According to a report by the Yankee Group, the number of unlicensed audio files to be swapped by services like Kazaa and Morpheus will top 7.44 billion in 2005, with a small decline to 6.33 billion happening in 2006.
If Yankee's projections are right, it could be bad news for the recording industry, which has been launching their own pay services and working to thwart unlicensed music swapping. The entertainment industry is also pondering legal moves against individuals.
According to the RIAA, Internet piracy of music has shaved 5 percent from music sales in both 2001 and 2000. Although Yankee says the declines can be attributed to other reasons, unlicensed music swapping is "certainly a significant contributing factor."
Yankee analyst Mark Goodman has said that it would probably take a few years for the record industry to develop an Internet business model that works. "It's a question of a number of factors falling into place," said Goodman. "All five labels and the independents have to be signed for digital services and that'll take some time."
One interesting factiod from the Yankee report is that teens are among the most avid music consumers with 64 percent of the 16 and 17 year-olds downloading music. People 18 to 34 represented 47 percent, followed by 35 to 49 year-olds at 33 percent.
Those demographics, however, present a "fundamental question of how legitimate music services target the consumers who are the most likely to download music, if they don't have a credit card," Goodman said.
News source: CNet News.com
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