Singing a different tune; Economist, 11/12/09

Economist; Singing a different tune:

The battle against online music piracy is turning. A return to growth will take a good deal longer

"While it is by no means over, the struggle against music piracy is going better than at any point since the appearance of Napster, a file-sharing service, ten years ago.

It has been a brutal decade. In many countries music sales to consumers have fallen by more than a third...

The music business is now doing two things right. First, it has built a better stick. Most countries have virtually abandoned the practice of suing people for downloading copyrighted files. The favoured approach these days is known as “graduated response” or “three strikes and you’re out”. People who are suspected of trading media illegally are sent warnings. If they fail to stop, their internet-service provider (ISP) may slow their connection. If that fails to deter, they may be temporarily cut off...

Almost everywhere in the developed world, such laws are being debated. Even where they are not (America, for example), ISPs are working quietly with the record industry to similar ends.

The trouble with the old practice of suing people for swapping music is that it is slow, expensive and limited. In most countries, being prosecuted for file-sharing is a little like being struck by lightning. The exception is Germany, where a cheap, efficient legal system has made it possible to launch some 100,000 prosecutions. In the past two years the proportion of German internet users who share files illegally has dropped significantly. It now stands at 6%, according to Jupiter Research—less than in any other big European country...

The second change is that the industry is offering tastier carrots. These days the music associations talk less about lawsuits and more about cultivating alternatives to piracy. The past year has seen rapid growth of digital music services that accept the post-Napster consensus that music should be free, or at least appear to be free...

The recorded-music business is not about to lurch into growth. A big proportion of revenues—more than half just about everywhere—still comes from CD albums, which are gradually falling out of favour. Start-ups like Spotify need to turn more freeloaders into paying subscribers if they are to survive and start providing a serious income stream to record companies and artists. And there are still plenty of ways of sneakily copying music.

John Kennedy, head of the IFPI, points out that piracy was rife even before file-sharing. The goal is not to eradicate it—that is impossible—but to tilt the playing field towards legitimate services. That finally seems to be happening. "

http://www.economist.com/businessfinance/displaystory.cfm?story_id=14845087