Pirates broadsided

RIAA legal tactics scaring off file-sharers

The RIAA’s aggressive legal efforts to curtail online digital music piracy may actually be working, according to new survey data.

According to market researcher the NPD group, online music file downloading saw a steep decline after the RIAA’s well-publicized legal threats against individual users began earlier this month.

NPD reckons the number of households acquiring music files reached a high of 14.5 million in April 2003, with the number falling in May to 12.7 million and declining again to 10.4 million households in June. In late April, the RIAA warned that individual users cannot count on their Internet service provider to protect them from accountability for illegal file-sharing.

Threats of expensive lawsuits evidently gave the recording industry lobby group’s anti-piracy efforts some teeth in May. Subsequent reports of more than 1,000 subpoenas from record companies and teenagers facing hefty settlement fees may have given pause to some light users.

Some, however, insist that legal intimidation is unlikely to faze die-hard dorm-room entrepreneurs.

Piracy’s bounty: $4.6 bil

According to the IFPI, the global pirate music market amounted to some $4.6 billion in 2002, excluding CDs burned by consumers. Investment bank Bear Stearns estimates the actual dollar figure of the pirated market, including downloaded files, to be $9 billion-$14 billion annually.

“While we can’t say categorically that the RIAA’s legal efforts are the sole cause for the reduction in file acquisition, it appears to be more than just a natural seasonal decline,” said NPD veep Russ Crupnick. He added that the decrease is sharper than the declines noted in the offline retail world.

An RIAA spokesman said that while the research was an encouraging sign, the real test of the org’s legal strategy will be the long-term success of legal online music companies such as iTunes.com.

“That’s what this enforcement is all about,” the spokesman said.

Campaign’s blowback

Although the legal action appears to be producing results for the RIAA, their hard-charging tactics have a downside. Sen. Norm Coleman (R-Minn.) is investigating whether the RIAA’s subpoena campaign has gone too far, targeting unwary consumers in the process. In the past two weeks, the RIAA was forced to hand over the subpoenas to Coleman’s investigation subcommittee and answer for their actions. More Senate hearings probing the issue are set for the fall.

NPD’s MusicWatch Digital reports that total music files acquired per month dropped from a high of 852 million files in April to 655 million files in June. Conversely, among those consumers who continue to download files, the average number of music files acquired actually increased from 59 in April to 63 in June.

NPD MusicWatch Digital survey is collected and compiled continuously from the PCs of 40,000 online panelists.

(Susan Crabtree in Washington, D.C. contributed to this report.)