 different [corporate] ways of acquiring digital music, from buying ring tones on a cellphone to downloading music videos from the Web," says the Herald Tribune.

‘Pricing is an especially sensitive topic’
"While Americans may be conditioned to expect a single song for their dollar, Gabriel Levy, head of music for RealNetworks Europe, argued that Europeans are already seeing price elasticity," it states.

Actually, Americans are "conditioned" to expect no such thing, as the BigChampagne figures prove.

Moreover, while the IFPI boasts that 420 million single tracks were sold by ’services’ supported and supplied by the Big Four, in September, 2005, alone, the average number of files available on the p2p networks for download at any given moment (average simultaneous files) was close to three billion, p2p research company Big Champagne told p2pnet.

Meanwhile, "Pricing is an especially sensitive topic these days," the Herald Tribune says.

"The New York State attorney general is reportedly investigating whether the four record companies that dominate the industry have violated antitrust laws in the pricing of songs that are sold by Internet music services.

"And the European Commission has looked into Apple’s pricing in Britain, where it charges 79 pence, or $1.40, per track, compared with 99 euro cents, or $1.20, in France and Germany. Britons are also barred from downloading songs from the Continental music sites."

Meanwhile, despite Kennedy’s claims that file sharing is being "contained" or "pushed back," in France, Spain and Sweden, there are more than twice as many music downloaders using file-sharing networks as those paying for their digital tracks," observes the Herald Trbune.

And, "In Sweden, in fact, music piracy has turned into such a populist cause that a political party formed this year aims for laws to support so-called peer-to-peer networks."

This last refers to the Piratpartiet, or Pirate Party, which says its members are tired of being called criminals and terrorists for sharing files for no financial gain or loss to anyone, and that it’s against seeing the developing world starve because the developed world refuses to share its intellectual property.

Stay tuned.

Also See:
Associated Press – Music sales resumed decline in 2005, January 22, 2006
going down – File sharing rises in Hong Kong, January 22, 2006
Herald Tribune – Music business finds little to sing about, January 23, 2006
420 million – IFPI file sharing report, January 19, 2006
Pirate Party – Sweden’s new Pirate Party, January 4, 2006

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