Americans Head Back Online For Music

Monday, April 26th 2004, 12:00 am

By: News On 6

An estimated 6 million people have stopped downloading copyrighted music from the Internet over fears that they may sued by the recording industry, but the overall number of Americans who download music is rising with the popularity of iTunes, Napster and other legitimate online music services, according to a survey released today by the Pew Internet & American Life Project.

Approximately 23 million people are active downloaders of music, based on a phone survey of 1,371 adult Internet users conducted in February. That compares to 18 million estimated downloaders in November and December 2003.

Despite the recent uptick, the number of Internet users who download music remains well below the high-water mark of 35 million reached in the spring of 2003.

Lee Rainie, director of the Pew Internet & American Life Project, said the Recording Industry Association of America's (RIAA) decision to sue thousands of Americans who illegally traded and downloaded copyrighted music files had an immediate effect on file-sharing. An estimated 38 percent of Internet users now say they are downloading music less than they used to in response to the RIAA legal effort, according to the Pew survey.

"Once the first formal legal challenges took place, the public's mindset shifted. There's a wariness that we never saw last year at this time."

But Rainie said the limits of the association's legal campaign are evident in the recent increase in active music downloaders. "In general it's not a great long-term business strategy to sue your customer base. There is a natural limit to how far even the aggressive legal tactics of the RIAA can reach."

The music industry has sued 1,977 people since last September, reaching settlements with 432 suspected downloaders. The average settlement amount is about $3,000, but the association can claim up to $150,000 for each pirated song.

Greg Bildson, the chief operating officer of New York-based file-sharing service Lime Wire, confirmed that the number of people using the service fell after the RIAA filed its first lawsuits last September, but those numbers bobbed up again within a few weeks.

"In the early days when there was lots of press about those things you might see a blip for a week or so. Those blips have stopped as far as I can tell," Bildson said. Roughly 350,000 people download Lime Wire's file-sharing software every week, up from about 250,000 a week last year at this time, he said.

Lime Wire provides software products that allow people to connect to the Gnutella file-sharing network, one of the two most widely used networks for trading free copies of copyrighted music, movies and software.

RIAA Chairman Mitch Bainwol said the Pew survey's latest findings are "welcome news and another indication that the message of deterrence and the availability of exciting legal services is getting through."

The Pew survey also suggests that the recent increases in the number of persons downloading music from the Internet can be attributed to the success of legal Internet music services. According to Pew, while online music services like Apple Inc.'s iTunes remain less popular than file-sharing networks like Kazaa and Morpheus, 17 percent of people who download music are now using paid services.

RIAA officials contend that lawsuits are among their most effective weapons to fight illegal downloading, which they blame for leeching hundreds of millions of dollars in compact disc sales from their members' labels. Sales fell from a high of $13.2 billion in 2000 to $11.2 billion in 2003, a period that matches the growth of online music piracy services.

But other observers of the Internet file-sharing point to other data suggesting that the number of people scared off by the music industry lawsuits has been more than offset by the glut of new file swappers.

BigChampagne, which tracks file-sharing use by tapping into the most popular networks and recording the number of active users, has measured a steady growth in activity every year, even after the RIAA began its legal barrage, according to Eric Garland, chief executive of the Atlanta-based company.

The peak number of users logged onto the top file-sharing networks at any one time rose from 6.7 million last fall to more than 8.8 million in the first few months of this year, Garland said.

BigChampagne has tracked seasonal ebbs in file sharing usage, but has seen nothing like the drop-off reported in the January Pew study. Garland attributed the disparity between the two findings to the methodologies the groups use.

Pew might have a tougher time getting honest answers from Internet users about their downloading activity because it has been "stigmatized," Garland said.

Rainie and Garland agreed that the file-sharing ranks will continue to grow into the foreseeable future.

"We're chasing a growth technology that's starting to look a lot like instant messaging or e-mail in terms of being a communications technology that's on more and more desktops every day," Garland said.

The Pew survey findings hinted that a fair amount of illegal activity could accompany that growth. About 58 percent of the survey's respondents said that they do not care if the files they download are copyrighted. And about 15 percent of Internet users said they have downloaded video files onto their computers, compared to 13 percent in Pew's November-December survey.