Rory Cellan-Jones

As the Digital Britain bill starts to make its way through Parliament, the row over its controversial measures against unlawful file-sharers is getting ever more heated.

Supporters in the music and movie industries are rejoicing that something is at last being done to protect artists whose property they say has been stolen, while critics of the bill say it represents a fundamental attack on the rights of internet users.

But what's missing from the whole debate is some data. Just how much unlawful file-sharing is going on in the UK and what effect is it having on the creative industries? It's hard to be sure really - the music industry often says that twenty unauthorised tracks are downloaded for every one that's paid for, but I'm not sure how that figure was worked out. The government, too, seems hazy, unable to say how it will know when file-sharing has been reduced by 70%, the target to be attained by the initial deterrence campaign before stronger measures are contemplated.

Then there are the assertions made about file-sharers' behaviour. Critics of a crackdown say they are the very people who spend more on legitimate downloads, and that they would stop if only there were enough well-priced alternatives on offer. The music industry says there is ample evidence that deterrents work, pointing to an apparent rise in sales of music in Sweden following the legal action against the Pirate Bay.

So in an attempt to shed a little more light on this issue, I asked two of the most vociferous lobby groups to answer five questions about file-sharing, supplying me with a little bit of evidence on each of them.

Geoff Taylor of the BPI, the music industry trade body, and Jim Killock of the Open Rights Group, which believes the Digital Economy bill is deeply illiberal, responded with alacrity. Here's how it went - and even if you violently disagree with what either side says, please try to critique their evidence rather than their characters in your replies.

(1) What evidence do we have of the extent of unlawful file-sharing in the UK?

Jim Killock, ORG: Not enough. Most of it comes from the recorded music industry. We also have evidence in a rapid decline in file sharing: Music Ally thinks it has reduced by 40% [110 Kb PDF] .

Geoff Taylor, BPI: Plenty. There are several pieces of substantial research showing that around 7 to 8 million people in the UK are file-sharing music alone. Let's look at two examples.



Harris Interactive conducted research among the UK general public aged 16-54 from February to March 2009, which gave a 23% incidence of music file-sharing using peer-to-peer networks in the UK population aged 16-54, or 8.3 million file-sharers based on ONS population data. This number omits people under 16 completely.



Additionally, Jupiter Research conducted consumer research on behalf of the BPI in August 2007, which predicted 6.7 million peer-to-peer file-sharers during 2008, and 7.3 million for 2009.

(2) What evidence is there of the effect that file-sharing has had on the UK music industry?

ORG: Whatever effect it has, we can assume that effect is reducing.



the music industry has grown in the last ten years - it has not shrunk, as many would have you believe.



The shift has been towards digital and live music, and away from physical sales.

BPI: The observable link between the onset and growth of peer-to-peer and the decline of UK record sales is an obvious place to start. In 1999, UK trade deliveries were worth £1,133m, compared to £893.8m in 2008.



In terms of academic research - contrary to the claims made by critics - there is study after study which demonstrates the link between illegal P2P file-sharing and lost music sales. These include:



The Analysis of the European Online Music Market Development and Assessment of Future Opportunities [179Kb PDF] - "The overall impact of file-sharing on music spending is negative."



Institute Center for Technology Freedom (USA, 2007): The True Cost of Sound Recording Piracy to the US Economy by Stephen Siwek - This study estimates the damage to the USA economy as a result of music piracy and evaluates the impact on jobs, earnings and lost tax revenues, concluding: "Piracy of recorded music costs the US sound recording industries billions of dollars in lost revenue and profits."



Jupiter Research (UK) - Music Industry Losses. The report concluded that online music piracy cost the UK music industry £1.6bn between 2001 and 2012; in 2007 alone, online music piracy resulted in £159.2m of foregone spend.



Norbert Michael (USA, 2006): The Impact of Digital File‐sharing on the Music Industry: An Empirical Analysis [207Kb PDF] - The study found that file‐sharing had a negative impact on music sales, suggesting that "file‐sharing may have reduced album sales (between 1999‐2003) by as much as 13% for some music consumers."



There is a small number of studies which purport to show a positive relationship between file-sharing and music sales, but these have been subsequently heavily criticised in peer review.

(3) Isn't it true that file-sharers also tend to be the people who spend more on music?

ORG: Absolutely. Every academic study has shown this, for instance the Institute for Information Law study in the Netherlands [1Mb PDF] . Most file-sharing is about discovery - finding new things, as people do with radio - which is why new streaming services have eaten into file-sharing.

BPI: It is of course true that many people who file-share buy music, but it is also true that many file-sharers prefer to free-load with little willingness to pay for music at all. The report from the International Federation of the Phonographic Industry, based on research from Jupiter Research and Forrester Research [179Kb PDF] , succinctly sets out the case.



A recent Demos survey [3.51Mb Powerpoint] garnered plenty of headlines, but its flaws were not widely reported. Firstly, it grouped people who used search engines to discover music in with people who use P2P, but you can of course use search engines to discover music, then listen legally to streamed music for free or buy music.



The study simply illustrated the unsurprising fact that, as a group, file-sharers tend to be bigger consumers of recorded music than non-file-sharers - because most file-sharers are very interested in music while some non-file-sharers don't consume music at all. The net effect of illegal file-sharing in the UK and elsewhere has been to reduce legitimate sales. This is why spending on recorded music has fallen every year since illegal file-sharing began to become widespread.

(4) Doesn't the Swedish example show that when action is taken against unlawful file-sharing , there is a beneficial impact on legal music sales?

ORG: We'd need to see the whole figures to know what was happening, but legal music sales are growing everywhere, not just in Sweden. And the real result of the clampdown in Sweden has been the election of two Pirate Party MEPs with 7% of the population voting for them. Hardly a victory for the music industry.

BPI:It certainly looks that way, and there's similar news from South Korea, where the adoption of new anti-piracy laws has seen music sales rebound after years of decline.



In Sweden, music industry revenues rose 18% during the first nine months of this year, coinciding with the introduction of new laws in April to tackle illegal file-sharing. This isn't the whole story, though: there's also been a ruling on the Pirate Bay and Spotify has become very popular very quickly. But the increase in sales is very encouraging, and there's reason to be optimistic that revenues in Britain could follow a similar pattern if legislation is passed that steers people towards new legal services.

(5) Aren't there now plenty of legal alternatives for people who want to get hold of music online without resorting to file-sharing?

ORG: We can see this is what's happened, but we can also see that Spotify has closed its doors to new customers because the license payments they make are unreasonably high.



Online radio services like Spotify need to have licensing based on revenue share rather than per-play costs in order to make a profit.



Online licensing in general is still very restrictive with unreasonable and arbitrary conditions frequently imposed, including handing over of nearly 20% of their business in Spotify's case.



It would be well worth the Competition Commission taking a close look at the market abuse that is taking place and restricting trade.

BPI: There are more than 35 legal music services in the UK already. The a la carte download model popularised by iTunes has now been joined by many subscription and streaming services - such as Spotify and We7 - with vast catalogues and catering for all tastes and budgets. In the last few weeks alone, Sky Songs has launched, and retail giant Tesco has revamped its entertainment offering. There's more choice of music retailers online than you are likely to find on your local high street.



There is no longer any sensible justification for file-sharing illegally, since many services now allow free access to huge catalogues of music and feature playlist sharing and other social tools.



Sadly, these developments haven't made any significant difference to levels of illegal file- sharing. The growth of new music services will continue to be held back unless new legislation is passed, as it is difficult to justify developing new services when the market includes unauthorised services operating illegally to provide music entirely for free.