It could all come down to the Supreme Court ruling in the MGM vs. Grokster case that determines whether digital downloads will cease to exist or not. According to NPD, P2P (peer-to-peer) downloads are still ruling the net despite increased interest by users in the pay-to download market. To give you an idea of just how skewed the landscape really is, in March of 2005 243 million songs were downloaded from P2P services compared to only 26 million songs that were actually purchased online. But things could be changing.
NPD estimates that the pay-per-download market could see a potential for 30 million consumers due to better technology in broadband and MP3 players. Forty-one percent of digital music consumers say they began to download because of faster Internet access, 30 percent said it was because they had purchased a better computer and 22 percent attributed their digital music consumption to the fact that they had recently purchased a digital/MP3 player. Promotions were also important to consumers: 34 percent reported that they first downloaded music legally because of a special offer.
At the same time, consumers are somewhat confused by perceived restrictions on what they can do with the music they purchase and download. They are also concerned by the price of the services. As a result only 55 percent of consumers who tried legal services came back for more in subsequent months. By comparison, 85 percent of peer-to-peer (P2P) users engaged in repeat usage in 2004.
This should come as no surprise, with current DRM (Digital Rights Management) laws and regulations in place, most consumers have a hard time understanding the limitations to the music they just downloaded. Download a song via Apple iTunes and want to play it on your Creative Micro Zen? Fat chance, it just won’t work.
