Unlicensed Music Downloads To Peak In 2005.

Consumers will continue to flock to unlicensed file sharing services such KaZaa, Morpheus, and LimeWire because of their unlimited content and zero cost. Consumers aged 14 and older downloaded 5.16 billion audio files in the United States via unlicensed file-sharing services in 2001. This figure will grow to 7.44 billion audio files downloaded in 2005 before declining to 3.90 billion in 2007 due to the impact of legitimate music services, according to a new Report titled “Digital Audio: Legitimate Services Inch Forward.”

“Efforts by the record labels to use the courts to quash music piracy have failed and legitimate online music services have had little impact,” says Michael Goodman, Senior Analyst for the Yankee Group’s Media & Entertainment Strategies research practice, “The future of music, however, resides on the Internet, and its dramatically lower distribution costs.”

To be successful, legitimate music services must meet the following criteria:

Availability: Music services must offer content from all five major labels as well as the majority of independent labels.

Ownership: Consumers do not want to rent music. If they pay for it, they want to be able to mix it, burn it, copy it, and retain ownership even if they choose to discontinue subscribing to a service.

Portability: Downloaded files must be playable on different devices in the home, at work, and when mobile.

Exclusivity: Legitimate music services must differentiate themselves from unlicensed services with unique content and services.

Digital Rights Management (DRM): Consumers want to share music, and they will find a way to do so, thereby defeating all realistic DRM capabilities.

Online music services will undoubtedly cause retail revenues to decline, but new revenue streams and cost reductions will ultimately enhance record label bottom lines.

For more information at http://www.yankeegroup.com