RIAA LAWSUITS APPEAR TO REDUCE MUSIC FILE SHARING, ACCORDING TO THE NPD GROUPNPD MusicWatch Digital shows steep decline in online music file acquisition after recording industry association lawsuits were publicizedPORT WASHINGTON, NEW YORK, August 21, 2003 - According to The NPD Group, the number of households acquiring music files began to decrease in May of 2003, immediately after the Recording Industry Association of America (RIAA) instituted a well-publicized campaign threatening individual file sharers with legal action. NPD's projection of the number of households acquiring music files reached a high of 14.5 million in April of 2003, but in May that number fell to 12.7 million households and declined again in June to 10.4 million households. On April 24, the RIAA distributed a press release, titled "Judge Decides in RIAA's Favor Again in Verizon Case," which publicized a legal decision that made clear individuals cannot rely on their ISPs to shield them from accountability for illegal file sharing. The decision was widely covered in a variety of media. This media announcement, along with reports of subsequent legal efforts by the RIAA to target individual file sharers, suggest that fear of record industry subpoenas have led many consumers to curtail peer-to-peer (P2P) file sharing. "Today, file sharing is the most popular method of digital music acquisition," said Russ Crupnick, VP of The NPD Group. "While we can't say categorically that the RIAA's legal efforts are the sole cause for the reduction in file acquisition, it appears to be more than just a natural seasonal decline. This decrease is sharper than the declines we're seeing in the offline retail world. In addition because the initial drop followed well-publicized legal efforts, there's evidence to show that the RIAA's tactics may be having its desired impact on reducing file sharing among consumers." NPD MusicWatch Digital reports that total music files acquired per month also dropped from a high of 852 million files in April to 655 million files in June. Conversely, among those consumers who continue to download files, the average number of music files acquired actually increased from 59 in April to 63 in June. According to Crupnick, "our data suggests that the RIAA's legal tactics have more of an effect on the attitudes and actions of lighter downloaders." Crupnick concluded, "A near-term decline in file acquisition should hearten music industry executives, because the bulk of this activity can be ascribed to illegal P2P sites; however, it will be interesting to see in the future if these numbers turn upward again, as new paid online music services begin to break through." Methodology Note: NPD MusicWatch Digital information is collected continuously from the PCs of 40,000 NPD online panelists, balanced to represent the online population of PC users. About NPD Music
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