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
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
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
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.
quote: Record companies cannot collect restitution for every time a song has been illegally downloaded, a US District judge has decided. Judge James P. Jones gave his opinion on United States of America v. Dove, a criminal copyright case, ruling that each illegal download does not necessarily equate to a lost sale, and that the companies affected by P2P piracy cannot make their restitution claims based on this assumption.
quote: As we believe that we are decreasing the number of pirates downloading the game with our DRM fixes, combining the increased sales number together with the decreased downloads, we find 1 additional sale for every 1,000 less pirated downloads. Put another way, for every 1,000 pirated copies we eliminated, we created 1 additional sale. Though many of the pirates may be simply shifting to another source of games for their illegal activities, the number is nonetheless striking and poignant. The sales to download ratio found on Reflexive implies that a pirated copy is more similar to the loss of a download (a poorly converting one!) than the loss of a sale. Though that doesn’t make a 92% piracy rate of one of our banner products any less distressing, knowing that eliminating 50,000 pirated copies might only produce 50 additional legal copies does help put things in perspective.