IFPI Announces A Wave of International Legal Actions Against File Swappers

May 2004

Record Labels, Artists, Music Publishers

IFPI and the recording industry associations in Denmark, Germany, Italy and Canada have announced the first wave of international lawsuits charging individuals with illegally file-sharing copyrighted music. A total of 247 alleged illegal file-sharers face legal action in a move that steps up the record industry’s international campaign against online copyright theft. Further waves of lawsuits against major offenders will be launched in different countries in the coming months. The legal actions charge the individuals with illegally making available hundreds of music tracks for copying, transmission and distribution via file-sharing services. However the move comes against a backdrop of criticisms in the United States where the Recording Industry Association of America has already used similar tactics. Critics point out that the European legal download market is still hampered by a lack of available rights and that the use of lawsuits is heavy handed. However the IFPI argue that More than 600,000 consumers in Europe alone are now accessing a large catalogue of 300,000 tracks that are available from 50 legal online sites. Jay Berman, Chairman and CEO of IFPI. said: “Today’s announcement should come as no surprise. Over the past year the record industry has been extremely active internationally and locally, educating the public about the huge damage being done by illegal file-sharing, explaining the laws and promoting all the sites where large catalogues of copyrighted music are available for consumers to access legitimately. “IFPI figures show that global sales of recorded music fell 7% in value in 2002. IFPI’s global figures for 2003 have not yet been released, but it estimated that sales for the year will have been down by over 7%. A number of third party surveys in major music markets have confirmed that illegal file-sharing directly depresses music purchases by consumers. Other countries have stepped up their ‘warning’ campaigns to put illegal file-sharers of music on notice that if they continue with their activities they risk court action. Sweden is announcing today the launch of their instant messaging campaign to users of peer-to-peer networks, following a similar announcement by the UK on 25 March. Enzo Mazza, General Director of FIMI, the Italian Recording Industry Association adds “Music piracy is an enormous and ongoing problem in Italy, threatening the jobs and livelihoods of thousands of Italians in the music industry. As Italians take up broadband, they also take up unauthorised P2P file sharing in increasing amounts – almost half of all regular internet users in the country already regularly download music although the activity is most popular with younger internet users. 3.3 million Italians use P2P services and most of them share illegal files over the net. We cannot allow this to continue at this pace. With this in mind the Italian industry has worked closely with the education authorities to get schools to adopt copyright protection measures.” In Italy 30 individuals have been charged with copyright infringement. The Public Prosecutor’s office in Milan ordered criminal raids that started in January. A special unit of the Fiscal Police has seized 25 computers, 30 hard discs and storage systems, and 50,000 files as evidence.

Source: IFPI (International Federation of the Phonographic Industries)


IFPI figures for 2003 confirmed a drop in world sales of recorded music of 7.6% in value in 2003 although the year-on-year decline was slowed by a stronger second half in the US market, combined with resilient sales in the UK. The IFPI attribute the fourth consecutive year of falling music sales to the combined effects of digital and physical piracy alongside competition from other entertainment products. The decline affected virtually all major markets, with Western Europe showing particularly sharp falls compared to recent years. Sales in Germany were down 19% in 2003 and down by more than 30% in value since 1999. Denmark, France, Sweden, Belgium, Greece, Ireland, Portugal and Switzerland also experienced double digit declines. Year on year, the industry has suffered global losses of 20% over the three years since 2000. Internet piracy remains a very significant factor in the decline in world music sales. Positive signs include more robust album sales in the US – thanks partly to a strong end-of-year release schedule – and a global rise in music DVD sales. DVD music video now accounts for 5.7% of global retail revenue compared to 3.1% in 2002. These factors helped restrict a global downturn in CD sales, which at the six-month point had been down 10.9% in value. Online sales of physical CDs also continued an upward trend, with an increase in the US from 3.4% to 5% in volume and in the UK up from 5.6% to 6.6% of total units. The global music market was worth $US32 billion with total unit sales (including music video) of 2.7 billion.
The IFPI’s report on world music sales does not include sales in digital formats, but IFPI’s market research department is collating information on these purchases across major markets and intends to include information on online sales for the first time in 2005. Apple’s iTunes announced it had reached the 50 million downloads mark in March 2004. Puretracks in Canada reached 1 million downloads in February, and in Europe OD2 ” powering many of the now 50 plus European portals for music downloads” announced in April it had sold more.

