US Music Piracy Plunges After LimeWire Shutdown

[Guest bigdady]

Today we have some good news for the major record labels. The renowned market research group NPD has found that close to half of all Americans who were pirating music via P2P applications a year ago, have reportedly stopped doing so. As a result the number of US music pirates decreased by 12 million. NPD attributes this unprecedented shift to the LimeWire shutdown, but we fear that it wont have any effect on record label revenues.

There is no arguing that the file-sharing landscape changed for good when the RIAA managed to shut LimeWire down October last year. From one day to another, the most widely known file-sharing application ceased to exist.

At the time we doubted that LimeWire’s demise would have much of an impact on the volume of music piracy, but according to research from the NPD Group we were wrong.

Although there are plenty of alternatives to LimeWire, NPD found that the number of people who downloaded music illicitly using P2P in the last quarter of 2010 has decreased by 43% compared to the year before. The researchers conclude that much of the decline is due to the unavailability of LimeWire, which ceased its operations just a few weeks into quarter 4 of last year.

This data comes from an extensive survey of 5,549 Americans, and translated into the entire population it means that the number of music pirates has decreased from 28 million to 16 million in just a year.

Looking at the market share of the various P2P applications, LimeWire was still in the lead with 32 percent of the music pirates indicating that they’d used it in the few weeks that it was still available. This is down from 56 percent in the year before.

As expected, LimeWire’s shutdown also resulted in a market share up-tick for various other P2P applications. FrostWire appears to be the greatest beneficiary, as it saw a relative increase from 10 percent to 21 percent.

The most popular BitTorrent client uTorrent saw its market share growing from 8 to 12 percent. However, since the total number of music pirates declined so much this actually means that in absolute numbers less people indicated that they used uTorrent to pirate music compared to a year ago.

Taken together NPD’s research suggests that the percentage of music pirates in the U.S. population has fallen drastically, from 16 percent to 9 percent in a year. But the big question is what effect this has had on music industry revenues. Although we don’t necessarily have much faith in the validity of the survey, the RIAA must be delighted with the findings – or are they?

We assume that when they look at their revenues during the last quarter of 2010, the big music labels will fail to see any significant change in their revenues. Why? Well, because music piracy might not have much of an effect on music sales in the first place. But I guess if they can’t use it to their benefit, the RIAA will simply ignore what might be the biggest piracy decline in history.