File-sharing—fight, ignore or compete: Paid download services vs. P2P-networks

Music downloads from the Internet have been bothering the music industry since 1997. To protect their main source of income the music industry has employed different strategies: lawsuits against downloading services and users of these services; technical solutions to prevent CD-ripping; information campaigns; and lobbying for stricter copyright laws. Many of these efforts resulted in the opposite of what was intended; it caused bad publicity and alienated at least a part of the public. When Apple launched their downloading service, this soon resulted in a market share of 70% of legal downloads. Apple CEO Steve Jobs declared that they would not sue or ignore file-sharing services but compete with them. The central question addressed in this paper is whether legal downloading services can compete with file-sharing services. It will be argued—on the basis of case studies and an analysis of the features of paid services and P2P-networks—that legal services have some advantages over illegal ones and differ on many aspects. They will probably serve different markets; file-sharing services will serve bootleggers, aficionados, and the (previously) single-buying youth market. Legal services will serve a more mature market.