The study suggests that as piracy increases and artists and
authors break away from publishers to go independent, record labels
and book publishers will lose $3.1 billion and $1.5 billion,
respectively, by 2005. However, the company claims that movie
studios and game publishers have less to fear and more time to plan
a profitable digital media strategy.
"Consumers have spoken - they demand access to content by any
means necessary," said Eric Scheirer, analyst at Forrester.
"Neither digital security nor lawsuits will stop internet theft of
content. Regardless of whether they consider Napster right or
wrong, traditional publishers must focus on beating Napster at its
own game. They must create compelling services with the content
consumers want, in the formats they want, using the business models
they want."
Forrester interviewed 50 entertainment companies that produce
music, movies, books, videogames, and television. Executives
interviewed say that they will use DRM technology to stop
file-sharing, the technology that Napster depends on, and sue
internet companies and consumers that don't respect their
copyrights. But after speaking with several dozen DRM vendors,
Forrester predicts that this two-pronged strategy will fail.
"DRM can't prevent filesharing, nor will business models that
depend on the control of content ever reap sustainable revenues,"
continued Scheirer. "Consumers don't want business rules or
restrictive technology - and it only takes one person to break down
the security barriers and share content on the net. Lawsuits will
only succeed in driving consumers to underground Internet services
like Gnutella and Freenet."
"There will always be a market for content. But as control over
distribution slips away from major publishers, a lot of the money
they're making today will instead be earned by artists and service
vendors," Scheirer added. According to the Report, musicians will
gain $1 billion, authors $1.3 billion, and third-party service
companies $2.8 billion by 2005 in a historic transfer of
revenues.
Forrester predicts that surprisingly, the danger of collapse is
much less acute for companies in the movie and videogame
industries. According to the Report, consumer demand for movies,
television, and videogame content is different in important ways
from the demand for music and books.
"The urge to collect and flexibly organise
music, make custom playlists and CDs, and play my favourite songs
thousands of times is a large part of the appeal of Napster. But
this urge doesn't hold for films. Movie companies will be able to
avoid losing control over their content, even without DRM, as long
as they make video-on-demand services available in the next few
years."
