Music firms 'hit hard by file-sharing services'

Music has lost its place as the social and cultural glue for the youth of today, and instead become a "temporary, disposable soundtrack" to other things in youngsters' daily lives, such as computer games, the latest industry research shows.

Instead of the 12-inch vinyl records that were admired for their artwork and had to be handled carefully if they were to last, today's children think of music as something "to last me until next week", which may come in the form of a downloaded file that is burnt on to a blank CD and forgotten next month, the survey reveals.

The study, by the technology researchers Jupiter MMXI, also forecasts that the music industry will decline for the next two years, and that an upturn in sales will not happen until 2004. The industry will also continue to lose money to file-sharing systems on the internet, which let people download music free.

Mark Mulligan, senior analyst at Jupiter MMXI in London, has just finished the study in which he interviewed record companies, official websites, and internet service providers. "They feel threatened, absolutely," he said.

"Company executives feel their biggest threat is the rise of file-sharing services." That is borne out by separate research by the company, which found that between November last year and March, the number of people in Europe visiting legitimate music download sites such as Peoplesound.com and Vitaminic.com decreased from 3.6 million to slightly less than 2 million, a drop of 45 per cent. In the same period, the number of people using file-sharing services such as Audiogalaxy and Gnutella increased from 7.1 million to 11.3 million, a growth of 59 per cent.

That has happened despite the fact that the legitimate sites have millions of pounds of venture capital. By comparison, nearly all the file-sharing systems are free, and have neither commercial funding nor, in some cases, any organisation behind them. "The file-sharing route offers unlimited choice, immediate access and it's free," said Mr Mulligan. "There's nothing that the record labels or online sites have to compare with that. But consumers' perceived value of music has disappeared and record companies haven't adjusted.

"People don't feel a CD is good value for money, and they don't feel that they should have to pay for music online either."

Mr Mulligan added that we had moved from the "tape generation" of the 1980s, who bought cassettes to "last until next year", through the 1990s CD buyers, who bought "to last until next decade", to today's buyers, who think of it as "music to last until next week".