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File Sharers Just Want Cheaper CDs
By Eric de Fontenay (Founder & Publisher)
(more articles from this author)
2003-02-28
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You can probably guess as to the results of marketing research firm Ipsos' quarterly study of digital music behaviors: more file sharing and burning. According to the study, 19% of Americans aged 12 and older have used a file sharing system to download music files. Reinforcing the past couple of editorials on digital 'generation' divide, 52% of 12-to-17 year olds reporting using p2p systems. And in what Miles Copeland might describe as an unholy marriage, 59% file sharers report being equipped with a CD burner as compared to 25% of all Americans. That's 23.6 million Americans aged 12 and older!

Assuming that the recording industry is not ready to raid the homes of 23 million Americans and considering its ineffectiveness in stemming the phenomena, music industry executives need to take a hard look at how long they can cling to the old business models & products. The Ipsos results reinforces an important assumption made in economic theory: consumers are rational decision makers. If they are able to produce an equivalent product to what's available in the market but at a considerably lower cost, they will self-produce. Once the investment in a computer (typically pre-equipped with a burner) and high-speed connection has been made, the incremental cost to the consumer of producing the same CD available at say Tower is a blank disc and the investment in time.

This is backed up by the Ipsos study that finds 42% of file sharers versus 12% of all Americans report to burning/copying instead of purchasing a recorded CD. This may also explain, at least to some extent, the generational divide: While the time necessary to make a CD may not be insignificant (especially considering poor quality prevalent on p2p systems), teenagers have lots of time on their hands. It's a relatively cheap good as compared older/busier consumers. FullAudio's strategy can in fact be seen as exploiting the differential value associated to time and quality associated by each demographic. For the broader industry, the lesson may be that it is not so much free music that consumers are increasingly looking for, but cheaper CD manufacturing.

Related News from Mi2N:
» File-Sharing And CD Burning Remain Steady In 2002


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