September 16, 2012 6:20 pm

Filesharing ‘costs music industry £500m’

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More than twice as many albums are downloaded illegally in the UK as are bought on legitimate sites such as iTunes, with big student cities such as Manchester and Liverpool being the most active in illicit music sharing.

The findings are part of an in-depth study of illegal file-sharing activity via the internet by Musicmetric, which provides music data on the web. The study underlines the challenges facing the industry as the “digital native” generation, generally much less in the habit of paying for online content, comes of age.

In the first six months of this year, more than 33m albums and about 10m singles were downloaded illegally in the UK via BitTorrent, the most popular peer-to-peer file-sharing network, according to Musicmetric.

This equates to an estimated annual loss in retail sales of more than £500m. And it compares to just 14.8m digital album sales over the same period, according to the BPI, which represents music companies.

Music labels are concerned about the damage this may be doing to long-term sales – about 15 per cent of the UK population have downloaded music illegally so far this year, according to Musicmetric, with the under-30s believed to dominate.

“Clearly the biggest problem with illegally downloaded music is that there is a generation who feel it is natural that music and all creative content is free,” says Andy Heath, director of Beggars Group, the British record company behind artists such as Adele and Dizzee Rascal. “Once they are in that mindset it’s very difficult for them to see it as not free.”

But the music industry is fighting back and is starting to have some success. In the past few months legal actions related to The Pirate Bay, a file-sharing website, which require internet service providers to block access to the site, have started to have an effect. Early signs indicate that the number of users of the site have fallen by two-thirds, according to research by the UK Online Measurement Company and Nielsen, who reports on consumer trends.

The industry is also making some inroads against MP3 aggregator sites such as mp3skull and Filestube. The BPI has long been fighting what seems like a constant battle against such activity. Every year it issues websites with millions of takedown notices, which are formal requests to remove music content from the web, only for new illegal content to pop back up. And each day the BPI issues 40,000 delisting requests to Google in a bid to prevent web users from finding illegal sites.

But the music industry may have scored a significant victory several weeks ago when Google agreed to incorporate the number of takedown notices a site has received into its search algorithm. That should result in serial offenders falling off search results and could greatly reduce traffic to illegal sites.

By 2014, internet service providers will also be required to send warning letters to users who download music illegally. Many ISPs have objected to the measures, which are being introduced as part of the Digital Economy Act, as too draconian. But evidence of a similar initiative in France indicates the letters are effective.

Despite these steps, the music industry recognises that enforcement is only part of the solution. Creating a wide choice of innovative and easy-to-use legal download sites is vital, too.

“Distribution of digital music has had a profound effect on our businesses,” says Jo Dipple, chief executive of UK Music, which represents the commercial music industry in the UK. “Combating illegal file-sharing and developing a legal digital market is at the heart of our work.”

Digital revenues are growing respectably, up 24.7 per cent in the first half of this year to £281.6m, and now representing a third of wholesale income for record labels. But with physical sales falling, there is still a lot of work to do.


According to BPI, revenues from music downloads and subscriptions overtook income from physical CDs and records in the first quarter of 2012. The UK recorded music business trade organisation also said that digital albums now made up 34 per cent of the total album market. In August this year, six years after records began, UK sales of digital albums passed the 100m mark. In 2010, they stood at 50m. The 10 biggest-selling digital albums – by Adele, Ed Sheeran and Lady Gaga – have all sold more than 250,000 copies online.

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