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ECommerceTimes.com

Music Swapping Moving Away from P2P

By Keith Regan
Mar 25, 2005 1:28 PM PT

The entertainment industry's aggressive legal campaign against illegal file swappers has dramatically reduced the use of peer-to-peer (P2P) networks but might also be pushing the development of alternative "privatized" approaches to sharing music and video.

Music Swapping Moving Away from P2P

The Pew Internet & American Life Project said a recent survey found growing use of informal fire-sharing networks, with people sharing copyrighted music -- some of it bought from online sites such as iTunes -- using means such as e-mail and portable players.

Widespread File Swapping

The findings could have broad implications for the music industry, which has touted the rise of paid sites and the drop of P2P activity as evidence that its controversial legal campaign to sue file-swappers is bearing fruit.

The report says that about 36 million Americans, or 27 percent of U.S. Internet users, download music or video files from the Web and that half of them have found ways to swap their files without using legal sources or P2P networks.

Rather than relying on networks such as Kazaa or Morpheus, which formalize the file-sharing process, people are using other means to share those files, including e-mail, MP3 players, instant messaging and even blogs, the report said.

"The privatization of file-sharing is taking place as the number of Americans using paid online music services is growing and the total number of downloaders is increasing," Mary Madden, the research specialist at Pew who wrote the report, said.

Broad Implications

The report was released as the U.S Supreme Court readies for a hearing on the P2P issue Tuesday in the case of MGM vs. Grokster. The P2P firm Grokster has won several legal rounds at lower levels, with courts finding that it can not be held liable for the sharing of copyrighted material that might take place with its technology.

However, the Pew report seems to suggest that while, by many measures, legal efforts have worked -- almost 30 percent of people in the survey who described themselves as former downloaders of music said they stopped because of fear of being sued -- the nature of digital music makes finding alternatives very appealing.

The new means so far are more cumbersome than P2P networks, Madden notes. For instance, using MP3 players to share tunes requires extensive workarounds to overcome digital rights software limiting how many copies of a legally bought song can be shared. Also, only broadband users can effectively swap large song files of digital video over the Internet.

However, e-mail and instant messaging has emerged as one of the top choices for moving files. That's not surprising, Madden said, given how prevalent use of those tools is and the rapid growth of high-speed Web access. In the survey, 28 percent said they sent or received music or video files via e-mail or IM, meaning about 10 million American adults are currently swapping files that way.

Still Struggling

The development could mean an entirely new set of headaches for the music industry and could impede efforts to get ahead of technology and cultural viewpoints enough to capitalize on what many believe could be a juggernaut of revenue and profit from digital music.

Because music can be downloaded instantly and at little cost to the distributors, it is almost an ideal product to sell digitally. However, the music industry has long been viewed as one of the biggest disappointments in the e-commerce arena.

Still, most record labels resisted the rise of the Internet, analysts say, and as a result have been playing catch-up for several years.

Jupiter Research analyst David Card told the E-Commerce Times that Apple has provided a huge boost to the music industry with the iPod and iTunes Music Store and that others, such as the revamped Napster, are helping to spread the reach of legitimate downloads.

More Challenges Ahead

However, he added, to a certain extent, the industry gave illegal downloading and sharing enough of a head start to give it legitimacy, particularly among younger users. "The industry has tried its best to defend its intellectual property and make it less appealing to download, but it's not clear it's changed everyone's attitudes," Card said.

The Pew report suggests that even with P2P usage on the decline and legitimate music purchases on the upswing, the industry might still have its work cut out for it in order to become e-commerce savvy.

Time is of the essence as well, because the industry already finds itself trying to answer the next challenge -- how to capitalize on the rise of wireless devices such as smartphones that have the capability to download music directly from the wireless Web.


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