Music fans continue to resist paying for music online

Young: Despite lawsuits and relatively cheap alternatives, listeners would rather share than buy.

November 13, 2003|By Daniel Rubin | Daniel Rubin,KNIGHT RIDDER/TRIBUNE

The music industry needs to clone Ryan Dixon.

The senior at Cabrini College in Radnor, Pa., began downloading free music off the Internet even before Napster put file-sharing on the map in 1999. When Napster went down, Dixon graduated to Kazaa.

Now the 21-year-old pays for all his digital songs. Last week, he picked up an EP from the band Maroon5 and a live Jason Mraz track for 99 cents each on iTunes, Apple Computer's online service. That makes 675 songs he has bought online legally since April.

He is virtually alone.

For every Ryan Dixon, there are thousands of others who prefer getting things for free. They have balked at the high price of CDs, and they don't want anyone limiting what songs they can own or what they can do with them. They feel they will never get caught.

This is digital music's "pregnant moment," said Josh Bernoff, senior analyst for Forrester Research, which tracks technological trends. The music industry, after years of blaming file-sharing for plummeting sales, has struck back, with such big names as Napster, Dell, Sony, America Online, RealNetworks and MusicMatch introducing or planning pay-per-song alternatives. The services are aimed at those who want to spend less and are spooked by copyright-infringement lawsuits.

Many industry observers say the new services will provide little lift for the beleaguered record business. In fact, they say, the pay services will steer more people toward the freebies.

"Apple legitimizes Kazaa," said Peter Fader, a marketing professor at the University of Pennsylvania. "It is telling the world that downloading is the right way to get music."

More people shared free music files in October than the month before, and more are sharing this year than the year before, said Eric Garland, CEO of BigChampagne.com, which monitors traffic on the largest peer-to-peer networks - including Kazaa, Morpheus and Grokster - accounting for about 85 percent of file-sharing.

"While watching these pay services evolve, we've only seen one trend in file-sharing behavior: more people sharing more and more files," Garland said.

The 4.4 million people that BigChampagne counted sharing files in September constituted a 45 percent increase from the year before - the month the Recording Industry Association of America sued 261 people, alleging that they stole copyrighted music via the Internet.

"The selection and availability and the quality offered on file-sharing networks is still superior," Garland said.

Apple, the market leader for online music, aspires to sell 100 million songs by April, its service's first anniversary. That many songs change hands for free on file-sharing networks in a matter of days.

But the industry probably will make money on the new services. Apple pays about two-thirds of what its takes in to labels for rights to offer the music online. The labels have deals with all of the services. But not all companies participate. Beatles music, for instance, is not available online - legally.

The recording association's strategy of suing those it suspects of stealing music has had an effect. Nielsen/NetRatings has reported that the number of people using Kazaa, the most popular software for trading free music, fell by about 40 percent between June 29 and Sept. 21.

But Nielsen based its estimates on how many times members of its user panel loaded Kazaa software, and measured U.S. Internet-account owners in their homes, according to Garland. BigChampagne measures use of the networks, and takes in foreign downloaders, college students and teen-agers - the most active traders.

Teen Research Unlimited, a market-research group that concentrates on the habits of young people, has found that they are unlikely to stop taking free stuff off the Web.

"The teens we've spoken to recently haven't curtailed their downloading in the last six months," said Michael Wood, TRU's vice president. "They feel invincible. They kind of laugh at the industry's attempt to shut them down."

He said teens rationalize their actions. "So they'll buy [Eminem's] Shady brand of clothing but won't feel the need to support Eminem by buying his music," Wood said.

"The only way [for the labels] to win the war is to change the rules of combat," Fader said.

That means adding value, such as helping fans learn about songs they might not know. His experience on subscription services such as Rhapsody suggests to him that for the first time since music went online, the consumer's experience is shifting from gathering to hunting.

The new services provide skilled guides for collectors, Fader said, letting them know what others with similar tastes are listening to, and what staff music obsessives suggest.

All this will be moot in five years anyway, Fader said. By then, we'll walk around with cell phone-size wireless players that enable us to receive whatever we want to hear. We'll pay by, say, the month and won't need to own or store vast amounts of music: We'll get what we want on demand.

With this magic jukebox, "you can punch up any song or genre or playlist you've stored and let the music wash over you," Fader said. "So you won't have to worry which song to put on the device today."

By then, maybe the Beatles will play along, too.

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