Napster Users Buy More Records - Jupiter

Users of the Napster Internet-based music file sharing service tend to buy more records than people who don't use the site, according to a report expected to be published Monday by Jupiter Communications.

Music on Napster does take place, despite the good intentions of many Napster users, and it's this aspect of the online service that has the music industry chasing its own tail through the courts.

Jupiter's analysis, however, seems to confirm at least some conventional wisdom on the legal onslaught against the Napster service, namely that the music industry may be shooting itself in the foot with its legal action against what some might call an online shop window.

The Recording Industry Association of America (RIAA), which represents the largest music publishing companies, nevertheless has taken the stance that piracy is piracy, no matter how it is carried out.

Jupiter's report noted that the RIAA has said that Napster is responsible for the reduction in pay music sales amongs college students.

"An inherent flaw in the RIAA's argument against Napster is that the association's supporting research shows a decline in record sales in college areas with high Napster usage," Jupiter said, adding that the RIAA has failed to point out that the bulk of the reduction in sales occurred before the arrival of Napster on the online scene.

Jupiter's report added that users of networked music-sharing technologies, such as Napster, are 45 percent more likely to have increased their overall music purchasing than nonusers.

As a result of its research, Jupiter said that record companies must refocus their strategy from litigation to adoption, and incorporate networked music sharing into their distribution channels.

Aram Sinnreich, an analyst with the research firm, said that because Napster users are music enthusiasts, it's logical to believe that they are more likely to purchase now, and increase their music spending in the future.

Jupiter's report observes that since the launch of Web sites and software such as Napster and Gnutella, record labels and intellectual property owners have demonized networked music sharing, even as it has gained enormous traction among consumers.

However, the firm said, these players have yet to capitalize on the upside of such sharing technology.

According to Jupiter's research, if the music industry were to let players like Napster stand, it would drive incremental sales. But, if the industry partnered with networked music-sharing technology companies, the benefit would be exponentially greater.

Sinnreich added that record labels must work to develop networked music sharing as part of their offering - understanding that their challenge is to get consumers to shift to the labels' sponsored channels instead of existing services such as Napster and Gnutella.

Jupiter's research concludes that while exclusive content, artist chats and album art are helpful in promoting such channels, the trump cards for consumers' adoption must address two features: guaranteed file quality and virus protection.

In its research, Jupiter said that consumers identified these two features as most important in their decision to pay for a music subscription service above other features such as discounts, newsletters and deep artist information.

For its study, Jupiter queried more than 2,200 online music fans on whether the money they spent on music purchases had increased, decreased or remained the same since they began visiting music destinations on the Web.

Jupiter analysts report that only cash-strapped, computer-savvy users, ages 18 to 24, who spend less than $20 on music within a three-month period, indicated that they were likely to remain at a constant purchasing level despite online music use.

The research was carried out in preparation for its Plug.In Online Music Forum, which will take place on July 24/25 in New York.

Jupiter Communications' Web site is at http://www.jup.com .

Reported by Newsbytes.com, http://www.newsbytes.com.