Music labels clamping down on music pirates scored their first victory in Germany on Tuesday. Meanwhile, the competition in the legal online music trade is heating up with the launch of Apple iTunes in Europe next week.
Pilfering Kazaa users have seen better days in Germany.
For one music enthusiast in the Eastern German city of Cottbus, the good times of downloading music for free via peer-to-peer file-sharing programs like Kazaa came to an abrupt end on Tuesday. He was convicted in a German court of copyright infringement, according to a statement released by the German Federal Association of the Phonographic Industry in Berlin.
The 23-year-old will have to fork over a hefty €8,000 ($9,855) in fines in addition to covering the legal costs of the case. The case is expected to set a precedent for future cases, said Gerd Gebhard, the Chairman of the association, and will also serve as a cautionary tale to those considering illegal music file-sharing.
Clamping down on illegal downloaders
The case, one of 68 brought against people who download music illegally in Germany, represents a significant victory for a music industry desperate to stem the tide of lost profits since music file-sharing and downloading software like Kazaa and Napster became hugely popular.
In Germany alone, Internet piracy contributed to a 20 percent drop in profits, which has resulted in the loss of thousands of jobs, according to industry officials. Globally, losses are estimated at $2.4 billion (€1.96) a year.
The strategy of pursuing illegal music pirates in the courts is part of a two-pronged approach. In addition, music industry executives are hoping to bring illegal file-swappers back into the market by offering them the chance to download music legally -- for a fee -- via a host of new legal and industry-sponsored online platforms.
iTunes Europe in June?
Apple launched its iTunes music store to feed its wildly popular iPod digital players.
With a major announcement about the introduction of Apple's iTunes music shop service in Europe next week in London, the competition in the legal online music branch is about to heat up, and a price war between new entrants into the market could benefit consumers. But perils exist for all market entrants: The already troubled German online platform, Phonoline, will struggle to survive the intense competition, while Apple may find marketing online tunes in Europe more challenging than in the United States.
Shrouded in secrecy, Apple CEO Steve Jobs has called a press conference for June 15 saying only that, "the biggest story in music is about to get even bigger". It is expected that Apple will announce the long-anticipated launch of the European version of their online music store, which is already hugely popular in the United States. A launch is expectedly imminently in Britain, where Anglo-Saxon copyright rules make it easier to negotiate with rights-holders and record companies, but launches in France and Germany could also come at the same time.
In the first year, stateside music fans flocked to the site to download -- and pay for -- more than 70 million songs. No doubt Apple executives hope to repeat their success in Europe. However, they will find increased competition in the European market from a host of recently launched clones.
On May 20, Napster launched in Britain, joining industry leader OD2. Sony is expected to enter into the European market at the end of June. In Germany, music labels launched their own online music store, Phoneline, in March, though the effort has been plagued by criticisms that the library is too limited and prices too high.
Individual members of the music industry throughout Europe are engaged in a bitter struggle to attract customers amidst fierce competition.