Online music sales plummet

LONDON, UK (MP3 Surveys) - Sales of CDs and cassettes online have fallen by 25% in the first nine months of 2002, according to a survey.
The increasing popularity of CD copying, or burning, and illegal song-swapping over the internet has been blamed for the drop.

The survey by research firm ComScore Networks monitored more than 1.5 million web users.
It showed online sales of music - in the form of physical singles, albums, CDs and tapes - fell to $545m (�348m) from $730m (�467m) in the same period a year earlier.

Sales of legal digital downloads were also included in the survey but accounted for a tiny portion of the total, ComScore said.
"All legitimate businesses online have an incentive to fight piracy, obviously as this study shows. It affects everyone," said a spokeswoman for the Recording Industry Association.

The record industry places a lot of the blame on the popularity of services such as Kazaa and Morpheus which allow users to swap files, including music, across the internet for free.

Online retailers such as Amazon, which also sell books and consumer electronic devices, have become household names in recent years.
About 3.2% of music sales were made online in 2000 before this fell to 2.9% in 2001, according to the RIAA. But not everyone is convinced that CD sales over the internet makes sense.

Wider issue

"There's no point in buying a physical CD online when you can download one," said Phil Leigh, an analyst with Raymond James and Associates.
Mr Leigh said the survey highlighted a wider issue - about the future of albums. "The primary message of the CD burner is the consumer doesn't want to be straight jacketed into buying a pre-packaged CD.
"I think what we're seeing is not only the death of the physical form factor, but the death of the pre-packaged concept."

While all forms of sales of music are falling in the United States, the survey found online music sales fell three times faster.

ComScore data showed that after the demise file-swapping pioneer Napster, US consumers flocked to alternatives, including Kazaa and Morpheus.

By September 2002, Kazaa had topped more than 10 million US home users and ComScore said that six of the leading file-sharing applications collectively were used by 14 million consumers.