RIAA: New Data Show Napster Hurt Sales

ByABC News
February 26, 2001, 9:22 AM

L O S   A N G E L E S, Feb. 26 -- Recording industry officials have brought forth new evidence in their attempt to prove that Napster, the Internet music-swapping service, has cut into their business.

Shipments of CD singles sank by 39 percent last year, accordingto data released by the Recording Industry Association of America.

Napster hurt record sales, said RIAA president Hilary Rosen.In particular, Rosen pointed to the drop in the sales of singles,once the format that fueled the music industry, as evidence ofNapsters affect.

The industry released the figures after a federal court ruledthis month that the service helped users to violate music copyrightlaws. Financial penalties and an injunction have placed the futureof the popular service in question.

Napster chief executive Hank Barry said the association istwisting the data to support the recording industrys claim thatthey have suffered irreparable harm at the hands of Napsterusers.

In order to argue weve done irreparable harm, it would begreat if there were some irreparable harm to show, he said. Wehavent seen a credible survey yet that suggests Napster is hurtingCD sales.

Last week, music executives shook off Napsters offer to settlea copyright infringement lawsuit, saying it didnt offer a viablebusiness model and failed to address concerns over the security ofonline music.

Under the proposal, Napster offered $150 million annually forfive years to Sony, Warner, BMG, EMI and Universal. An additional$50 million would go to independent labels in each of those fiveyears. The money would come from a fee-based service that Napsterwould like to launch if given approval from the record companies touse their songs.

Record industry executives called Napsters offer inadequate foran industry with annual revenues of $40 billion.

Same Old Song

Some experts trace the drop in the sale of singles back to therecord companies themselves. Industry watchers say that recordcompanies have cut production of an unprofitable product that nolonger serves the needs of the industry.