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U.K. Government Report Warns Music Industry of MP3 Perils

A new report published Wednesday by the U.K's Department for Culture, Media and Sport warns the music industry to wake up to e-commerce or face decline.

The main problems, identified in the report, are the extremely slow download times of MP3 music files, the lack of payment mechanisms for teenagers without credit cards, and the threat from pirates and foreign competitors to whom music lovers are switching their custom.

The report, entitled "Consumers Call the Tune," was published by Culture Secretary Chris Smith at a breakfast for the music and telecommunications industries hosted by Chancellor Gordon Brown.

"Consumers are driving the online revolution, and they want the ability to get the music they want, when they want, where they want it. If the U.K. music industry is to continue to prosper it must give consumers what they need and a safe way of paying for it," said Smith.

"The truth is that British songwriters, performers, music companies and ultimately the consumer will only benefit if music is both online and paid for."

Currently, users around the world download three million MP3 music files every day, with online sales of $4 billion being forecast by 2004.

With the music industry in the U.K. presently contributing £3.2 billion ($5.1 billion) to the domestic economy, the impact of MP3 and the Internet should not be underestimated, says the report.

To rectify the situation, the report recommends the introduction of a secure online payment system that can be used by young people as well as adults. Cheaper, faster Internet access is also essential, says the report, while steps should also be taken to ensure that music can be played on all the different types of digital hardware, including home computers, digital TVs and even mobile phones.

The report comes from the New Technology group of the Music Industry Forum, set up the Department for Culture, Media and Sport in 1997 as an interface between Government and the music industry.