The report from the Organisation for Economic Co-operation and Development(OECD) says that on-line music distribution is set to grow over the next few years, from around 1–2% of total music sale revenues currently to 5–10% of revenue by 2008.
This, says the report, will create positive and significant economic ripple effects for the consumer electronics manufacturers, and the PC and telecom industries, meaning that growth in the sector will have implications for a wide range of players, including artists, consumers, the record industry, and new digital intermediaries, such as digital rights management software companies.
In principle, says the report, file-sharing software is an innovative and promising technology, although it is currently abused by the many P2P users who take advantage of the software to make unauthorised copies not only of music, but increasingly also of video and software.
This piracy has had an undoubted effect on the music industry, although the OECD does not consider that file-sharing is solely to blame.
“It is very difficult to establish a basis to prove a causal relationship between the size of the drop in music sales and the rise of file sharing,” says the report. Physical piracy, CD burning, lower consumer spending and competition from other entertainment devices have also played a part.
However, it predicts that internet-based piracy is likely to be reduced as licensed file-sharing and new forms of super-distribution evolve.
Last year marked a turning point in the development of the technology, says the OECD, with the launching of a range of legitimate on-line music services, notably Apple’s iTunes. By the end of 2004, there were 230 sites offering over one million tracks on-line in the US and Europe.
Presenting itself as one of the first roadmaps as to how public policy regarding on-line music distribution should be re-evaluated, the report calls for policies balancing the interests of suppliers and users in areas such as the protection of intellectual property rights and digital rights management (DRM). These polices should not disadvantage innovative e-business models and new technologies.
Given that the on-line distribution of content is a relatively new phenomenon, legal frameworks involving issues such as rights protection technologies and secure micro-payment systems may also need to be revisited, says the OECD.
