The NPD Group, a top market analytics research firm has released a new study [press release] that might surprise some.  It claims that in 2010 the rate of users who pirate content on peer-to-peer (P2P) networks dropped to 9 percent, down drastically from 16 percent reported in 2007.  This marks a dramatic reversal of the trend of increasing piracy rates in recent years.

The report argues that piracy is not a "fundamental" problem for the media industry, given the relatively low levels.  This stands in stark contrast to statements in the Digital Media Report 2010 [PDF] by the International Federation of the Phonographic Industry (IFPI), the parent organization of America's RIAA.  The IFPI stated in the report, "[The industry will] struggle to survive unless we address the fundamental problem of piracy."

Warner Music, a RIAA member takes a bit more conservative approach.  In a recent presentation to the U.S. Federal Communications Commission, Warner suggested that only 13 percent of Americans pirate.  The Warner report also offers some disclaimers about the harmful impact of pirates, stating that most pirates do spend money on content and that they "tend to drive high discovery for others".

The numbers from the NPD Group are admittedly slanted, though, due to a significant event in the industry.  They were taken from the final quarter of 2010, when the RIAA scored a major lawsuit win that forced the U.S.'s most popular P2P client, LimeWire, to cease distribution.  Thus the dip in P2P filesharing may be only temporary, due to the loss of one of the highest profile clients.

States Russ Crupnick, entertainment industry analyst for NPD, "Limewire was so popular for music file trading, and for so long, that its closure has had a powerful and immediate effect on the number of people downloading music files from peer-to-peer services and curtailed the amount being swapped. In the past, we've noted that hard-core peer-to-peer users would quickly move to other Web sites that offered illegal music file sharing. It will be interesting to see if services like Frostwire and Bittorrent take up the slack left by Limewire, or if peer-to-peer music downloaders instead move on to other modes of acquiring or listening to music."

Today, many of the most used clients are unofficial community releases of past P2P clients that were banned by lawsuits.  Examples include Kazaa Lite and WireShare (formerly LimeWire Pirate Edition), etc.  According to the NPD Group's data, FrostWire (traditional P2P) and uTorrent (Torrent P2P) increased in use, as well, in the wake of the Limewire shutdown.

While the study did consider BitTorrent traffic (a specialized P2P protocol), it did not consider new forms of illegal content distribution, such as one-click downloads, illegally streamed content, such as unauthorized posts to video sharing sites like YouTube.  The latter seems particularly prevalent, as you can go to YouTube and find virtually any song you can imagine -- mostly from unofficial user-submitted uploads (though the major label industry does maintain an official presence on the site via channels like Vevo).

Media organizations have tried unsuccessfully to sue YouTube's owner Google over such posts.  The television industry championed the biggest such case, when Viacom sued Google, demanding $1B USD in damages for pirated content hosted on YouTube.  The media giant's case fell apart, though, after it came out that Viacom employees uploaded content under fake screennames to make it look like infringed content.

The study also only surveyed those 13 and up.