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Business News (more headlines) 10-01-2003

Consumers Say Recording Industry Association Of America -RIAA- Is Off-Beat When It Comes To Music Swapping

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The RIAA is out of tune when it comes to online music sharing according to consumers who claim to put their money where their mouse is. A recent survey of 500 Americans conducted by InsightExpress(www.insightexpress.com), a professional online research firm, reveals that nearly three out of four 'free music' down-loaders (72%) feel that peer to peer sites actually expand their overall musical horizons, leading them to purchase more - not less music. Additionally, 85% say they are more likely to buy an artist's music if they can sample it on the Internet first.

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While the majority of consumers (70%) are aware of the current RIAA lawsuits aimed at curtailing the practice of sharing music on the Internet, activity on free swapping sites remains high. However, this does not mean that some down-loaders are not wary. One in three report being concerned with the possible legal ramifications for downloading music, with one in four claiming they will stop the practice altogether.

The question remains whether or not this is good news for the music industry. More than a third (37%) of music swappers say downloading MP3s has caused their music purchases to actually increase. More specifically, consumers stated that downloading music from the Web resulted in the following:

Impact Downloading "Free Music" has on
Actual Music Purchases: % of
Down-
loaders
----------------------------------------------------------------------
Increased purchases of CDs/Tapes 50+% 15%
----------------------------------------------------------------------
Increased by 25% 11%
----------------------------------------------------------------------
Increased by 5 - 10% 11%
----------------------------------------------------------------------
No impact 52%
----------------------------------------------------------------------
Decreased 5 - 25% 4%
----------------------------------------------------------------------
Decreased purchases of CDs/Tapes 50+% 7%
----------------------------------------------------------------------

"Americans are telling us that down-loading is a convenient way of sampling different types of music and reviewing various artists - helping them decide which music they'll purchase," said Doug Adams, director of marketing for InsightExpress. "The recording industry should consider that by prosecuting illegal file swappers, the net effect may actually be cutting their profits instead of recouping perceived losses."

One solution for consumers that want their music at the click of a mouse may be the emerging 'fee-for down-load' music sites; services slow to catch on with survey participants as not one cracked the top 5 as one of their most frequented download sites. However, almost two in five down-loaders say they are willing to pay a fee for downloading music with 44% favoring a subscription service and 38% preferring the pay-per-song method.

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