Study: Media giants wrong about online piracy

25th September 2002Media giants such as Time Warner and Walt Disney should be paying less attention to pirates, and putting more effort into providing compelling digital content, says a new report Media companies must put less emphasis on protecting digital content and instead find ways to make money from digital music and movies if they hope to beat back copyright pirates who threaten their businesses, according to a study released on Wednesday from KPMG.The tax, assurance and financial consulting firm said the responsibility for finding new digital business models lies with the boards of directors, and not just with mid-level managers. With an estimated $8bn to $10bn (£5bn to £6.5bn) in lost revenues annually, the issue should be a corporate governance matter.”What we don’t see is a real questioning of business models,” said Ashley Steel, a partner in KPMG’s Information, Communications and Entertainment practice.”They complain about the Napsters,” she said, referring to the bankrupt music swap site that was found to violate US copyright laws. “But why do the Napsters exist, because the marketplace wants them.”Steel said that if the issue “is not on boardroom table… then that boardroom has problems”.Ever since the 1990s technology boom fueled the drive to put music, movies, TV shows and books on the Web, the world’s major record labels, movie and TV studios and publishers have focussed on creating software and hardware that prevents people from illegally copying digital content and re-selling it.The music industry has been the hardest hit, with CD sales dropping dramatically over the past few years as so-called peer-to-peer Web sites like Napster were used prominently by people who would trade, for free, digital files of the songs. (Many analysts argue, however, that the drop in sales has little to do with the rise of peer-to-peer systems.

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