One of the key statistics that is hyped every year, is the piracy ratio of downloaded music. Just as last year, IFPI estimates that 95% of all downloads are illegal, without giving a proper source for this figure. Interestingly, those who take a closer look at the full report (pdf), will see that only 10% of the claimed illegal downloads are seen as a loss in sales.

Contrary to the RIAA’s arguments in court, the BPI and IFPI don’t believe in the “every pirated download is a lost sale” myth. Matt Phillips, BPI’s Director of Communications wrote in an email to TorrentFreak: “No, we don’t think every illegal download is a lost sale (and never, ever, have, if my memory serves me correctly). The estimates for lost sales revenue is [sic] not calculated on this basis.”

To come up with a ‘best guess’ of the real losses for the UK market, the music industry have commissioned Jupiter Research. For two years in a row, Jupiter estimated the losses are to be about equal to the revenue that comes from digital sales. If we combine this with the ‘only one in 20 downloads is paid for’ guesstimate, only one in 10 illegal downloads is seen as a loss in sales.

Of course we will be very reluctant to draw conclusions from research that is commissioned by the music industry itself, however, it would interesting to know what the effect is of those downloads that are not seen as a loss. Could they perhaps used by consumers to discover new music, and generate revenue in the long run?

What is clear from the report is that ‘pirates’ have shown the music industry what consumers really want. The music industry is slowly starting to recognize that they have to compete with piracy, by offering high quality products. In the 2009 report, for example, IFPI proudly reports that many services now sell DRM-free music, while they themselves are the reason why these restrictions were implemented in the first place.

In the report IFPI writes: “An important development in 2008 was the licensing of more online stores to sell downloads without digital rights management (DRM), meaning consumers can play the music they acquire on any portable device. In January 2009, Apple announced it had signed deals with leading record companies to offer eight million DRMfree tracks at flexible price points. The move is expected to significantly boost download sales.”

Besides the usual anti-piracy ramblings on how ISPs should help to disconnect pirates from the Internet, the report documents another interesting trend. The music industry clearly recognizes that they’ve done something wrong in the past, and is now promoting unlimited download services, either ad supported or for a low monthly fee. If done right, this ‘piracy inspired’ model might just be the future of music consumption, or at least a worthy competitor to piracy. But then again, they will find something else to complain about sooner or later.

Source: Music Piracy Not That Bad, Industry Says

* The number of people who have actually been sued for filesharing by the recording industry amounts to little more than a handful
* None of these cases have actually been defended on the basis of filesharing, but on the basis of fair use, dismissal because it was someone else, etc.
* A letter demanding settlement does not amount to a lawsuit, or being “sued ”

Myth: Filesharing is illegal
Facts: No it isn’t illegal inasmuch that it does not constitute a criminal act

* If you are caught and if the matter is pursued, it is a civil matter between you and the recording industry and you could be sued.
* You cannot be arrested, searched, fined or imprisoned for filesharing. The recording industries do not have state support, they cannot simply search property at will or seize your possessions, they are private companies with no more rights than private individuals.

Myth: The recording industry always wins
Facts: No they don’t

* Over 75% of the people receiving demands for settlement in the 2 years ended September 2005 neither settled nor were taken to court
* No cases contested on the basis of filesharing have yet been heard by a judge

Myth: The risks of being caught filesharing are very high
Facts: They are not

* The risks of receiving a demand for settlement are 1 in around 4,000
* The risk of receiving a demand for settlement and then actually having to do so are around 1 in 17,000
* The risks of being taken to court for filesharing are around 1 in 12M
* Nobody has ever received a demand for settlement or been sued for downloading only. The risk of being the first to face such an action are in therefore the order of 1 in 60M
* More than 95% of those caught filesharing have been caught using Fastrack clients such as Kazaa

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Source: Mythbusting