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UK – Anti-piracy moves ‘hurt sales’ economics/market data/middlemen

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Anti-piracy moves ‘hurt sales’By Andrew Edgecliiffe-Johnson for Financial TimesPublished: November 20 2007 02:00 | Last updated: November 20 2007 02:00Retailers are urging the music industry to drop piracy protection for online downloads after new figures showed the average Briton has bought fewer than three digital tracks in the past three years.Incompatible proprietary technologies, aimed at defeating rampant piracy in the digital music era, are instead “stifling growth and working against the consumer interest”, said Kim Bayley, director-general of the Entertainment Retailers Association (ERA).Her warning comes as high street retailers and digital music specialists watch pre-Christmas sales trends nervously. The music industry makes at least 40 per cent of its revenues in the fourth quarter, but the traditional sales build-up has started later than usual.Although Leona Lewis – the X Factor winner backed by Simon Cowell’s Syco label – this month notched up the highest first-week album sales for a debut artist, album volumes are down 11 per cent, or 12m units, for the year to date, according to the Official UK Charts Company and Music Week.Recorded music companies had been “quick to complain” that the slide in CD sales had not been offset by growth in digital music, Ms Bayley said, but their embrace of digital rights management (DRM) systems “might have added to the slow take-up of legal digital services”.Just 150m tracks have been downloaded legally in the UK over the past three years, she added. “Sadly, that amounts to an average of less than one 79p per download per head of population per year.”The ERA’s appeal comes as more companies experiment with the DRM-freeMP3 format, following a pre-emptive challenge in February by Apple’s Steve Jobs. Most recently, Universal Music this month began offering its classical and jazz catalogue in MP3 format.In April, EMI “unlocked” its catalogue, charging consumers a premium for DRM-free versions of its music on Apple’s iTunes store, and has since signed deals with other digital retailers for MP3 files encoded at more than twice the quality of standard audio files.”There are certainly experiments, but there’s still a certain element of resistance within the music industry,” Ms Bayley said. “At the moment, [DRM] just puts consumers off,” she said, adding that confusion about formats was driving people toward illegal downloads.She cited research this month that found consumers were almost four times as likely to choose an MP3 file as a DRM-protected track when the two were offered alongside each other.The ERA, which represents high street retailers and online sites, said it was making the appeal now in the hope that music companies would drop DRM protections before the Christmas season and the January sales rise, when consumers load up the iPods they receive at Christmas.

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