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Ad-Supported Music, Alternative to Litigation

A recent Ipsos market study demonstrates that ad-supported models could provide an important new channel for many U.S. consumer music file sharers. The models are already helping to reduce file sharing, and have the potential to become part of a long-term trend.

Moreover, this proactive approach would surely be more advantageous to music record labels that have previously used litigation as their primary reactive method -- in an attempt to dissuade consumer file sharing.

A majority of downloaders and streamers currently operating outside of the fee-based market may simply be unwilling to pay for music. However, given the choice, many fee-adverse consumers may prefer to avoid MP3 file sharing as well.

These consumers value music, but in the absence of an ad-supported offering, the desire not to pay is greater than the desire not to file share with friends and family members.

The annual Digital Music Discovery and Purchase Process study -- part of TEMPO, an Ipsos bi-annual study of digital music behaviors -- is an in-depth examination of how U.S. consumers discover and acquire or purchase digital music.

Findings from the study indicate that ad-supported downloading is a key channel the music industry should embrace in conjunction with the efforts currently being undertaken to combat file sharing -- if it is to reach the largest consumer audience possible with valued music offerings.

Key findings from the Ipsos market study include:

-Currently, ad-supported and fee-based approaches to music have roughly equal appeal.

- If forced to choose something other than ad-supported, a little over a third of those users would enter the fee-based market. The rest are unwilling to pay and either take up file sharing or become inactive.

- If forced to choose something other than file sharing, about two-thirds of those currently involved in it would enter the market -- almost entirely on the ad-supported side.

- Only about a third of current file sharers are truly lost customers from the traditional music industry.

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