January 16, 2004 9:19 AM PST

Oops! They're swapping again

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Illegal music downloading could be making a comeback, according to market researchers who note a surge in the use of peer-to-peer services.

The NPD Group, an independent market research firm, reported on Friday that peer-to-peer usage was up 14 percent in November 2003 from September. This upturn comes after six straight months of declines in digital file sharing. Usage dropped dramatically starting in April 2003, when the Recording Industry Association of America (RIAA) began its well-publicized campaign of threatening individual file sharers with legal action.

News.context

What's new:
After six months of declines, peer-to-peer usage recently climbed 14 percent.

Bottom line:
The decline came as the RIAA launched more than 300 lawsuits against file swappers. The reversal cast doubts on the music industry's claims that its lawsuits are working to deter people from illegally downloading music files.

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"It's important to keep in mind that file sharing is occurring less frequently than before the RIAA began its legal efforts to stem the tide of P2P (peer-to-peer) file sharing," Russ Crupnick, vice president of NPD, said in a statement. "We're just seeing the first increase in these numbers. NPD will continue to monitor whether it's a temporary seasonal blip or a trend that suggests that the industry should be more aggressive in capping the use of illegal methods to acquire digital music."

The RIAA has launched more than 300 lawsuits since it started its campaign against file swapping. Officials for the organization have been optimistic about its success, pointing to polls that suggest that people are more aware of the risks involved in the practice.

But data from research firms like NPD throws more cold water on the music industry's claims that its lawsuits are working to actually deter people from illegally downloading music files. Even though overall usage of peer-to-peer services has declined by almost half since April 2003, earlier studies by NPD and others also suggested that large numbers of people have still been illegally downloading music files.

NPD uses two tools to monitor peer-to-peer activity. MusicWatch Digital is a tool that continuously examines PCs of roughly 40,000 participating individuals, recording which sites they have gone to and what they have downloaded on their hard drives. The ongoing survey has been compiling and analyzing data on a monthly basis since April 2003.

The second tool, called MusicLab, is a traditional paper survey mailed to 5,000 individuals asking them to report their usage and Web surfing. The results represent the U.S. population.

Information obtained from the MusicLab survey, which is compiled every other month, confirms the trends found by MusicWatch Digital. MusicLab data suggests that there was a sharp drop in usage starting in May 2003, when roughly 20 percent of computer users had downloaded music from peer-to-peer services. In July, the number dropped to 18 percent, and in September it was down to 11 percent.

By November, however, 12 percent of computer users were sharing music files.

So what's causing this increase? Crupnick had several suggestions.

For one, he said waning media coverage of lawsuits could have something to do with it. Even though the RIAA continues to file lawsuits, reporting of the issue by major consumer media has dropped dramatically from what it was in the months leading up to the September subpoenas.

Another possibility is that this increase is simply a reflection of traditionally high interest in music during the fourth quarter. Approximately one-fifth of music sales generally occur in November and December, according to NPD.

Crupnick also noted that in late October, several high-profile legal music downloading services were launched. Some people may have been checking out the illegal peer-to-peer sites again to compare music lists with what's now being offered on legal sites, he said.

 

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