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DIGITAL MUSIC GOES GLOBAL IN 2011 WHILE ACTIONS ON PIRACY GAIN MOMENTUM

Major international music services now in 58 countries, up from 23 in January 2011
Digital music revenues up 8 per cent to US$5.2 billion
Anti-piracy action makes an impact in France, New Zealand. US to follow in 2012

London, January 23, 2012 – The digital music business saw unprecedented global expansion in 2011, while key steps forward were taken in several markets to help tackle digital piracy.

With rapid expansion into new markets by services such as iTunes, Spotify and Deezer, the major international digital music services are now present in 58 countries, compared to only 23 at the start of 2011.

Consumers are benefitting from a widening choice of services for experiencing digital music. In 2011, subscription services expanded and linked with new partners to reach new audiences. Meanwhile cloud technology is helping transform the way fans manage and store their music.

Global revenues to record companies grew by an estimated 8 per cent to US$5.2 billion in 2011 – a faster rate than 2010 – with strong consumer demand for both single track downloads (up 11 per cent by volume), digital albums (up 24 per cent by volume) and fast-expanding subscription services. The number of users paying to subscribe to a music service leapt by 65 per cent in 2011 to 13.4 million worldwide, according to IFPI estimates.

In the US, the world’s largest music market, digital channels have overtaken physical formats to become the primary source of revenues for record companies. Globally, 32 per cent of music industry revenues come from digital sources, far surpassing the film, newspaper and book sectors. New services launched across Latin America, while in China record companies are working in a landmark partnership with the largest internet company Baidu.

IFPI’s Digital Music Report 2012 is published today, providing a comprehensive overview and analysis of the global digital music business at the start of 2012.

Commenting on the Report, Frances Moore, CEO of IFPI, said: “As we enter 2012, there are good reasons for optimism in the world of digital music. Legal services with expanding audiences have reached across the globe and consumer choice has been revolutionized. Meanwhile momentum is building in the fight against piracy as governments and a growing circle of intermediaries engage with our industry.

“Any complacency now, however, would be a great mistake. Our digital business is progressing in spite of the environment in which it operates, not because of it. In 2012 the momentum needs to build further. We need legislation from governments with coordinated measures that deal with piracy effectively and in all its forms. We also need more cooperation from online intermediaries such as search engines and advertisers to support the legal digital music business.”

Positive momentum but legal environment remains a huge problem

Piracy remains an enormous barrier to sustainable growth in digital music. Globally, one in four internet users (28%) regularly access unlicensed services, according to IFPI/Nielsen. This is rigging the market for legitimate services, stunting growth and jeopardizing investment in music. IFPI advocates an inclusive combination of graduated response, and other measures to tackle the problem.

There has been positive momentum in the fight against piracy in 2011. In France, the introduction of the new Hadopi graduated response law has seen peer-to-peer (P2P) piracy levels decline by 26 per cent, with around two million P2P users stopping the activity since warning notices were first sent out in October 2010 according to IFPI/Nielsen.

A newly-published academic study finds evidence that Hadopi has had a positive impact on iTunes sales in France.

The analysis, by Danaher et al[1], found that iTunes singles sales were 23 per cent higher than they would have been in the absence of Hadopi.

In the US, a groundbreaking ISP cooperation deal was signed in 2011 and a graduated response program will be implemented in 2012, with most major ISPs signing up to a “copyright alert system”. The move follows the closure of the illegal service LimeWire in 2010, which has helped cause a dramatic drop in levels of P2P piracy in the US market.

There was important progress elsewhere too. In New Zealand, a new graduated response law took effect in September 2011, with early indications of impact. In Europe, a string of court judgments has helped reduce copyright infringing activity on major sites like The Pirate Bay. In Belgium and Italy visits to the infringing sites dropped by 70-80 per cent in each case. In Spain a new law came into force to allow the blocking of illegal websites – a positive step, though disappointingly limited in its scope.

Stepped-up cooperation with online intermediaries

The recorded music industry is now working directly with advertisers, payment providers, search engines and website hosts to tackle digital piracy. A partnership struck in 2011 between IFPI, the City of London Police and payment providers MasterCard, Visa and PayPal has prevented more than 60 illegal websites from abusing payment services since it began in March 2011.

Better cooperation is being sought with search engines, which are a major channel for consumers to access music. Research in several countries indicates that between a quarter and a half of people illegally downloading access infringing music via search engines. However, many of the top results provided by search engines are linked to unauthorized content or sites which regularly infringe copyright.

