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RIAA Releases Mid-Year Snapshot Of Music Industry
WASHINGTON (August 26) 2002 -- Both online and physical music piracy continue to impact the music industry midway through 2002, with a comprehensive new survey of public practices providing the strongest evidence to date that illegal Internet downloading is displacing sales and helping explain a seven percent drop in CD shipments and a 69.9 percent increase in counterfeit/pirate optical disc seizures, according to new analysis and data released today by the Recording Industry Association of America (RIAA). According to PricewaterhouseCoopers LLP, CD shipments dropped 7 percent in the first six months of 2002, while seizures of counterfeit CDs soared by 69.9 percent. The first-half decline in CD shipments comes on top of last year's overall 5.3 percent drop. Together, the findings from both surveys show a continuing fall-off in CD sales—and in the process decisively debunk the theory that stealing music online is somehow good for the music business. Based on a May 2002 survey of 860 Internet-connected music consumers age 12 to 54, Peter D. Hart Research Associates found that by a more than a two-to-one margin, consumers who say they are downloading more also say they are purchasing less. Among people who said their downloading from file-sharing services had increased over the past six months, fully 41 percent reported purchasing less music now than six months ago, compared to only 19 percent who said they were purchasing more music. Even for those who are downloading the same amount, nearly two-to-one are purchasing less music in the past six months -- 25 percent purchased less, 13 percent more and 62 percent purchased the same amount of music. And, for those who are downloading less, 22 percent said they purchased less in the last six months, 23 percent said they purchased more and 55 percent said they purchased the same amount. Though other factors like the decline in consumer spending have played a role, Cary Sherman, President of the RIAA, said that illegal music downloading was the main culprit in the drop in sales. "Cumulatively, this data should dispel any notion that illegal file sharing helps the music industry," said Sherman. "In fact, there are numerous red flags and warning bells that illustrate conclusively the harmful impact of illegal downloading on today's music industry," Sherman continued. "For example, 63 percent of Internet-connected music consumers tell us they've acquired at least one burned CD in the past year. And of those, the proportion who say they have acquired 11 or more burned CDs has more than doubled in the past year, rising from 10 percent to 24 percent. This industry must continue to combat piracy in new and innovative ways," Sherman said. Like That Tune? Many Head Straight To The Internet To Get It For Free! Other findings of the Hart survey include: * 35 percent of young Internet-connected music buyers say the first thing they will do after hearing a song they like by an unfamiliar artist is download the song for free from a file sharing service. * Only 10 percent of those same young fans say the first thing they will do after they hear a song they like by an unfamiliar artist is buy the album. More Downloading, Fewer Shipments The impact of these consumer practices is evident in the new sales and shipment data. For example, the number of titles selling more than one million units has dropped sharply since last year: * At mid-year 2001, 37 titles had sold more than one million units, * At mid-year 2002, only 20 titles have sold more than one million units. In all, total U.S. music shipments dropped 10.1 percent from 442.8 million units in the first half of 2001 to 398.1 million units in the first half of 2002. In dollar value, this represents a 6.7 percent decrease, from $5.93 billion in the first half of 2001 to $5.53 billion in the first half of 2002. RIAA Strengthens Anti-Piracy Efforts With More Operations The RIAA has continued to strengthen its commercial anti-piracy efforts in working with local and federal law enforcement. The efforts remain a success on many fronts. For example, in the first half of 2002, RIAA Anti-Piracy Units increased the number of search warrants executed by over 96 percent. Arrests and indictments were up 83.9 percent as well. "Despite the significant resources we have dedicated to combating this problem, and the associated success we have had in seizures, commercial disc piracy continues to harm the industry," said Sherman. "We have been working even more closely with law enforcement agencies and that valuable relationship has produced significant results."
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