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To Fileshare or Not To Fileshare, That Is The Question

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...new data from Forrester Research indicates that online music downloads are not responsible for the drop in global music sales, but that they could be the solution to the music industry's problems.
The implications of P2P technology, or file sharing, are nothing short of profound. At any given time on the Net, there are literally millions of people file sharing simultaneously. One out of five Net users regularly file shares. And that's with the threat of lawsuits.

Not surprisingly, young people are in the majority when it comes to downloading music from these P2P sites such as Kazaa, Morpheus, and Audio Galaxy. In fact, over 250 million people have downloaded the Kazaa Media Desktop software in the past two years.

And, in the past year, approximately two-thirds of 12-24 year olds on the Net have downloaded MP3 files from an online file-sharing service.

New research from the Yankee Group indicates that consumers will continue to flock to unlicensed file sharing services because of their unlimited content and zero cost. In 2001, US Consumers downloaded 5.16 billion audio files in the US via unlicensed file-sharing services and the Yankee Group suggest that by 2005 this figure will have grown to 7.44 billion. And because these files are free, that figure will continue to grow, even with the RIAA threatening to either take users to court, or attach virus' to files that have the potential to wipe out users' hard drives.

While P2P File Sharing has been blamed for a decline in music sales worldwide, most file sharers claim that their CD purchases have stayed the same or even increased since they began downloading music from the Net.

And new data from Forrester Research indicates that online music downloads are not responsible for the drop in global music sales, but that they could be the solution to the music industry's problems. Forrester surveyed 1,000 online consumers and found no evidence of decreased CD buying among frequent digital music consumers.

Forrester's research also indicates that the 15 percent drop in music sales in the past two years can be attributed to a number of causes. "We see no evidence of decreased CD buying among frequent digital music consumers," said Josh Bernoff, principal analyst at Forrester.

"Plenty of other causes are viable, including the economic recession and competition from surging video game and DVD sales. But labels will soon discover that there are several simple ways of satisfying today's sophisticated digital music consumers."

Music Bill of Rights

What Mr. Bernoff and other forward thinking activists have proposed is, in essence, a digital music bill of rights.

"First, consumers will demand their right to find music from any label, not just two or three," Bernoff believes. "Second, they want the right to control their music by burning it onto CDs or copying it onto an MP3 player. Finally, consumers will demand the right to pay by the song or album, not just via the subscription services now offered by Pressplay, MusicNet, FullAudio, and EMusic," added Bernoff. "We call this set of features - which any paid music service must meet to satisfy customers - the Music Bill Of Rights."

This writer foresees the following scenario in the Digital Music Revolution: In the next two or three years, labels will struggle to deliver on the promise of digital music, but their services will fall short because they fail to match the Music Bill of Rights. But by 2005 or 2006, the major labels will endorse a standard download contract that supports burning and a greater range of devices.

Downloading will start to soar in 2006 as finding content becomes effortless and impulse buys, trouble-free. Labels will make content available on equal terms to all distributors, while online retailers will become hubs for downloading.

By 2008, the new business model could generate as much as $2.1 billion, or roughly 20 percent of the music business. Big hits by icons old and new will spark traffic, as people download music directly to their cell phones, portable players, or PCs. As a result of the growth potential, artists will embrace the Net and sign downloading rights over to their labels - or see sales suffer.

But that's tomorrow.

As for today, the question is, why haven't independent musicians utilized P2P as a marketing tool? Perhaps because they haven't considered the possibility.

Obviously there is a window of opportunity here. In the next few years independent, forward-thinking musicians can take full advantage of this once in a lifetime opportunity to begin building an audience.

Next time, some suggestions for using filesharing to market your music.


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