Europeans unwilling to pay for online content

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Europeans are not paying for online content and are unwilling to do so in the future, according to a survey published by the European Commission. Meanwhile, business models to sell music over the Internet are shifting towards pre-paid unlimited music access.

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.

Music sector lobbies and the wider online content production industry have been pushing for a range of initiatives to reduce Internet piracy in Europe. They hope to curb activities like downloading or uploading songs, films and software that do not respect copyright rules, and thus deny copyright holders a significant potential source of revenue.

During negotiations on the so-called 'telecoms package', some MEPs tried to address the issue of online copyright protection by imposing obligations on Internet service providers (ISPs), in line with what is happening in France and the UK. But the plan has been rejected after heavy pressure from the telecoms industry and consumers in support of free downloading and peer-to-peer websites. 

The telecoms package, meant to reshape the legal landscape of electronic communications across Europe (Links Dossier), is currently being held hostage by an inter-institutional dispute over Internet users’ rights (EURACTIV 12/06/09).

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