Survey: Online Music Sales Tumble

SAN FRANCISCO (AP) — The growing popularity of CD burning and illegal song-swapping over the Internet has caused online music sales to tumble this year, according to a survey to be released Monday.

Online sales of prerecorded music lagged behind last year's totals through the third quarter by $185 million in sales, or 25 percent, according to the study conducted by research firm comScore Networks.

Music sales via the Internet this year have reached $545 million through the third quarter, well behind last year's total of $730 for the same time period.

The study showed former Napster users flocked to alternative file-sharing networks such as Kazaa and Morpheus. After Napster went offline for good in the summer of 2001, Morpheus' user base grew from less than one million in June 2001 to 7.2 million in March 2002, comScore found.

Phil Leigh, an analyst for Raymond James & Associates, said consumers increasingly are seeking the instant gratification from free downloads with which online CD orders can't compare. And the ability to burn those downloads to blank CDs offers computer users even more personalization and choice that CDs don't offer, Leigh said.

"The primary message of the CD burner is the consumer doesn't want to be straightjacketed into buying a prepackaged CD," Leigh said. "I think what we're seeing is not only the death of the physical form factor, but the death of the prepackaged concept."

There also are legitimate ways to buy downloads online, such as Listen.com's Rhapsody service as well as MusicNet and pressplay, two joint ventures launched by the major recording companies to counter illegal song-sharing.

But those services have yet to release any figures on how many people have actually signed up and it is hard to gauge their popularity in the face of free downloads from Morpheus and Gnutella network programs.

Leigh said free downloads and CD burning have liberated the consumer "so that she can have what she wants on a disc, and not three (songs) she wants and five she doesn't."

The study only considered online purchases of physical recorded media such as CDs and cassette tapes for its study and did not look at paid music downloads.

In September, the chief executive of the Recording Industry Association of America testified before a House hearing on music piracy and peer-to-peer networks. Hilary Rosen said that public education about the illegality of unauthorized file-sharing was of the utmost importance.

"I wish I could tell you that there is a silver bullet that could resolve this very serious problem,"Rosen said. "There is not."

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