But the International Federation of the Phonographic Industry also highlighted the positive results of on-going deterrence campaign since the first wave of litigation in March.
Litigation to date
Launched in March, the first phase of litigation targeted 247 individuals in Denmark, Germany, Italy and Canada, charging them with illegally making available hundreds of music tracks for copying, transmission and distribution via file-sharing services.
The actions followed similar suits in the US, where the Recording Industry Association of America has to date filed suit against 2,947 individuals.
Of the 88 alleged Danish file-sharers to receive civil demand letters, 17 individuals have either already paid or agreed to pay compensation averaging around €3,000 each, while a further 23 are negotiating levels of compensation, said the IFPI.
A further 24 suits are due to be filed in court during the week, with several hundred more planned for the coming months.
In Germany, a 23-year old man from Cottbus in south east Germany became the first to agree to pay compensation for illegal file-sharing, and now faces a bill of €8,000 to cover the 6,000 MP3 files found on his computer and 70 CDs containing further files.
In a second case, a 57-year-old teacher from Stuttgart has been charged with copyright infringement and will face similar compensation demands.
Further actions are expected in Germany, and in Italy, where the Public Prosecutor has charged 30 individuals with copyright infringement and trials are expected to start within the next few months. In addition France, Sweden and the UK have already launched high-profile warning campaigns that they will prosecute file-sharers if necessary.
Effect of lawsuits to date
To establish what effect, if any, the litigation has had on public awareness, in May the IFPI conducted a survey of consumers in France, Germany, the UK and Denmark.
The results of the campaign to date are positive, claims the IFPI, showing that legal awareness among the European public has increased and the number of pirate files on the internet has fallen steadily.
Meanwhile, the number of legal sites where consumers can buy music has risen to over 100 globally - five times the number that existed one year ago.
According to the survey, seven out of ten people in France, UK, Denmark and Germany are now aware that file-sharing copyright music without permission is illegal (70% on average compared to 66% before the start of the campaign). The impact has been greatest in the under-30s age group responsible for the majority of file-sharing.
In Italy, 45% of surveyed file-sharers say they expect to stop over the next three months (twice the number before the campaign started), while in Germany, France and Denmark, public confidence in the effectiveness of litigation has risen (59% say the campaign will work, compared to 55% in December)
File-sharing as a whole, says the IFPI, has dropped, with the number of infringing music files on the internet standing at 800 million, down from 900 million in January 2004 and down 27% from a peak of 1.1 billion files in June 2003. In addition, the number of infringing music files available on peer-to-peer networks has fallen to 700 million, 100 million less than in January 2004 and 30% down on the June 2003 peak of one billion.
At the same time, says the IFPI, the number of legal on-line music sites has increased from 20 in mid-2003 to over 100 (of which more than 50 are in Europe), and traffic on these sites has increased dramatically over the last year.
Pan-European on-line music provider OD2 reports average monthly music downloads at over 500,000 in first quarter of 2004 rising by 27% in May 2004.
According to IFPI Chairman and CEO Jay Berman:
"Today's results show that litigation, combined with the rollout of new legal on-line music services, is having a real impact on people's attitudes to illegal file-sharing, and this in turn is affecting levels of file-sharing activity. We are not claiming victory yet, but we are encouraged by the way the market is developing, and by the shift we see in public opinion."