95% of Music Downloads are Illegal: IFPI

The International Federation of the Phonographic Industry (IFPI) has released its report on Digital Music 2009. According to the report (.PDF). It concludes that despite initiatives by the music industry, 95% of music downloads continue to be illegal.

Yes, the IFPI, or as it's known, the global version of the RIAA, says that 40 billion songs were illegally downloaded in 2008, and the report goes on to state that:

The debate has a huge way to go, but the campaign for ISPs to act as proper partners in helping protect intellectual property is making progress.

Yes, they're talking about "three strikes rules" the E.U., France, and now the RIAA are considering / embracing. Nothing like really, really, bad news to push your initiatives through, after all. They call the system "graduated response," and list the following statistics:

• Seven out of ten (72%) UK music consumers would stop illegally downloading if told to do so by their ISP (Entertainment Media Research, 2008)

• Seven out of ten (74%) French consumers agree internet account disconnection is a better approach than fines and criminal sanctions (IPSOS, France, May 2008)

• Eight out of ten (82%) American teenagers familiar with the law think sanctions for illegal downloading are appropriate; 57 per cent of those unfamiliar with the law agree (KRC US, January 2008)

• 90 per cent of consumers would stop illegally file-sharing after two warnings from their ISP (IPSOS, France, May 2008)

Still, it's hard to believe that 95% figure. The majority of people hardly understand P2P, or want to participate in what many consider immoral as well as illegal, after all. Happily for the industry, though, according to the report,

Music companies’ digital revenues internationally grew by an estimated 25 per cent in 2008 to US$3.7 billion. Digital platforms now account for around 20 per cent of recorded music sales, up from 15 per cent in 2007. The continued growth in digital sales has helped slow down the rate of decline in the overall market for recorded music.

Single track downloads, up 24 per cent in 2008 to 1.4 billion units globally, continue to drive the online market, but digital albums are also growing healthily (up 37%). The top-selling digital single of 2008 was Lil Wayne’s Lollipop.

Pretty impressive growth despite the piracy. Also, unlike the RIAA, the IFPI does not consider every download to be a lost sale. Rather, they consider about 10% of the downloads to be lost sales, meaning that rather than 40 billion songs, only 4 billion song sales were lost, assuming, of course, the IFPI's unsubstantiated numbers are correct.

Here's where what Valve's Jason Holtman said at the Game Business Law summit at SMU's law school last week strikes a chord. He said that "Pirates are underserved customers." And that makes sense: quite a few people pirate games because of overpriced schlock and DRM. The same might apply to music.

After all, the music industry, despite all the cheering from the IFPI, really still doesn't get the digital age. As the study states, the industry (and music retailers like iTunes) is finally, finally getting that people hate DRM. Serve the customers well, with DRM-less music, better pricing, and there'll be less piracy, so the theory goes. We'll see, though hopefully we'll see more independent studies rather than industry-funded ones.

Source: hothardware.com