Copyright 2004 Newspaper Publishing PLC  
The Independent (London)
March 31, 2004, Wednesday
SECTION: First Edition; NEWS; Pg. 12

LENGTH: 517 words

HEADLINE: EUROPEANS TARGETED FOR ILLEGAL MUSIC DOWNLOADING

BYLINE: CHARLES ARTHUR

BODY:
THE BATTLE between the record labels and music fans reached Europe yesterday, with the first wave of lawsuits against 247 people accused of sharing copyrighted songs over the internet.

The lawsuits, in Denmark, Germany and Italy, target people who the record companies say have offered hundreds or even thousands of music files for others to download online through "peer-to-peer" networks such as KaZaA and Gnutella. Anyone found guilty could be fined thousands of euros.

The International Federation of Phonographic Industries (IFPI), which is coordinating the actions, suggested similar lawsuits could follow in Britain. Initially, the lawsuits are targeted in the countries where CD sales have fallen most quickly, a decline which the industry blames on file-sharing and "domestic" piracy.

Johan Schluter, head of the Danish Recording Industry Association, blamed internet piracy for CD sales falling 50 per cent in four years. "People are losing their jobs; record stores are closing down; and artists find it increasingly difficult to get their music released," he said. More than 120 Danes, alleged to have been offering between a few hundred and up to 54,000 music files, are being sued.

Observers said the legal action had come too soon, at a time when there are insufficient legal download services in Europe for people to use. The leading download site in the US, Apple's iTunes Music Store, is not expected to launch in Europe for a couple of months; the US version opened last April, and has sold more than 50 million tracks. Mark Mulligan, an analyst at Jupiter Research, said: "I think it is misplaced to put this into effect now before there is a wide choice of compelling, legal, music services. All it does is deter people from coming into the legitimate folds because it breeds resentment."

Academic research in the US suggests file-sharing is not the cause of the music industry's problems. Professor Felix Oberholzer-Gee and Professor Koleman Strumpf of Harvard Business School and the University of North Carolina compared the number of song downloads with CD sales in the autumn and winter of 2002, when file-sharing was rampant, and found that file- sharing has "no statistically significant" effect on sales.

Their evidence suggested it takes 5,000 downloads to reduce album sales by one copy, on which basis US CD sales should have fallen by just two million copies in 2002. Instead they fell by 139 million from 2000 to 2002, which, the professors say, must have some other cause.

In the US, where 2,000 lawsuits have been filed, there was outcry when one accused was revealed as a girl who had downloaded nursery rhymes; another was a grandmother who had never used her computer.

But Jay Berman, head of the IFPI, said that although polls showed 65 per cent of people knew file-sharing of copyrighted music was illegal, the lawsuits had become necessary. "This is designed to stop an illegal activity and promote a legal activity. Hopefully, the result will be to increase demand for legitimate services."

Business Analysis, page 40

LOAD-DATE: March 31, 2004