Music Fans Still Burning

Music is ubiquitous, as research from The NPD Group finds that nearly two-thirds (64 percent) of all U.S. households with Internet access had at least one digital music file on their hard drives, and more than half of that group had up to 100 digital music files.

Number of Music Files per Household
1-100 files	56%
101-500 files	28%
501-1000 files	8%
1001+ files	8%
Note: Should be read, “56 percent of the households that had digital music files on their hard drives had between 1 and 100 files”
Source: The NPD Group

While all of these music files aren’t the result of Internet downloading, NPD says that two-thirds of all digital music file acquisition can be attributed to file sharing, and the remainder is mainly attributed to ripping tracks directly from CDs.

Kazaa (21 percent usage) and WinMX (5 percent usage) were among the most popular P2P [define] services, and Russ Crupnick, vice president of The NPD Group, comments on the digital music libraries that Internet users are compiling: “The RIAA’s [Recording Industry Association of America] focus on those sharing the most files makes sense, because this group provides the most egregious example of one of the music industry’s most pressing business issues – copyright infringement.”

While WebUser reports that, according to the RIAA, 52 percent of survey participants support the campaign against those swapping music online, WebUser’s own poll shows that 94 percent of the respondents are against suing illegal file swappers.

Yet, with all these digital music files filling up hard drives, research from Parks Associates indicates that most music-lovers lack immediate playing portability.

The September 2003 study finds that only 20 percent of digital-music users own an MP3 player – and a scant 8 percent plan on purchasing one within the next 12 months – preferring to burn their own CDs instead. Parks found that some 80 percent of PC users own a CD burner.

“The CD is being replaced as a distribution method, not a format,” said John Barrett a research analyst at Parks Associates. “Digital music users are taking their tracks, burning them onto CDs, and then playing the CDs on their stereos.”

But IDC forecasts the worldwide compressed audio player – or “MP3 player” – market to grow to nearly $44 billion in revenues by 2007, representing a five-year compound annual growth rate of 30 percent. IDC further estimates that devices featuring compressed audio encoding and decoding as an additional feature will capture roughly two-thirds of the overall market in 2007 and generate more than $28 billion in revenues.

“The design and image associated with products like Rio portable flash players and Apple’s iPod portable jukebox have done a great deal to spark popular interest in MP3 players,” said Susan Kevorkian, senior analyst in IDC’s consumer devices and technologies research group.

Kevorkian cites device pricing and features, consumer familiarity with device technology.