Almost 50% of European citizens do not want to pay for online audiovisual content and only 5% bought music or videos on the Internet in the three months before a poll conducted in 2008 and published by the Commission in the annual digital competitiveness report in August.
The figures confirm existing data on the economic importance of online piracy, which is estimated to account for 95% of music tracks and 80% of movies downloaded. In 2008 over 40 billion copyrighted files were exchanged illegally across the world, according to the recording industry.
Consumer organisations claim that the volume of piracy is lower than the music industry estimates. However, it is a fact that peer-to-peer websites flourish worldwide.
In recent months, legislative initiatives to curb online piracy have been strongly opposed by Web users and Internet service providers. Boundaries between copyright protection and online users’ rights are difficult to define, as the standstill over the EU telecoms package has proven (see background).
New models emerge to sell digital content
In this context, the digital content industry is increasingly shifting towards new business models to monetise their digital products. The music sector is setting the new pace, having been the industry hardest hit by online piracy.
The International Federation of the Phonographic Industry (IFPI), which represents the recording industry worldwide, estimates that in 2008 music companies’ digital revenues grew on average 25% compared to the previous year and accounted for one fifth of their sales, up from 15% in 2007.
This trend was fostered by the improved performance of online music stores, such as iTunes, Amazon, 7digital or Dada, which saw overall sales grow by 24% in 2008 from a year earlier. The boost was mainly helped by the increased availability of content transferable to many different devices, as opposed to content usable only on specific platforms, as was the case with music downloaded from Apple’s iTunes which could only be played on Apple’s iPods.
But the industry itself acknowledges that another key factor behind the growth of digital music revenues lies in the increased shift towards different business models which are expected to overtake sales from digital stores.
One such new model is based on offering paid access to unlimited music content instead of selling single songs or albums. Examples of the emerging trend are the service announced by BSkyB in partnership with Universal Music for the British and Irish markets, and similar national initiatives in Denmark, France and Sweden.
Mobile handsets makers such as Nokia and Sony Ericsson are also selling new phones equipped with services allowing unlimited music access to their users.
