Illegal file-sharing of music is being kept in check while the number of legal tracks downloaded internationally tripled to 180 million in the first half of 2005, new figures released by the international recording industry show today.

The IFPI figures indicate that the surge in broadband use globally is benefiting the legal music business while illegal file-sharing remains virtually flat. Infringing music files available on file-sharing networks and websites rose slightly (3%) from 870 million in January to 900 million, while broadband lines installed grew four times faster at 13%.

Meanwhile the legitimate digital music industry is expanding fast globally. IFPI estimates that single track downloads in the top four online markets in 2005 have more than tripled in the last year.

Legal music downloads in the first six months of 2005 in the US, the UK, Germany and France outstripped the total for the whole of last year. Single track downloads in these markets have risen to 180 million in the first half of 2005 compared to 157 million for the whole of 2004. This is more than three times the 57 million downloads of the first half of 2004.

The legitimate market is responding to that demand, with over 300 digital sites now available worldwide - three times the number of one year ago.

At the same time research suggests there has been a clear shift of consumer attitudes in response to the well-publicised legal actions against file-sharers in 11 countries. More than 1 in 3 file-sharers surveyed in the US and the UK cites "fear of legal action" as the main reason for stopping illegal file-sharing.

Signs of a turning tide are also visible in other countries where there have been sustained legal actions against illegal file-sharing. In Austria, third party surveys show a sharp reduction in illegal file-sharers, down 26% between the first quarter of 2004 and the same period of 2005. This follows earlier research from Germany showing a sharp fall in illegal music downloads in 2004.

John Kennedy, IFPI Chairman and CEO said: "We are now seeing real evidence that people are increasingly put off by illegal file-sharing and turning to legal ways of enjoying music online. Whether it's the fear of getting caught breaking the law, or the realisation that many networks could damage your home PC, attitudes are changing, and that is good news for the whole music industry.

"We are not there yet. Many still appear to be gripped by a bad habit they are finding hard to break. This is despite all the public warnings and information campaigns about digital music that have been organised in the last year. These people are now increasingly likely to face legal actions against them. They are ordinary men and women in ordinary occupations - doctors, students, teachers, cooks, nurses, and even a judge. But they are having to learn the hard way that the price for file-sharing illegally can be as a high as a fine of several thousand euros."

Legal downloads triple internationally

The legal downloads market has taken off in the first half of 2005, especially in Europe.

In the UK, single track downloads in the first half of 2005 were up ten fold on the same period of 2004, at just over 10 million. French and German legal download markets have also increased sharply, to an estimated 4 million and 8 million single track downloads respectively in the first half 2005.

In the US, legal music downloads are estimated to have nearly tripled from 55 million in the first half of 2004 to 159 million tracks in the first half of 20053.

Subscriptions to digital services are up sharply in 2005, with a total of 2.2 million people now subscribed to music services globally. This is up from 1.5 million subscriptions estimated in IFPI's Digital Music Report in January.

Meanwhile online services keep growing, with new services registered onto IFPI's directory every week (www.pro-music.org/musiconline.htm). There are now over 300 online music sites globally - 190 of these in 23 European countries. iTunes offer 1.5 million tracks with Napster close behind offering 1.2 million.

Attitudes change as people stop to think about file-sharing

Third party findings suggest litigation against illegal file-sharing is changing behaviour. Independent research company Jupiter found that 37% of currently active file-sharers in the UK are cutting down through fear of legal action4. In the US, lawsuits are the main reason why people are stopping illegal downloads. One in two people stopping blames the fear of legal action, while two in five point to spyware, adware and viruses found on P2P networks.

IFPI is actively supporting a global education campaign "Young People, Music and the Internet" launched last month by the charity Childnet International with the music sector Pro-music alliance.

IFPI Communications Director Adrian Strain said: "Our global educational efforts, too, are helping to transform the public debate on digital music. In the next few months we will step up the momentum, to get the "download legally" message our to all our key audiences - parents, children, companies, schools and colleges, music fans, the downloaders of today and the downloaders of tomorrow.

"We are encouraged by the success and feedback surrounding the recent parents educational campaign launched by Childnet International and Pro-music "Young People, Music and the Internet", with tens of thousands of leaflets already going to hundreds of retailers and libraries in Europe and North America."

Illegal file-sharing of music is being kept in check while the number of legal tracks downloaded internationally tripled to 180 million in the first half of 2005, new figures released by the international recording industry show today.

The IFPI figures indicate that the surge in broadband use globally is benefiting the legal music business while illegal file-sharing remains virtually flat. Infringing music files available on file-sharing networks and websites rose slightly (3%) from 870 million in January to 900 million, while broadband lines installed grew four times faster at 13%.

