Business Matters: Subscriptions and Anti-Piracy Efforts: Helping the Record Industry Make Progress?
Business Matters: Subscriptions and Anti-Piracy Efforts: Helping the Record Industry Make Progress?

The main news to come out of IFPI's Digital Music Report 2012 is that digital sales and services grew by 8% in 2011 to $5.2 billion, combined with a slowing decline in the overall recorded music market, which fell 3% from a total trade value of $16.7 billion in 2010 to $16.2 billion dollars last year. But the report also contained interesting data concerning the timely issue of preventing copyright infringement and the effectiveness of anti-piracy legislation.

Of particular interest are IFPI's statistics regarding the success of "Hadopi" graduated response laws in France, whereby a criminal court has the power to suspend an internet account for up to a month and levy a fine of €1,500 (about $1,930) if an individual is found guilty of repeat infringement. Since warning letters were first issued in October 2010, IFPI says P2P piracy levels in France have fallen by 26%, with approximately 2 million P2P users stopping their use of unlicensed services, according to IFPI/Nielsen data. To date, there have been more than 700,000 Hadopi notices sent, which IFPI estimates to have reached approximately 10% of P2P users in France.

The IFPI report also quotes a newly-published academic study entitled "The Effect of Graduated Response Anti-Piracy Laws on Music Sales: Evidence from an Event Study in France" by Danaher et al, which estimated that iTunes singles sales in France were an average of 22.5% higher for singles and 25% higher for digital albums than they would have been prior to the introduction of Hadopi laws.

IFPI additionally points to the introduction of graduated response laws in New Zealand in September 2011 as having an immediate positive effect, with usage of P2P networks falling 16% between September and November last year, accompanied by an increase in online sales.

In South Korea -- which first introduced graduated response measures in 2009 and saw 6% growth in its overall recorded music market in the first half of 2011, according to IFPI -- government officials report that 70% of infringing users stop their activity upon receiving a first notice.

Site-blocking measures across Europe, whereby ISPs in Belgium, Italy, Denmark, Austria and Finland were ordered to block access to P2P network The Pirate Bay, also had a profound effect on music sales in the respective markets. In Belgium, consumer usage of The Pirate Bay fell by 84% between August and November 2011, according to data from comScore. In Italy, where ISPs were also ordered to block access of BTjunkie, Pirate Bay usage fell 74%.

"Over the last year there has really been a build-up of momentum [but] the environment remains very, very challenging with something like 28% of people who are accessing the internet going on unlicensed sites," said IFPI chief executive Frances Moore, speaking at the London launch of the IFPI Digital Music Report. "Some governments have engaged [with the problem] but there's definitely more work to be done," she said.

Moore also commented on the on-going controversy surrounding SOPA/PIPA in the U.S. "What is quite clear is that the U.S. remains committed to combating piracy," she said. "When you are taking on this type of initiative [you] always get resistance. But if you look around the rest of the world you see these actions [implemented] in South Korea and you see the market improve."

Moore also called for search engines such as Google to do more in the fight against piracy by removing restrictions on the number of takedown notices for non-legal content that rights holders can notify. Moore also called for search engines to favor legal music sites over P2P links in their search listings, as well as cut advertising support for P2P sites. "There's a duty of diligence here that does have to be applied," she stated, adding that IFPI's on-going aim was to build stronger partnerships with search engines and other online intermediaries, such as ISPs, payment providers, advertisers, mobile service operators, to help further combat piracy.

In 2011, IFPI says that it removed more than 15 million infringing links, a 115% increase on 2010. A partnership between IFPI, the City of London Police and various global payment providers has, meanwhile, helped remove payment services from 62 illegal websites based in Russia and the Ukraine, preventing an estimated £180 million ($280 million) of illegal trade, according to IFPI.