Recovering Kazaa users are everywhere. They might be fearful of the recording industry's litigious rampage. Perhaps they're tired of pop-ups and promotions. Maybe they went straight--to Apple's ITunes or Musicmatch. Or perhaps they've just gone further underground for their digital music.
Kazaa's file-sharing software is still used by more than 20 million people, according to research from ComScore Media Metrix; that number is down from almost 35 million users less than one year ago. But the steep decline doesn't mean the death knell is ringing for free--and illegal--music online. Paid music services may be growing, but so are some of the smaller peer-to-peer services. And many Web surfers are finding new sources and new methods for trading music online.
So in the war against online music piracy, who is winning? It depends on whom you ask.
The Recording Industry Association of America began filing lawsuits against alleged file swappers last September, and calls the suits an effective deterrent against piracy. So far, 2454 individuals have been sued. The RIAA won't say how many suits are still pending, but it recently filed 477 new cases.
"The barometer of success for us is not the day-to-day traffic on any particular pirate peer-to-peer network. There will always be a degree of piracy online, just like there is always piracy on the street," says Jonathan Lamy, RIAA director of communications.
"The idea here is to create an environment where legitimate online music services can flourish. We look at whether we are facilitating the expansion of the legitimate online music market, and so far it's been very encouraging," he says. "Clearly, file sharing is still an enormous problem, and that means that we need to continue the course of deterrence through legal action and offering great legitimate alternatives."
Researchers confirm that file sharing appears to be on the decline.
"Our long-term tracking indicates that the usage of peer-to-peer services is down compared to a year, or a year and a half ago," says Russ Crupnick, president of music and movies at researcher NPD Group. However, he notes, "overall tracking tells us that peer-to-peer usage has been pretty stable for the last six to nine months."
Use of peer-to-peer services is down slightly in a recent survey by the Pew Internet Project and ComScore Media Metrix. ComScore also noted a drop in the use of the WinMX file-sharing service, says Graham Mudd, a senior analyst with ComScore. In December 2002, the service had an estimated 7.5 million unique users. By February 2004, ComScore's most recent data, that number was down to less than 6 million users, ComScore says.
However, ComScore notes an increase in the use of several smaller, lesser-known peer-to-peer networks, such as BitTorrent and eMule. BitTorrent, for example, had slightly more than 200,000 unique users in November 2003. By February 2004, the number was just under 400,000.
"There has been some speculation that these services have lower visibility, and it may be more difficult to track users on them," Mudd says. "More savvy Net users may be switching to these applications because they think they can fly under the radar."
The RIAA, however, disputes that assumption.
"The nature of these networks is such that if you are distributing music files to thousands or millions of other users, you can be found," Lamy says. "And why would you? There are great legal alternatives available, so there isn't any excuse for getting your music illegally."
While BitTorrent's usage almost doubled over a three-month period, it remains small. Clearly, not everyone uninstalling Kazaa and WinMX is moving to an alternative service, Mudd says. "The pickup in smaller applications does not make up for the overall decline in peer-to-peer usage," he says.
Some users are switching to legal services, such as ITunes, which celebrated its successful first year in April. (ITunes for Windows users launched last October.) ITunes sold 70 million songs in its first year, Apple CEO Steve Jobs said in celebrating the anniversary last month. While admitting that number falls short of Apple's goal of selling 100 million songs in its first year, Jobs called the growth "phenomenal."
ComScore's Mudd agrees ITunes' success is impressive but says users of legal music services are not all repentant file swappers.
"The drop-off in peer-to-peer is not necessarily being picked up by the paid services," he says.
Ironically, the RIAA campaign is also scaring off potential customers, the Pew and ComScore study finds. Sixty percent of people who have never tried downloading music say the threat of lawsuits will deter them from downloading music from any source--legal or illegal--in the future.
The RIAA's actions--intended to stop illegal file swapping--are clearly confusing some people, says Mary Madden, a Pew research specialist.
"This is a mixed message for the RIAA," Madden says. "On the one hand, they have significantly intimidated people from logging on to peer-to-peer services. But there's also the potential for people to be scared away from legal services. People are still very confused about what constitutes legal and illegal behavior."
After all, some file-sharing services promote premium or other fee-based services, and some also have legal uses, she notes. "So the potential is there for confusion," she says.
And there's still the matter of price--itself a moving target.
"There's only so much you can do to compete with free," says David Card, a senior analyst with Jupiter Research. "Guaranteed file quality helps. People cite that as a reason they'd be willing to pay."
Music fans worry that the music industry will raise prices on its sanctioned sites once people switch over. Some reports said Apple was under pressure to raise the price of downloadable songs from 99 cents to as much as $2.49 each. Jobs felt it necessary to address the topic at the ITunes anniversary.
"Apple and the music labels will continue to offer songs for 99 cents," he said. He declined to discuss the status of any pricing negotiations with record labels.
Raising prices is a "terrible idea," says Jupiter's Card. Jupiter's research suggests 99 cents is a "sweet spot" for pricing, and that users will not pay more, he says. ITunes competes not only with free--if illegal--services, but also increasing competition from legit services. Wal-Mart recently launched its own music services, offering downloadable songs for 88 cents each; and RealNetworks and Sony both market similar services.
And ITunes and the rest still must compete with those newer, smaller services and alternative sources of music. Some savvy Web users are turning to newsgroups such as Usenet to swap music, and some are even creating their own private file-swapping networks.
Such ventures aren't immune from RIAA lawsuits, representatives for the industry group say. The RIAA won't discuss any particular legal steps it may take in the future.
But the lawsuits against alleged file swappers will "go on as long as necessary," RIAA's Lamy says. "Right now, the online music marketplace is overwhelmed by pirated and illegal music, and the legitimate services are put in a position of competing against free. Stolen copies of the same products are offered for free. We're never going to eliminate piracy, but we need to bring it down to a level where the legitimate services can compete."
Liane Cassavoy, PC World