Meanwhile the legitimate digital music industry is expanding fast globally. IFPI estimates that single track downloads in the top four online markets in 2005 have more than tripled in the last year.

Legal music downloads in the first six months of 2005 in the US, the UK, Germany and France outstripped the total for the whole of last year. Single track downloads in these markets have risen to 180 million in the first half of 2005 compared to 157 million for the whole of 2004. This is more than three times the 57 million downloads of the first half of 2004.

The legitimate market is responding to that demand, with over 300 digital sites now available worldwide - three times the number of one year ago.

At the same time research suggests there has been a clear shift of consumer attitudes in response to the well-publicised legal actions against file-sharers in 11 countries. More than 1 in 3 file-sharers surveyed in the US and the UK cites "fear of legal action" as the main reason for stopping illegal file-sharing.

Signs of a turning tide are also visible in other countries where there have been sustained legal actions against illegal file-sharing. In Austria, third party surveys show a sharp reduction in illegal file-sharers, down 26% between the first quarter of 2004 and the same period of 2005. This follows earlier research from Germany showing a sharp fall in illegal music downloads in 2004.

John Kennedy, IFPI Chairman and CEO said: "We are now seeing real evidence that people are increasingly put off by illegal file-sharing and turning to legal ways of enjoying music online. Whether it's the fear of getting caught breaking the law, or the realisation that many networks could damage your home PC, attitudes are changing, and that is good news for the whole music industry.

"We are not there yet. Many still appear to be gripped by a bad habit they are finding hard to break. This is despite all the public warnings and information campaigns about digital music that have been organised in the last year. These people are now increasingly likely to face legal actions against them. They are ordinary men and women in ordinary occupations - doctors, students, teachers, cooks, nurses, and even a judge. But they are having to learn the hard way that the price for file-sharing illegally can be as a high as a fine of several thousand euros."

Legal downloads triple internationally

The legal downloads market has taken off in the first half of 2005, especially in Europe2.

In the UK, single track downloads in the first half of 2005 were up ten fold on the same period of 2004, at just over 10 million. French and German legal download markets have also increased sharply, to an estimated 4 million and 8 million single track downloads respectively in the first half 2005.

In the US, legal music downloads are estimated to have nearly tripled from 55 million in the first half of 2004 to 159 million tracks in the first half of 20053.

Subscriptions to digital services are up sharply in 2005, with a total of 2.2 million people now subscribed to music services globally. This is up from 1.5 million subscriptions estimated in IFPI's Digital Music Report in January.

Meanwhile online services keep growing, with new services registered onto IFPI's directory every week (www.pro-music.org/musiconline.htm). There are now over 300 online music sites globally - 190 of these in 23 European countries. iTunes offer 1.5 million tracks with Napster close behind offering 1.2 million.

Attitudes change as people stop to think about file-sharing

Third party findings suggest litigation against illegal file-sharing is changing behaviour. Independent research company Jupiter found that 37% of currently active file-sharers in the UK are cutting down through fear of legal action4. In the US, lawsuits are the main reason why people are stopping illegal downloads. One in two people stopping blames the fear of legal action, while two in five point to spyware, adware and viruses found on P2P networks.

IFPI is actively supporting a global education campaign "Young People, Music and the Internet" launched last month by the charity Childnet International with the music sector Pro-music alliance.

IFPI Communications Director Adrian Strain said: "Our global educational efforts, too, are helping to transform the public debate on digital music. In the next few months we will step up the momentum, to get the "download legally" message our to all our key audiences - parents, children, companies, schools and colleges, music fans, the downloaders of today and the downloaders of tomorrow.

"We are encouraged by the success and feedback surrounding the recent parents educational campaign launched by Childnet International and Pro-music "Young People, Music and the Internet", with tens of thousands of leaflets already going to hundreds of retailers and libraries in Europe and North America."

Read complete article at ifpi.com

Posted by at 03:34 PM | Permalink | Comments (0) | TrackBacks (0)

by Charles Jade
Orignially posted at ars technica

While the iTMS dominates the (legal) music downloading business, it does so at a price, and it's not US$0.99, but rather 128kbps. Enter MusicGiants.

"If you're listening to compressed music using your iPod earbuds, you won't notice much difference [from a CD]," says Scott Bahneman, founder and chief executive of tiny startup MusicGiants. "But once you play it on a good home stereo, the difference is huge."

