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The RIAA's Uphill Battle

Since Napster burst onto the scene in 1999, the Recording Industry Association of America (RIAA) has fought tooth and nail to retain control over the way people obtain and share music. Some new research suggests it's not a battle the RIAA is likely to win anytime soon.

Last month, Digital Music News and the media-tracking group BigChampagne released a study that found that one-third of all PCs worldwide have some peer-to-peer (P2P) file-sharing application installed, with Gnutella client LimeWire appearing most often.

"LimeWire continues to be the iTunes of P2P by a wide margin," said Richard Menta, research analyst at Digital Media News.

The study found that LimeWire's growth over the past several months has been modest, but the continued pervasiveness of P2P applications used in file-sharing comes as a blow to the RIAA. The group has been vigorously encouraging migration to paid online music services that operate through licensing agreements with labels.

Unfortunately for the RIAA, researcher NPD Group suggested that online music purchasing continues to see little uptake among most PC users.

The group found that Mac users were the most likely to pay for their downloaded music, while non-Mac users continue to shy away from legal downloads.

Apple's user base has grown dramatically over the past couple of years, but the company holds only a 9 percent share of the market, according to NPD's most recent figures. As a result, Mac users also represent the minority in paid music purchasing from sites like Apple's own iTunes.

One-half of all Mac users purchased their downloaded music during the third quarter of last year, NPD found, while only 16 percent of PC users did the same.

"There's still a cultural divide between Apple consumers and the rest of the computing world, and that's especially apparent when it comes to the way they interact with music," NPD vice president and entertainment industry analyst Russ Crupnick said in a statement.

"Mac users are not only more active in digital music, they are also more likely to buy CD's, which helps debunk the myth that digital music consumers stop buying music in CD format."

Even as it encourages the proliferation of legal digital music services, the RIAA continues to extol the merits of the CD.

In a report the association released in August, titled, "The CD: A Better Value Than Ever," it found that, relative to inflation, the price of a music album has gone down over the last four decades. Further, since 1983, the RIAA said the price of a CD (as measured by suggested retail value) dropped from $21.50 to $14.90 in 2006.

This holiday season, however, that message was lost on shoppers. CD sales from Thanksgiving to Christmas Eve were down 20 percent from the same period last year, according to Nielsen Soundscan figures reported in Variety.

The new developments come as the RIAA continues to face intense criticism for pursuing what many have characterized as a failed strategy, and for alienating customers in the process.

To critics, the most objectionable component of that strategy has been its energetic litigation policy: The association has filed more than 20,000 lawsuits against individuals and businesses for illegally downloading music.

On this point, the RIAA is blunt. Regarding unauthorized downloading, its Web site says: "It's theft, it's illegal and there can be real consequences. Legal downloading doesn't cost much. Every fan has a choice: Pay a little now or a lot more later."

The association also makes a moral plea: "When you go online and download songs without permission, you are stealing. The illegal downloading of music is just as wrong as shoplifting from a local convenience store -- and the impact on those who create music and bring it to fans is equally devastating."

Many of those suits have been brought against university students, a group that the RIAA claims engages in illegal downloading to a degree well out of proportion with its size. To that end, it has launched education programs promoting legal music-sharing services, successfully lobbied Congress to pass a bill compelling universities to make those services available, and, in considerable detriment to its public image, sued students.

Next page: Changing tactics