[1] Danaher, B; Smith, MD; Telang, R; and Chan, S

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To download the full report go to: http://www.ifpi.org/content/library/DMR2012.pdf

RECORDING INDUSTRY WELCOMES EU DECISION ON COPYRIGHT TERM EXTENSION

Brussels, September 12, 2011 – The international recording industry welcomed today’s decision by the European Union to extend the term of copyright protection offered to performers and producers from 50 to 70 years.

The decision was applauded by Plácido Domingo, chairman of IFPI, which represents the recording industry worldwide: “The decision to extend the term of protection for recordings in Europe is great news for performing artists. Artists at the start of their careers will benefit from an increased pool of revenue that will be available to invest in new talent. Established artists can benefit from their work throughout their lifetimes. This is especially important today when licensed digital services make music widely available online.

“Extension of protection also reflects the important role performers play in the success of songs by narrowing the gap between the protection offered to recorded performances and that offered to compositions.”

Frances Moore, chief executive of IFPI, added: “This is a victory for fairness. With this decision, the European Union is giving artists and producers in Europe the fair treatment they deserve. The extension of the term of protection to 70 years narrows the gap between Europe and its international partners and improves the conditions for investment in new talent.

“Over 38,000 artists and performers petitioned for this extension, supported by right holders from across the European music sector. Their calls have been heeded, and we thank the European Commission for having the vision to table this Directive, the European Parliament for giving it resounding support and the Member States, led on this occasion by the Polish Presidency of the EU, for making term extension a reality.”

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Notes to editors:

The EU term extension Directive extends term of protection for performers and producers of musical works from 50 to 70 years. It brings Europe’s artists and producers closer into line with the protection offered to authors and composers (life plus 70 years).

The Directive also narrows the gap between the term of protection in Europe and that of other countries and regions, where term of protection can range from 70 to 95 years.

The EU term of protection Directive was proposed by the European Commission in 2008 and voted on by the European Parliament in 2009. The Directive was adopted by the EU Council of Ministers in Brussels today. The legislation will be implemented by Member State Governments within two years from publication in the Official Journal.

About IFPI

IFPI is the organization that promotes the interests of the international recording industry worldwide. Its membership comprises some 1,400 major and independent companies in 65 countries. It also has affiliated industry national groups in 45 countries.

IFPI.org, November 23, 2010
Read The Press Release: http://ifpi.org/content/section_news/20110912.html

LIMEWIRE CRUSHED IN RIAA INFRINGEMENT LAWSUIT

On May 11, 2010, LimeWire was found liable of copyright infringement in a decision that threatens to financially devastate the New York company behind the file-sharing application.

In a 4-year-old case brought by The Recording Industry Association of America, U.S. District Judge Kimba M. Wood ruled that LimeWire’s users commit a “substantial amount of copyright infringement” (.pdf) and that the Lime Group, the company behind the application, “has not taken meaningful steps to mitigate infringement.”

The RIAA was seeking up to $150,000 per copyright violation, though the final damages in the lawsuit have not yet been determined. The lawsuit claimed at least 93 percent of LimeWire’s file sharing traffic was unauthorized copyright material.

Limewire claims “50 million unique monthly users.” Its website claims its “software is downloaded hundreds of thousands of times every day and boasts millions of active users at any given moment.”

It was the first case targeting a file-sharing software maker following the 2005 Grokster decision, in which the U.S. Supreme Court cleared the way for lawsuits targeting companies that induced or encouraged file sharing piracy.

Before the RIAA filed suit, the record label’s trade group urged LimeWire to license its material or shut down.

“LimeWire is one of the largest remaining commercial peer-to-peer services,” Mitch Bainwol, the RIAA’s chairman, said in a statement. “Unlike other P2P services that negotiated licenses, imposed filters or otherwise chose to discontinue their illegal conduct following the Supreme Court’s decision in the Grokster case, LimeWire instead thumbed its nose at the law and creators.”

George Searle, LimeWire’s chief executive, said in a statement that the company “remains committed to developing innovative products and services for the end-user and to working with the entire music industry, including the major labels, to achieve this mission.”

Searle was not immediately available for comment.

Judge Wood scheduled a June 1 hearing to determine how to proceed.

Wired.com News, May 12, 2010 (David Kravets)