The Impact of Digital Piracy on Music Sales: A Cross-Country Analysis (Report‪)‬

Introduction The record industry has led listeners to believe that the recent rise in digital piracy has hurt music sales. Digital music piracy, or the unlawful downloading of copyrighted music, has been a controversial topic since 1998 when Shawn Fanning created Napster. Though the MP3 file, short for MPEG-1 Audio Layer-3, was originally developed in 1987, Napster represented the first mainstream and user-friendly program to transfer and download these files. Napster, a peer-to-peer (P2P) program, allowed online users to connect with one another and swap copyrighted music, videos, and other files contained on their computers, thus providing a way to get free music online. (1) Since music artists and record companies were uncompensated when consumers downloaded these music files, the act of downloading "free music" became known as digital music piracy. Market statistics compiled by the International Federation of the Phonographic Industry (IFPI) show that worldwide sales of music fell at the turn of the century and P2P networks were immediately blamed for the industry's bad fortunes.