MusicGiants provides "high definition" music downloads ranging from 470-1100kbps using Microsoft's WMA codec, DRM included, of course. Each song will cost US$1.29, while albums will go for a dying chain record store equivalent US$15.29. In addition, a $50 per year (waived with $250 in yearly purchases) annual fee will be charged. Hardware requirements include Windows XP, WMA 10, a honkin' big hard drive (40GB is the laughable minimum), and a high-speed Internet connection. MusicGiants will have have the catalogs of the five major labels available for download by the end of June, making it the only high bit rate legal download service, unless you count allofmp3.com, whose legal status remains indeterminate outside of Russia.

The service itself is run through client software (30MB download). The primary selling point of MusicGiants is visualized by a "fidelity meter" that displays the rate at which the music was encoded. The service allows you to integrate you current music library with their catalog in an interesting twist. As an example, looking at an artist would display what music you have in "low fidelity" and what MusicGiants has to sell you at a "high definition" bit rate, as well as exactly how much that would cost you. MusicGiants will also sell you hardware, though it won't be tiny white plastic and shiny metal players. The SoundVault, a 400GB stereo component, including sound processing and networking hardware, will go for a cool US$9,500, and allow you to remove the PC entirely from the audio equation. This does not mean you cannot use MusicGiants purchases with a PC, or portable music players for that matter, but the Terms of Service reminds users it is up to them to ensure that any player has WMA "lossless" support. What the service does not provide for--at least it's not talked about anywhere--is the ability create copies of music at bit rates appropriate for a given device. While 1100kbps might be great for an expensive stereo system, its overkill for a portable player. The ability to derive bit rate versions from a single copy of a file on the fly, or based upon device profiles, is a logical feature that should be included.

Still, despite being aimed at the "discerning" music lover, higher bit rate music is something everyone might be able to appreciate, including those that sell portable music players. As flash players take over the low-end gigabyte market, it makes sense to sell higher bit rate music to fill larger sized hard drive based players, for this reason it remains to be seen if MusicGiants will be the sole reseller of high bit rate music for very long.

Posted by at 04:08 PM | Permalink | Comments (0) | TrackBacks (0)

By Peter Burrows
Originally appeared at BusinessWeek Online

Startup MusicGiants is offering downloads of CD quality. Industry watchers agree there's a market -- but just how big is another question

When it comes to the red-hot online music business, a lot of the focus has been on how we'll get our music: whether we'll buy songs from a download site such as Apple's (APPL ) iTunes music store or rent it from subscription services that let you listen to almost anything so long as you keep paying the bill, a la Napster (NAPS ) or RealNetwork's (RNWK ) Rhapsody service.

But another question is going to become an important issue for an increasing percentage of consumers: Namely, what will the sound quality of this music be? Today, songs pulled off the Net are skimpy facsimiles of the ones you get on a CD. They're highly compressed -- stripped of millions of digital bits that leave them with about one-tenth of the data found on a CD track (that's assuming the typical "bit rate" of 128 kilobits-per-second). You can transfer the files fast, but the sacrifice is sound quality.

CD QUALITY. That's fine for now, since most people listen to digital music on their PCs or MP3 players -- devices normally used with cheap speakers that mask any sound quality deficiencies. And compression has played a vital role in the development of the market so far. It's the magic that makes iPod-mania possible, by enabling even tiny devices with limited storage to carry thousands of songs.

But if the digital music revolution is to reach its full potential -- an all-digital future, perhaps, in which CDs racks are no longer needed -- analysts say the industry will have to hit a far better-sounding note. Already, tech-savvy consumers are dabbling with ways to distribute their digital tunes more freely, to play them on their good living-room speakers, wall-rattling home theaters, or slick car audio systems.

Often they find the compressed files' sound quality sorely lacking. "If you're listening to compressed music using your iPod earbuds, you won't notice much difference [from a CD]," says Scott Bahneman, founder and chief executive of tiny startup MusicGiants. "But once you play it on a good home stereo, the difference is huge."

Bahneman hopes to close that gap, and position MusicGiants to take a high-end niche in the fast-growing "digital home" market. This summer, his 15-person outfit will launch the first service that sells online music at CD-equivalent fidelity -- what Bahneman calls "high-definition music." MusicGiants has licensed the music of all five major record labels, which it will sell in a "lossless" format, defined by Microsoft (MSFT ), that results in digital songs that equal the quality of CDs.

NO GEEK-SPEAK. These are big files requiring far more storage space than MP3s traded on file-sharing sites, or downloaded from the for-pay services. But for music lovers who can hear the difference -- or think they can -- MusicGiants' service will be the only game in town, at least for now. "They're addressing the biggest compromise that music fans have had to make: trading portability for quality. This solves that dilemma," says Ted Cohen, senior vice-president for digital development and distribution for record label EMI.

A preview version of the MusicGiants service is available at musicgiants.com. So far, song selection is limited because the company has uploaded only EMI's catalog. It's postponing an official launch until it has the catalogs of the others ready to go, later this summer.

