p2p report prepared for media defender, inc.. 2 a larger volume of cd sales in 2006 were lost to...
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2
A larger volume of CD sales in 2006 were lost to borrowing, rather than to P2P
How Were Lost CD Sales Replaced?
2006
Ripped from others
30%
Paid downloads19%
Not Replaced2%
P2P17%
Burned from others
32%
Source: NPD Digital Music Study December 2006 (US Internet Pop. Age 13+)
Digital Music Study - Mainstream Consumer Analysis: Volume and spending estimates include respondents up to the 95th volume percentile per activity
3
10.6% 10.4% 9.9% 10.0% 10.2%10.9% 10.8% 10.9% 11.1% 11.7% 11.2% 11.6%
12.7%
7.8%
5.8%5.8%6.1%5.9%5.4%5.0%5.7%
4.2%5.6%
4.9% 5.3% 4.7%
Dec -05
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -06
% o
f Int
erne
t Hou
seho
lds
P2P Legal
The upward trend of both P2P and legal HH penetration continued in 2006
Downloading Activity of Internet Households*(MusicWatch Digital Dec ‘05 – Dec ‘06)
*Includes use of all major à la carte stores, tethered downloads from major subscription services, and eMusic’s bundled downloads.
Source: MusicWatch Digital – Dec 06
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P2P Services: Number of Households Downloading From P2P
6,7027,051
6,9737,305
8,693
6,419
5,624
5,7016,1606,258
6,4116,1336,1976,3075,892
7,9527,656
7,9797,5417,3867,378
6,9006,7296,657
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
In T
hous
ands
2005 2006
P2P Downloading Households (‘000s)(MusicWatch Digital Jan ‘05 – Dec ‘06)
*July 06 – Four torrent clients (Azureus, BitComet, uTorrent, and BitLord) were added to NPD’s coverage.
Source: MusicWatch Digital – Dec 06
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The volume of P2P songs acquired continues to increase and follow a seasonal flow
258,295
392,261
577,883
395,168414,667 401,344
385,404414,311
250,743265,883258,132238,610228,210
257,338255,882227,790239,348
258,462
390,934
465,764431,442
451,140447,331412,920
320,916315,664317,252
330,207 317,371
456,313
0
100,000
200,000
300,000
400,000
500,000
600,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
In T
hous
ands
2005 2006Line 3
Volume of Unique Songs Downloaded (‘000s)(MusicWatch Digital Jan ‘05 – Dec ‘06)
*July 06 – Four torrent clients (Azureus, BitComet, uTorrent, and BitLord) were added to NPD’s coverage.
Volume without
additional torrent sites
Source: MusicWatch Digital – Dec 06
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LimeWire
BearShareKazaa
Morpheus
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Jul - 06 Aug Sep Oct Nov Dec - 06
In T
hous
ands
LimeWire BearShare Kazaa Morpheus Other
LimeWire remains the dominant source for P2P music acquisition
“Other” includes:
Blubster
Ares
eMule
Warez
Shareaza
eDonkey
SoulSeek
DC++
WinMx
iMesh (classic)
iMesh (6.0+)
BitTorrent
uTorrent (Jul ‘06)
Azureus (Jul ‘06)
BitComet (Jul ‘06)
BitLord (Jul ‘06)
*Households may have used more than one application.
P2P Downloading Households* (‘000s)(MusicWatch Digital Jul ‘06 – Dec ‘06)
Other
Source: MusicWatch Digital – Dec 06
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Consumer acknowledgement has not yet translated into decreased P2P activity
27%
22%23%
19%
32%
26%
File sharing hurts artists Stopping is honest
Sept '04 Sept '05 Sept '06
P2P Users Say…
Source: NPD – MusicLab Sept 06
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Reasons For Downloading More From Free File-Sharing Services
Why did you start or download more music from free file-sharing services?(Those who downloaded from free file-sharing services in past year)
28%
26%
25%
24%
23%
22%
21%
17%
13%
11%
30%
33%
37%
55%56%
51%
Like to buy specific songs instead of the full album
Purely because the music is free
If I like the song I can download/stream it instantly
I'm listening to more music on my computer
Can burn songs as much as I want
There's more music available from free services
It's easier to find music using free services
Find more music I like through digital services
Have faster/better Internet access
Free services offer more than just music
Downloading more in place of buying CD's
Burning more mixes with downloads
I have no method to pay for downloads
Music is compatible with my portable player
Have a better computer (hardware and/or software)
Share more of the music I buy with others
Source: NPD Digital Music Study December 2006 (US Internet Pop. Age 13+)
Digital Music Study - Mainstream Consumer Analysis: Volume and spending estimates include respondents up to the 95th volume percentile per activity
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P2P Consumers: Other Music Acquisition Activities (past year) (among the US internet population age 13+)
As P2P volume continues to grow, the majority of consumers still purchase CDs
73%
28%
7%
Purchased CD Paid DigitalDownloads
Subscribed
Source: NPD Digital Music Study December 2006 (US Internet Pop. Age 13+)
Digital Music Study - Mainstream Consumer Analysis: Volume and spending estimates include respondents up to the 95th volume percentile per activity
10
$61$53
$68
P2P - started in past 6mos.
P2P - started in past 7mos to 2 yr
P2P - Started 2+ yrs ago
(Downloaded via P2P in past year)P2P Downloaders: Per Capita Music Spending (Past 12 Months)
CD $43 $49 $52
Subscription $3 $4 $8
** See appendix for assumptions used to estimate dollar value
N = 171 N = 313N = 140
Source: NPD Digital Music Study December 2006 (US Internet Pop. Age 13+)
Paid Download $7 $8 $8
Established P2P users spend more onCDs than consumers new to P2P
Digital Music Study - Mainstream Consumer Analysis: Volume and spending estimates include respondents up to the 95th volume percentile per activity
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Value Definitions
The following per-unit cost assumptions were used to calculate the per capita value.
Year 2006 Year 2005Full length CD 12.80$ 13.00$ CD Single 7.97$ 7.02$ Digital Album 9.99$ 9.99$ Digital Track 0.99$ 0.99$ *Subscription Fee 8.45$ 7.80$
*Subscription Fee is self reported. Figure reported in table above is an average for all subscribers
Source: NPD Digital Music Study December 2005 and 2006 (US Internet Pop. Age 13+)