Jupiter: Napster Users Are Big CD Buyers, Too

BOSTON (07/21/2000) - Consumers who swap music online tend to increase music purchases rather than reduce them, according to a study released by Jupiter Communications Inc., a New York-based Internet commerce analysis firm.

The study shows use of the popular but controversial MP3 music-swapping service Napster Inc. to be an indicator of increasing sales, said Aram Sinnreich, an analyst with Jupiter. "Screening for Napster users in general, they were 45 percent more likely to increase their music purchases than non-Napster using music fans," he said. "It behooves the recording industry to stop litigating immediately. If they just turn a blind eye, they would increase their sales."

The Recording Industry Artists Association (RIAA) launched a series of lawsuits against companies distributing MP3-format music online, including Napster, alleging the service amounts to the promotion of copyright infringement and that it hurts music sales.

The RIAA has also sued MP3.com Inc. and most recently the search engine and file-sharing program site Scour Inc. for copyright infringement.

RIAA lawyers have cited studies showing a slow-down in sales around college campuses due to Napster. For example, market research firm VNU Entertainment Marketing Solutions Inc., a unit of SoundScan, showed that retail store album sales within five miles of college campuses dropped 4 percent in the last two years. But Sinnreich said he disagrees with RIAA's conclusions from the study, because of movement toward online sales.

"That is the central problem with the Soundscan study -- it ignored online music purchases," he said, noting that the RIAA did not clarify that the most attrition took place before Napster's launch.

The music industry should "partner with a company. They should actively license their archives to third-party digital music service providers and actively market and promote the resulting services." If they do, they should increase their music sales exponentially.

A Jupiter spokeswoman said the study had not been commissioned by either Napster or the RIAA. The study was timed for release before Jupiter's Plug.In conference, to be held Monday and Tuesday in New York. The conference, sponsored partly by Internet music companies, will feature Richard Parsons, the president of Time Warner Inc.; Rob Glaser, chairman and chief executive officer of Real Networks Inc.; and rap artist Mike D of the recording group Beastie Boys.

RIAA, in Washington, DC. can be reached at +1-202-775-0101 or at http://www.riaa.com/. Jupiter Communications, in New York, can be reached at +1-212-780-6060 or at http://www.jup.com.

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