Still, MusicGiants offers some interesting features that provide a glimpse into the future of digital music. The service is clearly designed to be used with a big-screen TV in the living room, not the PC in the den. The company has designed a wireless keyboard and handheld mouse to navigate the site, and three remote-control manufacturers are designing compatible models. And the uncluttered user interface was created with the technically challenged in mind. It's devoid of geek-speak. Rather than "rip," for example, there's an icon simply labeled "Copy from CD."

STORAGE ISSUES. MusicGiants isn't for everyone, and not only because it takes minutes to download a song -- an eternity online. The service is for the serious audiophile, or those with serious disposable income. For starters, songs cost $1.29, vs. 99 cents or less at most online sites. There's also a $50 annual membership fee (waived for anyone buying more than $250 worth of songs). The higher prices help cover the higher costs of distributing music in lossless format, such as extra storage and bandwidth bills for those huge files.

Customers also need top-of-the-line gear to make the investment worthwhile. To get the benefits of the better fidelity on a PC, you'd need a pricey sound card and speakers, not to mention plenty of storage. Even an empty 40-gigabyte hard drive would hold only 100 CDs or so. A 1-terabyte drive from LaCie USA, may be more like it, if you've got $949 with nothing better to do.

Optimally, you want a media server of some sort to store the digital music right in your stereo cabinet, but such gear doesn't yet exist. Many companies, from boutiques such as Elan Home Systems to PC powerhouse Hewlett-Packard (HPQ ), make gear for piping digital music from PC to the entertainment center, but there's a limited selection of devices to pipe lossless music into the living room.

"AHEAD OF ITS TIME." That's why MusicGiants plans to sell a $9,500, 400-gigabyte device called the SoundVault that would sit in the stereo cabinet, just like a CD-player or receiver. (The package includes hardware, a high-end sound processing card, and networking gear.) That way, MusicGiants' customers could bypass their PCs and load songs directly into their living room stereo. "It's hard to sell gas, if no one has a car," says Bahneman, who hopes to get out of the hardware business as soon as other gear starts to appear.

The hardware requirements will limit MusicGiants' market to a small niche of the $700 million digital music market, expected to grow to $4.6 billion by 2008, according to Forrester Research. To grab a larger slice of the overall market, the company must convince mainstream music consumers -- still cooing over their iPods -- that they're missing out on something even better. Says Forrester analyst Josh Bernoff: "The idea of a higher quality music service is probably a little bit ahead of its time."

Still, MusicGiants' efforts are being closely watched. Besides the 2 million or so audiophiles out there, Bahneman is trying to build a distribution network with high-end home builders and home-theater installers. "MusicGiants is going to attract a lot of interest from [leading edge] consumers -- and once that happens, other people are going to begin hearing about it," says Dave Fester, general manager of Microsoft's digital media division.

SOUNDS FOR SYSTEMS. If the service, which works with Microsoft's Windows Media Player 10 software and uses Microsoft's digital-rights management, does well, larger players could be compelled to follow suit. "As people get more comfortable with digital music, they're going to realize that they want the best sound quality," says Fester. Gartner G2 analyst Mike McGuire thinks all digital music service providers will end up following MusicGiants' lead. "It could take years. But ultimately, I think CD-quality will have to become an option on all of the online services."

Indeed, some experts envision a future in which consumers download a CD-quality "master" copy of songs, which can then be compressed to a size that's appropriate to various playback devices -- say, a near CD-quality version for the big hard-drive in the car of the future or a lower-quality one for tomorrow's music-playing cell-phones. That way, consumers wouldn't have to worry about buying multiple versions of the same songs.

"In an ideal world, you'd have your complete library of songs stored somewhere in uncompressed form, so you could use whatever levels you wished," says John McFarlane, chief executive of Sonos, which makes a home networking system for playing digital music in up to 32 rooms.

RISING TIDE. That vision could take years to materialize. The giants of digital music are hardly racing to embrace a high-fidelity future. Apple, Napster, and others say their customers are happy with current compression standards, and many industry executives argue that the human ear can't distinguish between CD-quality and bit rates of more than 192 kbps.

Yet, online music providers are inching higher on the fidelity scale. Most services offer lossless ways for customers to rip their own CDs into their PCs. And others are increasing their bit rates to offer higher quality downloads. In April, for example, RealNetworks upgraded its Rhapsody subscription service to 192 kbps, from 128 kbps.

If MusicGiants makes a splash with its new "high-definition music" service, it may force the industry to deal with its fidelity issues sooner rather than later.

Posted by at 12:55 PM | Permalink | Comments (0) | TrackBacks (0)