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.