Region by Region Breakdown

North America: The USA, which saw a 12% fall in the first half of the year, saw a sales increase in the second half, particularly in the fourth quarter, bringing the full year sales drop back to 6%. Best-selling CD album releases by artists including OutKast, Alicia Keys and Ludacris drove the recovery. Canada, the world’s sixth largest market was down 2.9% in value, 4.2% in units.
Europe: In the UK, overall sales were virtually flat with 0.1% growth in 2003. There was continuing market strength in CD albums, bolstered by a strong release schedule, bonus packages and a vibrant retail environment. CD album growth was however offset by intense downward price pressure and fall in singles sales of 31% in units. Around the rest of Europe sales continued a downward trend, with the major markets of Western Europe seeing very sharp falls. Germany, heavily affected by CD-R burning and illegal file-sharing, saw a 19% drop ” the sixth consecutive year sales have fallen. France fell into line with other European countries in 2003, with a 14.4% drop. The market has now fallen back to year 2000 levels following two years of growth driven largely by local repertoire. In Scandinavia, despite strong local repertoire, Sweden and Denmark saw steep declines of 14.7% and 12.5% respectively. Belgium, Greece, Ireland, Portugal and Switzerland also saw double digit percentage declines.
Asia: Across Asia sales were down by 7.5% in units and 9.8% in value. This trend was led by a fifth consecutive year of shrinking sales in Japan, the world’s second largest market, which fell by 5.2% in units, 9.2% in value. Some Asian markets did show positive growth. Malaysia and the Philippines saw increases after a tough 2002. China, despite endemic physical piracy, was also an exception, showing a third consecutive year of growth. Sales value was up by 21.7% fuelled by the country’s large young population with increased disposable income and continued market development.
Australasia: Australasia was the only region to show growth in 2003, with local stars such as Delta Goodrem, Powderfinger and Guy Sebastian generating significant sales, along with a 100% increase in the value of DVD music video purchases ” a small market but one that is showing robust signs of growth.
Latin America: Latin America continued to suffer from piracy in both physical and online forms as well as difficult economic conditions. Sales are down across the region for the third year in a row with a drop of 14.4% in value in 2003. The industry has shrunk, causing labels to downsize, retail stores to close and the reduction of certification awards in many markets to reflect fewer sales. Mexico dropped out of the world’s top ten rankings, suffering a 16.2% decline in value. Argentina, Peru and Uruguay showed increases on 2002’s steep declines.

Effect of illegal file-sharing on music sales

Forrester Research Europe January 2003
Recent research by Forrester in Europe (‘WholeView Technographics’, January 2003) presents stronger arguments of the negative impact on sales specifically in Europe. The study states: “music industry executives claim that downloading tracks via services like KaZaA and Morpheus cannibalises CD sales and they’re right”. The survey concluded that more than 40% of frequent downloaders buy less music now than they did before they began downloading. 2% of people say that they bought more CDs after having downloaded.

Jupiter Research US August 2003
This was a survey of 1,326 US-based online music fans. One third of active file-sharers said that they had decreased spending on music since they started file-sharing. Only 16% said spending had increased.

Ipsos-Reid (US) Q4 2002 
As at end 2002, the quarterly US study TEMPO found that while 25% of Americans aged 12+ own a PC-based CD burner, 59% of file-sharers own a CD burner. Of these, 42% (representing 17 million people) reported having burned a pre-recorded music CD rather than actually purchasing that CD.

Edison Media Research May 2003 
The survey found that the heaviest downloaders have the most negative influence on sales. Among those who have downloaded more than 100 files, roughly 16% of respondents, CD purchases dropped 61% from last year. A year ago heavy downloaders purchased an average of 28.9 CDs a year versus the current average of 11.3 CDs.

Source and © : IFPI – http://www.ifpi.org/site-content/statistics/worldsales.html

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